Real Estate Investment Trusts (REIT) give investors access to property assets that would be otherwise out of reach and are a good option for portfolio diversification.
But with plenty of REIT’s to choose from on the ASX, which ones are most worth your time and hard-earned dollars?
These 3 stocks are my best REIT picks the ASX right now.
Growthpoint Properties Australia Ltd (ASX: GOZ)
Growthpoint Properties is a $2.4 billion market cap REIT with a diversified portfolio of 57 office and industrial properties.
Growthpoint shares have been on the up lately, rising from a February low of $3.08 to $3.55 at the time of writing, which is still above its share price of $3.33 at this time last year.
Growthpoint has some impressive tenants on its books, including Commonwealth Bank of Australia (ASX: CBA) and Woolworths Limited (ASX: WOW) with an investor update last month reporting a total property portfolio of $3.3 billion and 98% occupancy.
Investors have rallied behind Growthpoint after its share price bottomed out following the release of half-year results in February despite fundamentals showing the company was well-positioned for future growth, with statutory profit up 83% from the previous corresponding period and the highest reported half-year earnings per share since Growthpoint was listed.
Growthpoint’s board and management seem prudent and FY18 guidance has been upgraded, with no real headwinds on the horizon from the information given.
Growthpoint might be a bit of an under the radar REIT, in my opinion, and investors tossing up between Growthpoint and the likes of Stockland Corporation Ltd (ASX: SGP) should think carefully about which one to choose.
Abacus Property Group (ASX: ABP)
Abacus Property Group is a $2.23 billion market cap company that specialises in investing in property opportunities across Australia’s commercial property sphere.
Abacus shares have been back on the incline lately, up slightly to sit at $3.85 at the time of writing, after the company announced a $138 million asset divestment which included sale of its Bacchus Marsh Village Shopping Centre for $61 million.
Abacus is well-diversified, with the unique business unit of storage facilities on its portfolio list, and its divestment income was prudently used to pay down debt in the short term.
One to watch as its strategy is transformed.
Scentre Group (ASX: SCG)
The giant of this list, $22.3 billion market cap company Scentre Group has a large portfolio of shopping centre assets across Australia and New Zealand and has recently been tipped as a buy by UBS for its dividend prospects.
Scentre share prices have had a volatile 12 months, down 0.4% today to $4.17 – almost on par with its share price of $4.21 at this time last year with plenty of ups and downs in between.
Scentre’s update for the first quarter of 2018 last month detailed an impressive 99.5% of its portfolio was leased with 551 deals on the books and a focus on speciality store retailers with strong sales performance.
After Scentre split from Westfield Corp Ltd (ASX: WFD) in 2014 it has gone from strength-to-strength, while shopping centre stalwart Westfield has trundled along with its portfolio of assets in key locations such as London, New York, San Francisco and Los Angeles.
Scentre’s properties are concentrated mostly in the New South Wales area, while Westfield competes globally in the space and therefore exposes investors to the usual risks of foreign exchange ups and downs.
If you’re looking for more of a “local” option Scentre is your pick, but expect to experience the by-product of volatility that discretionary retailers bring, with Scentre locked into a dispute earlier this year with Premier Investments Limited (ASX: PMV), for example.
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Motley Fool contributor Carin Pickworth owns shares of Commonwealth Bank of Australia. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited and Wesfarmers Limited. The Motley Fool Australia has recommended Scentre Group. 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.
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