Optimising Malaysian Shariah-compliant real estate investment trusts: Perspective of REIT managers

Globally, the market for Shariah-compliant products and services has expanded in recent years. Malaysia, Saudi Arabia and Luxembourg are now considered global Islamic capital market hubs. Islamic capital market products and instruments include the Islamic Equity Market in which the Islamic Real Estate Investment Trusts (REIT) are included. The purpose of this paper is to examine the performance measurement methods adopted by Malaysian REIT (M-REIT) managers, particularly those engaged in Shariah-Compliant REIT management. The existing performance measurement methods for conventional and Islamic REITs were identified through an extensive review of the current academic literature. Using semi structured interviews with senior Malaysian REIT managers, including the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Investment Officer and senior executives, this paper examines various methods and instruments used to measure REIT performance from the management perspective. Based on the semi-structured interviews, the distribution yield was identified as the most significant performance measure and is used as a benchmark by M-REIT managers to enhance REIT performance. Greater transparency in this decision-making strategy may lead to an increase in the efficiency level and better performance to capture greater investor confidence in this promising investment sector