Centuria Industrial REIT (ASX: CIP), Centuria Metropolitan REIT (ASX: CMA) and Charter Hall Long WALE REIT (ASX: CLW) today announced their quarterly distributions for Q1 2019 – but are any of them in the buy zone?
What are the distribution numbers?
The Centuria Metropolitan REIT confirmed a quarterly distribution of 4.358 cents per unit (cpu) to be paid on 29 April 2019, while the Centuria Industrial REIT confirmed a 4.6 cpu distribution and the activation of a Distribution Reinvestment Plan (DRP).
On a pro-forma basis, this would translate into annualised distribution yields of 7.36% and 5.79%, respectively.
Also updating the market today was Charter Hall Long WALE REIT, which announced a 6.90 distribution per security. On a pro-forma basis, the REIT would yield 5.97% p.a.
These latest distributions show that commercial real estate (CRE) remains intact despite clear headwinds that are building for the retail and residential real estate sectors.
While the economy remains intact, office and industrial property yields should be largely maintained throughout the cycle and could offer good countercyclical exposure for yield-seeking investors.
How are these 3 REITs stacking up so far in 2019?
The Centuria Metropolitan REIT unit price is up 6.4% so far this year to just trail both the Centuria Industrial REIT (+10.2%) and Charter Hall Long WALE REIT (+10.9%).
These are pretty good capital growth figures for REITs at this point in the economic cycle, but I'd be wary of market valuations of properties given the large number of inter-REIT asset sales that have been occurring in the last 6-12 months which have pushed valuations higher.
In the CRE space, properties tend to be illiquid and difficult to sell and realise value at market-high prices, particularly in a falling market with lower demand and more bearish sentiment.
While these 3 REITs could provide countercyclical income within a portfolio, those seeking capital gains should check out these top growth shares as alternatives.
