A fuzzy model for financial performance measurement of real estate investment trusts: comparison of investment areas

Abstract

PurposeThis study aims to present the financial performance of companies and investment areas in the real estate investment trust (REIT) industry.Design/methodology/approachA fuzzy model for financial performance measurement (FM-FPM) was proposed through the collaboration of fuzzy axiomatic design (FAD) and fuzzy entropy weighting (FEW). For the data, financial ratios were used, and their importance and functional requirements were collected via a questionnaire survey.FindingsThe FM-FPM is a beneficial model to be used for a REIT industry based on the structured procedures of FAD and FEW techniques. It can be suitable to regularly evaluate the performance of REITs and their investment areas in financial means, especially in today’s turbulent business environment. The Turkish market that was considered to show the practical applicability of the FM-FPM demonstrated specifically that diversified real estate was found to rank first, followed by mixed-buildings, warehouses, shopping malls and hotels, respectively.Research limitations/implicationsThe FM-FPM can be employed for REIT industries in other countries and adapted to different industries. However, more respondents or a different set of criteria might lead to different outputs.Practical implicationsThe FM-FPM may guide REIT managers and investors while making their decisions and controlling the performance of REITs and investment areas.Social implicationsThe FM-FPM may encourage low- and middle-income investors to make good use of their savings.Originality/valueThe research is first (1) to offer a FPM model in order to determine investable areas in a REIT industry and (2) to employ multiple criteria decision-making tools in order to measure the financial performance of individual companies and investment areas in a REIT industry.