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A-REIT share price rollercoaster continues amid weaker earnings

The Australian real estate investment trust (A-REIT) share prices experienced a bit of a rollercoaster this week as the February reporting season rolled onwards.

Vicinity Centres Ltd (ASX: VCX)  closed 0.5% down for the day (2% for the week) on Friday following its half-year earnings release earlier today. The retail REIT’s earnings were supported by luxury goods and pharmacies throughout the first-half but the property downturn and faltering retail sector have started to erode profits.

Vicinity’s $235.3 million half-year profit was down nearly 70% on prior corresponding period, while it also revaluated its 66-strong portfolio by $71.6 million in the half. There were more worrying signs that the 2H19 result could see further investor pain, with revenue down 0.5% and the companies distribution down 1.85% to 7.95 cents per share (cps).

Fellow A-REIT Mirvac Group’s (ASX: MGR) share price was broadly flat this week, closing up 0.8% at $2.57 per share after its robust earnings result last Thursday.

The Stockland Corporation Ltd (ASX: SGP) share price was also up 0.8% on Friday, but this was small change in the context of a 3.6% drop for the week as retail headwinds continue to build. We’ve seen recent misses on estimates for retail sales and it looks like this might flow through to earnings for Stockland, which is due to report its half-year results next Wednesday.

Foolish Takeaway

Overall this week has been another rollercoaster – something that’s becoming a bit of a theme in the A-REIT sector. Aussie real estate is under pressure, and with the retail sector now staring at some serious deterioration in conditions as well, I would expect to see further volatility at least until the reporting season scrutiny subsides in March.

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Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.