The Motley Fool

Experts pick the best ASX REITs to buy today

A-REITs (or Australian Real Estate Investment Trusts) have seen a huge uptick in investor interest over 2019 so far. The S&P/ASX 200 A-REIT Index (INDEXASX: XPJ) has even outperformed the broader share market S&P/ASX 200 Index (INDEXASX: XJO) over the twelve months ending 30 June 2019. This is likely a result of the yield hunt that the Reserve Bank of Australia (RBA) has set off by reducing interest rates to record lows this year.

But according the Australian Financial Review, not all REITS are worthy of the money that is flowing into them.

REITs can be further divided into residential, retail, industrial and commercial property interests. Investor (and institutional) sentiment is varied across these subsections, with commercial and industrial REITs being favoured over retail REITs in particular.

Charter Hall Group (ASX: CHC) is one REIT that investment bank Goldman Sachs feels may be up to 38% overvalued, following its 52% rise this year so far.

However, Scentre Group (ASX: SCG) is one that both Goldman and property expert and fund manager Damian Diamantopoulos feel is undervalued at the current time, likely due to investors’ misgiving about the retail sector. Goldman sees upsides of up to 34% over the next year and Mr Diamantopoulos is particularly impressed with Scentre’s recent office sales in Sydney’s CBD.

In terms of the industrial space, Centuria Industrial REIT (ASX: CIP) is named as a favourite, especially considering the go-to industrial REIT Goodman Group (ASX: GMG) isn’t a pure industrial play. Some of Centuria Industrial’s ‘tenants’ include Woolworths Group Ltd (ASX: WOW) distribution centres, Australia Post and Holden.

Residential REITs like Mirvac Group (ASX: MGR) and Stockland Corporation Ltd (ASX: SGP) are also listed as potential winners. According to Diamantopoulos, the housing market recovery as well as low interest rates should provide healthy tailwinds for this sector going forward.

Foolish takeaway

I think that the ASX REITs are a good place to lock in some high yields in the near term before further interest rate cuts push up prices even more. I also agree that Scentre is a good pick today, as it is offering a 5.5% yield on current prices, but Centuria Industrial is also looking appealing with a 5.52% yield.

Don't forget to check out the Motley Fool's favourite dividend shares here before you go!

NEW! Top 3 Dividend Bets for 2019

With interest rates likely to stay at rock bottom for months (or YEARS) to come, income-minded investors have nowhere to turn... except dividend shares. That’s why The Motley Fool’s top analysts have just prepared a brand-new report, laying out their top 3 dividend bets for 2019.

Hint: These are 3 shares you’ve probably never come across before.

They’re not the banks. Not Woolies or Wesfarmers or any of the “usual suspects.”

We think these 3 shares offer solid growth prospects over the next 12 months. Each of these three companies boasts fully franked yields and could be a great fit for your diversified portfolio. You’ll discover all three names and codes in "The Motley Fool’s Top 3 Dividend Shares for 2019."

Even better, your copy is free when you click the link below. Fair warning: This report is brand new and may not be available forever. Click the link below to be among the first investors to get access to this timely, important new research!

The names of these top 3 dividend bets are all included. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies move – we may be forced to remove this report.

Click here to claim your free copy right now!

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. 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.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!