GOING GREENER FOR THE BETTER? A S-REITS PERSPECTIVE

Abstract

This study investigates the relationship between greenness of REIT’s portfolio and performance of REITs. Performance metrics such as Returns On Equity (ROE) and Returns On Assets (ROA) were used to as a proxy for operational performance, while dividend yields and quarterly market returns were used to represent the market performance of REITs. Using a sample of S-REITs’ historical data from 1st Quarter 2012 to 4th Quarter 2016, the results from the ordinary least squares (OLS) regression model shows consistency with empirical evidence. While the results reflect statistical significance between the greenness and performance of REITs, the results show that there are low economical significance between greenness and performance.

The results may contain implications for REIT managers and shareholders alike. With a rising green trend rising in Singapore’s real estate industry, REIT managers would have to factor in the pros and cons of further green investments, while managing shareholders’ expectations