Effect of Macroeconomic Factors and Firm-Specific Features on the Performance of Real Estate Investment Trusts in Nigeria

Abstract The real estate sector plays a crucial role in economic development through its contributions to investment, employment, and overall growth. However, the performance of Real Estate Investment Trusts (REITs), particularly in developing economies such as Nigeria, remains inconsistent due to macroeconomic instability and firm-level inefficiencies. This study examined the influence of macroeconomic variables and company-specific features on REIT performance in Nigeria, with a focus on GDP rate, Interest rate and Inflation rate from the macroeconomic aspect while Asset size and Liquidity from company-specific features over the period 2015–2024. A quantitative research design was adopted using a census approach of all REITs in Nigeria (N = 3, Skye Shelter REIT, Union Homes REIT and UPDC REIT) with secondary data sourced from annual financial reports, Nigerian Exchange Group publications, and macroeconomic databases such as the Central Bank of Nigeria and National Bureau of Statistics. Data were analyzed using descriptive and regression statistics (Vector Autoregression VAR) in Eviews software. The stationarity of the construct was confirmed using Augmented Dickey Fuller ADF test, the Augmented Dickey-Fuller (ADF) test results show that all variables are stationary at level, as their ADF t-statistics are less than the 5% significance threshold (p < 0.05). In addition, the VAR residual normality test indicates that the model is normally distributed, with the probabilities of skewness, kurtosis, and Jarque-Bera statistics all exceeding 0.05 (p > 0.05). The results revealed that UPDC REIT, which has the largest mean asset base (₦31.1 billion), also records the highest mean performance (4.00%), followed by UH REIT and then SFS REIT. The regression analysis revealed macroeconomic variables significantly affected only Union Homes REIT: GDP (β = 3.934848; t = 2.42493) and inflation (β = 1.080685; t = 2.47564) had positive significant effects, while interest rate (β = -1.113549; t = -2.25864) had a negative significant effect. For firm-specific factors, asset size negatively and significantly influenced Skye REIT (β = -1.90E-08; t = -2.33861) and Union Homes REIT (t ≈ -2.49), but was positive and insignificant for UPDC REIT (β = 9.29E-10; t = 1.58450). Liquidity had positive but insignificant effects across all REITs. The study concludes that both macroeconomic variables and firm-specific features jointly influence REIT performance in Nigeria, though the magnitude and direction of their effects vary across firms. The study recommends improved asset management, effective interest rate risk strategies, and better policy support to enhance REIT performance. Keywords: Investment; Performance; Real estate; REITS