ESG factors & REIT performance

: a case study on US REITs

Abstract

Real Estate Investment Trusts (REITs) have been encouraged to actively invest in CSR and ESG-related activities despite their significant financial cost. The existing empirical evidence shows mixed results, with several researchers advocating to increase ESG investment following the logic that it significantly enhances market performance, reputation, and profitability of the company. However, evidence also exists illustrating an insignificant relationship between ESG factors and firm performance. This study aims to understand the effect of investment into ESG factors on REITs performance in U.S. markets by taking net assets value (NAV), price to funds from operations (PFFO) and closing stock price as performance indicators. I find my results consistent with the existing literature showing that, in some cases, ESG factors have a significant positive impact on REITs9 performance indicators; however, when profitability, firm size and leverage are accounted for, the effect becomes negative. Overall, my study’s results are mixed, and exhibit that the complex relationship between ESG and REIT performance requires further investigation.

Date of Award	25 Jun 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Zoe Venter (Supervisor)