Causal Relationship of N-REITs Dividend Yield and Money Market Indicators: A Case Study of Skye Shelter REIT

Olanrele, Olusegun Olaopin; Adegunle, Tomisi O.; Fateye, O. B.; Oyedokun, Tunbosun Biodun; Chiwuzie, Augustina

doi:10.15396/afres2018_145

Cited by 5 publications

(5 citation statements)

References 21 publications

(13 reference statements)

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“…For example, the 3 month's Treasury Bills provides a return of 8.5% and return on cash ranges between 4.5% and 10.5%. Olanrele et al (2018), in a study carried out to determine the causal relationship between N-REITs dividend yield and Money Market Indicators (MMI) such as T-Bills and Currency in Circulation (CIC) found a short-run causal relationship between N-REITs dividend yield and MMI. The computed KPSS and PP test-statistics as seen in Table 6 are integrated of order I(0).…”

Section: Resultsmentioning

confidence: 99%

“…This is not in agreement with the findings of Niskanen (2012), which asserted that REITs provide good returns on investments. More recently, studies such as Olanrele, Adegunle and Fateye (2018), investigated the correlations between REITs and Money Market Indicators, such as Treasury Bills, among others. The Granger Causality tests conducted in the study revealed an insignificant long-run causal relationship, but a significant short-run causal relationship between N-REITs returns and Money Market Indicators.…”

Section: Literature Reviewmentioning

confidence: 99%

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Structure, Conduct and Performance of REITs in Emerging Markets

Dabara

Ogunba

2020

JARER

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Purpose: This study examines the correlations between the structure, conduct and performance of Real Estate Investment Trusts in Nigeria (N-REITs) with a view to providing information that will enhance and guide real estate investment decisions on N-REITs. Design/Approach: The study population consists of all three REIT companies in Nigeria, namely: Skye Shelter Fund, Union Home REIT and UACN Property Development Company (UPDC) REIT. Secondary data on dividends and share prices of N-REITs; Total Business Revenues (TBR) and Total Individual Expenditure (TIE) on conduct variables were sourced from periodicals of the respective companies covering the period from 2008 to 2016. The data series for the study were analyzed by means of the Kwiatkowski-Phillips-Schimidt-Shin (KPSS) unit root tests, Philip-Perron (PP) unit root tests, Granger Causality tests, and the Ordinary Least Square (OLS) regression. Findings: The study shows a Herfindahl Hischman Index (HHI) that ranged between 41.81% (recorded in 2010) and 100% recorded in 2008. This suggests a high concentration in the N-REITs industry. Similarly, the Granger Causality Test conducted reveals a bi-directional causal relationship between the structure, conduct and performance of N-REITs. Practical Implications: The study provides essential information (on the HHI, return performance and causal relationships) for stakeholders in the real estate sector regarding the influence of structure and conduct on the performance of N-REITs. This information will be valuable for equipping asset managers, insurance companies, pension funds and individual real estate investors in making informed investment decisions. Originality/Value: This study is unique as it is the first to draw a link between the structure, conduct and performance of REITs in an African emerging real estate market; something that has not been considered in previous studies.

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Section: Resultsmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Structure, Conduct and Performance of REITs in Emerging Markets

Dabara

Ogunba

2020

JARER

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“…A low supply of real estate units subsequently leads to higher demand which leads to increases in the value of the real estate through higher rents and leases. Similarly, Olanrele, Adegunle, & Fateye (2018) established that real estate investments in Nigeria were sensitive to interest rate changes but mostly dependent on the property life remaining.…”

Section: Relationship Between Real Estate Residential Property Prices...mentioning

confidence: 99%

Analysis of Inflation, Interest Rate, Exchange Rate and Real Estate Residential Property Prices, Kenya

Odhiambo¹,

Ombok²

2022

theijbm

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Real estate as an investment has continued to form an important part of investments held by both retail and institutional investors over the years. This has been attributed to its ability to generate continuous income streams and capital appreciation of the underlying asset. The Kenyan population is expected to hit 60 Million in 2030, with more than 50% expected to reside in urban areas. This, compounded by the higher-than-average returns experienced in the real estate sector, makes real estate an important investment for investors' portfolios. For instance, one Million invested in 2017 in the real estate sector would have been worth 9.61 Million in 2021, which is higher than that for bonds and equities. Notwithstanding this impressive return component, real estate investments in Kenya have faced challenges such as increased cost of credit through fluctuating interest rates owing to residential real estate being mostly financed by debt. Hence, unstable interest rates affect their market prices. Real estate residential investment has been susceptible to booms and busts and erratic exchange rates, which affect the value of investments made by both local investors and remittances from abroad from time to time which results in either inflated property prices which get out of reach of common retail investors or lack of demand for investors in a market facing a glut. Over the years, inflation has been rising steadily, with each investor becoming more interested in how this might affect their real return. Real estate, which is heavily leveraged, has also been prone to changes in the interest regime in the economy, which affects the cost of borrowing. The study concentrated on inflation, the interest rate regime, and the state of the exchange rate and drew conclusions while referencing finance and economic theory. The study established that a percentage increase in inflation results in a 2.248% increase in real estate residential property prices. On the other hand, a percentage increase in interest rate results in a 9.630% increase in real estate residential property prices. The study also establishes that real estate residential property prices have a negative relationship with exchange rates. Whereby a percentage increase in exchange rate results in a -1.995% decrease in real estate residential property prices in the long run. The study, therefore, recommends the inclusion of real estate investments in investors' portfolios to hedge against inflation and, at the same time, ensures that investors limit interest-sensitive asset classes such as fixed-income securities in portfolios containing residential real estate exposures. Lastly, the study recommends that investors use derivative securities such as futures contracts to hedge against adverse exchange rate movements in real estate residential properties that have exposures .in the foreign exchange markets either through foreign-denominated leases or rental contracts.

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“…Such studies include Niskanen (2012). More recently studies such as Olanrele, Adegunle and Fateye (2018) investigated the correlations between REITs and Money Market Indicators such as Treasury Bills among others. A group of studies conducted in South Africa by Akinsomi, Kola, Ndlovu and Motloung (2016) investigated the performance of the broad based black economic empowerment (BBBEE) of both listed and delisted property firms in South Africa.…”

Section: Literature Reviewmentioning

confidence: 99%

Performance of Real Estate Investment Trusts In African Real Estate Markets: A Case Study of Nigeria

Dabara¹,

Ogunba²,

Soladoye³

et al. 2019

26th Annual European Real Estate Society Conference

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Purpose: This study examined the correlations among the structure, conduct and performance of Real Estate Investment Trusts in Nigeria (N-REITs) with a view to providing information that will enhance and guide real estate investment decisions.Design/Methods followed/Approach: The study population consisted of all the three REIT companies in Nigeria namely: Skye Shelter Fund, Union Home REITs and UACN Property Development Company (UPDC) REITs. Secondary data on dividends and share prices of N-REITs; Total Business Revenues (TBR) and Total Individual Expenditure (TIE) on conduct variables were sourced from periodicals of the respective companies covering the period from 2008 to 2016. The data series for the study were analyzed by means of the Granger Causality tests, Kwiatkowski-Phillips-Schimidt-Shin (KPSS) unit root tests, Philip-Perron (PP) unit root tests and the ordinary least square regression (OLS).Findings: The study showed a Herfindahl Hischman Index (HHI) that ranged between 41.81% (recorded in 2010) and 100% recorded in 2008. This suggested a high concentration in the N-REITs industry. Similarly, the study found that the returns on investment in the industry ranged between -0.24% and 22.07%. The Granger Causality Test conducted revealed a bi-directional causal relationship among the structure, conduct and performance of N-REITs.Practical Implication: The study provided essential information for stakeholders in the real estate sector regarding the influence of structure and conduct on the performance of N-REITs. This information will be valuable for equipping asset managers, insurance companies, pension funds as well as individual real estate investors in making informed investment decisions.Originality/Value: This study is unique as it is the first to draw a link between the structure, conduct and performance of REITs in an African emerging real estate market which was hitherto not considered in previous studies.

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Causal Relationship of N-REITs Dividend Yield and Money Market Indicators: A Case Study of Skye Shelter REIT

Cited by 5 publications

References 21 publications

Structure, Conduct and Performance of REITs in Emerging Markets

Structure, Conduct and Performance of REITs in Emerging Markets

Analysis of Inflation, Interest Rate, Exchange Rate and Real Estate Residential Property Prices, Kenya

Performance of Real Estate Investment Trusts In African Real Estate Markets: A Case Study of Nigeria

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