Exploring the Effects of Green Portfolio on REITs’ Return Performance in South Africa

Figures & data

Table 1. Green Star South African ratings tool scores.

Overall score	Rating star	Overall score	Rating star
10–19	1	45–59	4
20–29	2	60–74	5
30–44	3	75–100	6

Source: GBCSA (2021).

Table 2. Eleven REITs with green buildings in their portfolio in South Africa.

Name of REIT	Type/Industry	Data captured (years/quarters)
Accelerate Property Fund (APF)	Retail	2014–2022
Hyprop Investments (HYP)	Retail	2014–2022
Liberty Two Degrees (L2D)	Retail	2017–2022
Attacq (ATT)	Diversified	2014–2022
Emira Property Fund (EMI)	Diversified	2015–2022
Growthpoint properties (GRT)	Diversified	2013–2022
Investec Property Fund (IPF)	Diversified	2013–2022
Redefine Properties (RDF)	Diversified	2013–2022
Spear REIT (SEA)	Diversified	2017–2022
Heriot REIT (HET)	Commercial/farm	2018–2022
Equites Property Fund (EQU)	Logistics-focused	2015–2022

Source: Various REITs’ financial reports, EquityRT.

Table 3. Description of model variables.

Variable	Definition
Dependent variables
Return on Assets (ROA)	(Net income/total assets)*100%
Return on Equity (ROE)	(Net income available for common shareholder/total common equity)* 100%
Portfolio green variables
Percentage green buildings (Green BLD)	(Number of green buildings/total number of buildings)* 100%
Percentage GLA that is green (Green GLA)	(Green GFA/Total GFA)* 100%
Portfolio green building score	Ratio of number of stars given to each certified building to the total number of properties
Control variables
Debt-to-equity ratio (D/E)	(Total loan amount to asset value used as collateral)*100%
Log of Market cap (lnMarketcap)	Stock price* total number of outstanding shares
Price-to-book ratio (PB ratio)	(Net assets/total number of shares)*100%
GDP growth rate	South Africa’s annual average rate of change of the gross domestic product (GDP).
FTSE/JSE all property index	Consists of all constituents of the FTSE/JSE SWIX All Share Index which belong to the ICB Real Estate Super Sector weighted with individual constituents’ weights capped at 15%
Covid-19 dummy	0 if Covid-19 was not present (i.e., 2019 and before) 1 if Covid-19 was present or after (i.e., 2020 and after)

* Indicates multiplication.

Figure 1. Number of non-green and green buildings, December 2021.

Figure 2. Total green GLA held by each SAREIT, December 2021.

Figure 3. Percentage of total green GLA to total GLA, December 2021.

Figure 4. The cumulative green GLA owned by SAREIT, 2013–2021.

Table 4. Correlation coefficients.

Variables	Debt-to-equity ratio	Log of market cap	Price-to-book ratio	GDP growth rate	All-price index
(1) Debt-to-equity ratio	--
(2) Log of market capital	−0.016	--
(3) Price-to-block ratio	−0.316**	0.424**	--
(4) GDP growth rate	−0.241*	0.220*	0.433**	--
(5) All-property index	−0.387**	0.381**	0.609**	0.489**	--

** and * indicates 1% and 5% level of significance, respectively.

Table 5. Panel model results with ROA as the dependent variable.

	ROA (1)^a	ROA (2)^a	ROA (3)^a
Percentage of green buildings	0.001*
Percentage of green lettable area (GLA)		0.001**
Portfolio green building Score			0.002*
Debt-to-equity ratio	−0.206	−0.220	−0.237
Log of market cap	0.047***	0.049***	0.048***
Price-to-book ratio	0.013	0.015	0.016
GDP growth rate	0.008**	0.007	0.008**
FTSE/JSE all property index	−6.550e-5	−7.125e-8	−7.261e-8
Covid-19 dummy	−0.038	−0.036*	−0.037
Adj. R^2	0.442	0.453	0.442
N	91

^a Indicates that fixed effects estimation technique was employed; **, and * indicate significance at 1%, and 5%, respectively.

Table 6. Panel model results with ROE as the dependent variable.

	ROE (1)^a	ROE (2)^a	ROE (3)^a
Percentage of green buildings	1.568e-04
Percentage of GLA		5.243e-4
Portfolio green building Score			2.395e-04
Debt-to-equity ratio	0.090	0.089	0.090
Log of market cap	−0.011	−0.012	−0.011
Price-to-book ratio	0.127**	0.129**	0.127**
GDP growth rate	0.019**	0.018**	0.019**
FTSE/JSE all property index	−1.086e-04	−1.040e-05	−1.093e-04
Covid-19 dummy	−0.072*	−0.076*	−0.073*
Adj. R^2	0.390	0.390	0.390
N	91

^aIndicates that random effects estimation techniques were employed; **, and * indicate significance at 1%, and 5%, respectively.

Table

	N	Min	Max	Mean	Std. Deviation
Return on assets	91	−0.18	0.14	0.04	0.06
Return on equity	91	−0.39	0.38	0.07	0.10
Percentage of green buildings	91	0.00%	62.50%	8.08%	11.57%
Percentage of GLA that green	91	0.00%	67.44%	6.32%	11.07%
Portfolio green building score	91	0.00%	36.06%	4.42%	6.65%
Debt-to-equity ratio	91	0.00%	48.50%	33.98%	9.20%
Log market cap	91	20.57	25.17	23.22	1.15
Price-to-book value ratio	91	0.00%	1.70%	0.82%	0.34%
GDP growth rate	91	−3.5%	3.1%	0.48%	1.68%
All property index	91	272.98	694.67	471.05	142.64

GBCSA. (2021). Integrated annual report. https://gbcsa.org.za/wp-content/uploads/2022/08/GBCSA-2021-Integrated-Report.pdf

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