PERFORMANCE OF COMMERCIAL REITS IN SINGAPORE

Abstract

Real Estate Investment Trusts (REITs) are investments in real estate properties with regular distribution of revenues generated from those assets at regular intervals to shareholders. The focus of this study is to analyse the performance of commercial REITs in Singapore, using a fixed effects panel regression model. This study is interesting because many local investors invest in Singapore REITs (S-REITs) either for regular or retirement income. The share prices of S-REITs are less volatile compared to the Straits Times Index (STI). The hypothesis is that the performance of REITs depends on financial factors such as the current ratio, asset turnover ratio, gross profit margin, debt to equity ratio, return on assets, return on equity, net asset value, earnings per share, market capitalisation, and external factors. A sample of 25 listed REITs from the Singapore Exchange (SGX) is used in this study. The data are collected for years 2017 to 2021. The study period is also able to examine the performance of REITs during the pandemic. From the panel regression, it is found that financial factors, Net Asset Value (NAV), market capitalisation and STI, have a statistically significant relationship with the share prices. In the analysis, firm-specific effects of the REIT firms, Keppel REIT, Mapletree Industrial Trust, Frasers Centrepoint Trust, Suntec REIT, and CapitaLand China Trust were also captured. The implications are that investors should focus on financial indicators that determines the asset value of a REIT when investing in REITs. This study serves as a guidance for investors who are looking to invest in REITs the various financial variables of a REIT company that is able to determine the performance of the company.