Valuation of Real Estate Investment Trusts (REITs): An Empirical Analysis - Singapore

Abstract

This paper examines Real Estate Investment Trusts (REITs) and explores methods for their valuation. It introduces various REIT types and analyses the Singaporean REIT (S-REIT) market. The research then investigates the effectiveness of Distribution Per Unit (DPU) as a metric for REIT performance evaluation. Employing logistic regression, the study analyses a sample of 19 S-REITs over a ten-year period. The findings suggest a positive association between DPU and exceeding benchmark returns, although not statistically significant at conventional levels. The research highlights the limitations of the model and emphasizes the importance of DPU in REIT performance assessment. It recommends incorporating DPU alongside other financial metrics and economic considerations for informed real estate investment decisions.