Abstract

The global survey of Real Estate Investment Trusts (REITs) has indicated a high performance nature of REIT as an investment vehicle for the real estate sector. Studies have been conducted across the REIT markets of America, Europe and Asia-Pacific with similar result of high income yield to the investors. However, there have been no report of the Africa REIT except South Africa Property Unit Trust and Property Loans Stock that features in the EPRA Global REIT survey. In an attempt to assess performance of Nigeria REIT and bring it to global awareness, this paper investigates the performance of Nigeria REIT (N-REIT) in its 7 years of existence (2007 to 2014) using Malaysia REIT (M-REIT) as a benchmark and possible improvement. The study adopted risk adjustment return analysis of the dividend distribution over the period of the REITs establishment. The study found that Nigeria REIT underperforms the benchmark, Malaysia REIT, both in terms of average return 4.8% and risk adjusted return -6.77% per annum against the Malaysia REIT 7.5% and 2.47% respectively. There is no significant differences in the risk return ratio for the two REITs. The underperformance of the Nigeria REIT suggest that the superior performance of REIT does not apply across all REIT markets, suggesting that differences in REIT structure and features can be a determining factor(s) in investment performance. The study recommends an increased capitalisation, market transparency and external management option for N-REITs performance enhancement. The non-evaluation of multivariate effect of these factors in this study is considered to be a limiting factor. Such study could be a future research focus.

Key words: Dividend return, Malaysia, Nigeria, REIT performance, risk adjusted return.