Real Estate Investment Trusts in Nigeria and the Structure-Conduct-Performance Paradigm

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. 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). 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. 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. 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.