How are ASX REITs smashing 52-week highs despite today's market meltdown?

If you own ASX REITs, you're probably feeling pretty chuffed today.

Rising real estate share price.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's hard to describe what has happened on the ASX boards today as anything other than a full-on meltdown. At present, the S&P/ASX 200 Index (ASX: XJO) has retreated by a sobering 0.7% after falling as much as 1.6% earlier this morning. That makes what is currently going on in the ASX real estate investment trust (REIT) space all the stranger.

Whilst most ASX 200 blue chips are nursing heavy losses today, REITs are, mostly, on fire. This space is currently one of the best-performing sectors on the ASX, with the S&P/ASX 200 A-REIT Index (ASX: XPJ) up a healthy 1.46% at the time of writing.

What's more, we've seen several real estate investment trusts even clock fresh new 52-week highs today.

Scentre Group (ASX: SCG) units touched a new high of $3.34 this afternoon, and are currently up 1.22% at $3.3 each.

Stockland Corporation Ltd (ASX: SGP) units reached a new high of $4.83 around the same time. Ditto for Centuria Industrial REIT (ASX: CIP), which vaulted up to $3.56 a unit in the past hour.

We've seen similar moves from HMC Capital Ltd (ASX: HMC), Charter Hall Group (ASX: CHC), and Dexus Industria REIT (ASX: DXI).

So how can we explain this apparent stock market paradox?

How are ASX REITs defying the meltdown to hit new highs?

Well, it's fairly difficult to pinpoint what's going on here. There are no obvious catalysts that can explain why investors seem to be flocking out of other ASX 200 shares and into REITs this Friday. Real estate investment trusts are often some of the ASX's most cyclical shares, so it's a real head-scratcher.

There are a couple of things we can point to though.

Firstly, we got some news today out of Bunnings REIT BWP Trust (ASX: BWP).

In January, we covered BWP's bid for fellow Bunnings landlord Newmark Property REIT (ASX: NPR). This bid, consisting of 0.4 BWP units offered for every Newmark unit, saw the Newmark unit price rocket 40% at the time.

Yesterday, BWP announced that it intends to shift its offer to an "unconditional" one as of 21 March, and extended its offer period to 12 April.

Given the rapturous reception of its original offer, it's possible that this news is having an impact on the REIT scene today.

Another factor we can point to is the recent broker love that many REITs have been on the receiving end of.

Earlier this week, my Fool colleague James covered the buy ratings that two different ASX brokers gave to Rural Funds Group (ASX: RFF) and Stockland.

Then last week, my colleague Bronwyn also covered similar buy ratings from different brokers again, this time covering Ingenia Communities Group (ASX: INA), Arena REIT No 1 (ASX: ARF) and Charter Hall Group.

Perhaps these recent and glowing reviews of these ASX REITs have convinced investors of their safe haven potential this Friday.

Whatever the reason for today's market defiance from the ASX REIT space, no doubt its investors will be delighted.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Rural Funds Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on REITs

a man with hands in pockets and a serious look on his face stares out of an office window onto a landscape of highrise office buildings in an urban landscape
REITs

Is it time to grab these cheap ASX 300 stocks before it's too late?

Here’s why these ASX shares seem very cheap in my view.

Read more »

Group of successful real estate agents standing in building and looking at tablet.
Opinions

Should ASX REITs be on your buy list right now?

Analysts offer their views.

Read more »

An older couple dance in their living room as they enjoy their retirement funded by ASX dividends
REITs

Why I think this could be the #1 ASX property stock for retirement

I believe this stock is offering everything that retirees could want.

Read more »

Boys making faces and flexing.
REITs

These 3 ASX index-beaters are setting new records today (I'd still buy)

I think these stocks still have plenty of growth potential.

Read more »

A business woman flexes her muscles overlooking a city scape below.
REITs

Why ASX property shares could be set for a comeback

The recovery could be strong, too, according to one global investment giant.

Read more »

An Australian farmer wearing a beaten-up akubra hat and work shirt leans on a fence with livestock in the background and a blue sky above.
REITs

Why I'm more bullish than ever on this ASX 300 dividend stock

This is a leading passive income share, in my opinion.

Read more »

a man with hands in pockets and a serious look on his face stares out of an office window onto a landscape of highrise office buildings in an urban landscape
REITs

Is now the time to consider this heavily discounted ASX 300 stock?

Could this be one of the deepest value stocks on the ASX?

Read more »

Two businesspeople walk in opposite directions on a staircase with arrows under their arms, one pointing up and one pointing down.
Earnings Results

One up, one down: ASX REITs vary after FY24 results

Two very different outcomes for these REITs after their FY24 results.

Read more »