Abstract
The purpose of the study is to provide valuable insights into investment options for real estate investment trusts (REITs) to investors and academics interested in high returns and diversification benefits coupled with in-depth subject knowledge. The study aimed to examine the influence of distribution centres on the performance of REITs. The specific objectives were to examine the present state of affairs regarding the performance of distribution centres as well as to evaluate what the current performance is in the REIT industry, highlight factors pertinent to distribution centres from financial to physical, including enablers and barriers in the industry and determine the contribution or effect of distribution centres on REITs’ performance. Mixed method analysis utilising narrative and semi-systematic literature reviews and regression analysis were adopted. Data was obtained through utilising data-source search engines such as Ebscohost, Scopus and Google Scholar. Data on distribution centres were obtained from a private database holding information on seven distribution centres. Quantitative data on REITs were obtained from the Integrated Real-time Equity Systems (IRESs). The findings show mixed results; while the regression coefficient for a distribution centre in Nelspruit were positive determinants of REITs performance, those for the distribution centre in Gauteng and Wholesale1 were observed to be negative. The study provides evidence on factors essential to distribution centres and REITs' performance. This shows the performance of Real Estate Investment Trusts (REITs) were positively influenced by certain factors related to a distribution centre located in Nelspruit, whereas factors associated with the distribution centre in Gauteng and Wholesale1 had a negative impact on the REITs' performance. This can be interpreted to mean that the success of these REITs may be closely tied to the operations of these distribution centres, and that understanding the operations of these centres could potentially provide insight into how to improve REIT performance. Studies are limited to the relationship between distribution centres and REITs’ performance especially including funds from operations (FFO). Overall, the findings of this study provide valuable insights for investors and analysts interested in understanding how distribution centres can impact REITs' performance. One limitation of this study is that it focused on a specific geographic region, which may limit the generalisability of the findings to other regions. Future research could explore the
relationship between distribution centres and REITs performance in other regions to determine if similar patterns exist.
Keywords – Distribution Centre, REITs, Real Estate, Sharpe Ratio