Many share market investors are reformed bricks and mortar stalwarts – so it makes sense that a large proportion are interested in real estate sector stocks, with most well-balanced portfolios containing at least one.
I think these three ASX real estate stocks are standouts in the sector for a variety of reasons.
Aveo Group (ASX: AOG)
Shares in retirement community owner, operator and manager Aveo Group are on the decline at present, having dropped down from a share price of $3.32 at this time last year to sit down 0.75% to $2.65 at the time of writing.
Aveo has 89 retirement villages across Australia with more than 13,000 residents, with the $1.5 billion market cap company going neck and neck with smaller cap sector player Gateway Lifestyle Group (ASX: GTY) which has recently received widespread praise for its fee structure sustainability across its residential parks.
Aveo’s half-year reports released back in February were a disappointment for investors, with EBITDA down 34% to $46.4 million and underlying NPAT down 33% to $36.4 million with no interim dividend distribution.
Aveo is said to be focusing on improved contract terms and better pre-contract disclosure after rumours residents had formed a class action that Aveo is said to be defending.
With a strong market share in the retirement living space in Australia, Aveo looks to have a pretty solid future if it can shrug off some bad press and meet its FY18 guidance of 20.4c EPS.
Likely still a good long-term bet.
Lendlease Group (ASX: LLC)
International property and infrastructure company Lendlease Group certainly provides its shareholders with good European market exposure, thanks to its range of high-profile projects across the likes of London and Milan.
In fact, the vertically-integrated company appears to have a lot going for it globally at present, with an investor update in April detailing its Asian market opportunities, competitive advantage in the space, and strong pipeline of projects to drive future earnings growth and diversification.
Lendlease announced it would develop a $302 million senior living community in Shanghai, China, after signing a contract with the Qingpu district government recently for 50-year land rights in Shanghai suburbia.
Lendlease has seen some volatility in its 12-month share price graph, but shares are back on the incline, despite dropping down slightly in Monday morning trade to sit at $18.27 at the time of writing.
On a global scale Lendlease appears to be surging ahead of peer Stockland Corporation Ltd (ASX: SGP) as Stockland continues to focus on high-density residential options onshore, and is on track to settle 6,500 residential lots for FY18 as its concentration on retail town centres is also reaffirmed.
Stockland shares were down to $4.19 at the time of writing, a drop from $4.63 at this time last year.
There’s the potential for Lendlease to spread itself too thin if its diversifies too much on a global level, but for now, its fundamentals look strong and its project pipeline looks exciting.
Mirvac Group (ASX: MGR)
Development and construction player Mirvac Group manage a diverse range of assets across the office, retail, industrial and residential sectors.
Mirvac’s April-released quarterly update was positive, despite weakening house prices, with occupancy rates close to 100%, and expected FY18 EBIT guidance on track, a robust balance sheet and well-located projects with 3,400 settlements expected for FY18.
Mirvac spreads itself across the retail, residential, office and industrial sectors, but manages to maintain profitability across the board, aligning itself with the Clean Energy Finance Corporation and White Ribbon initiatives to strengthen its public reputation and market share.
Mirvac seems well-placed to leverage on the increased urbanisation across the country, which is also boosting the returns of property portal companies such as REA Group Limited (ASX: REA) and Domain Holdings Australia Limited (ASX: DHG).
Mirvac shares were down slightly today to sit at $2.22.
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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.