S&P/ASX 200 A-REIT Index (ASX: XPJ) shares are outperforming in 2025, up 9% compared to the S&P/ASX 200 Index (ASX: XJO), up 8%.
Falling interest rates worldwide are a tailwind for ASX real estate investment trusts (REITs), although the economic outlook is uncertain.
On The Bull this week, two analysts reveal a REIT to buy and one to sell.
Here's why.
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ASX REITs: Buy one, sell the other
BWP Trust (ASX: BWP)
Buy this ASX REIT for 'dependable income', says expert
Jed Richards of Shaw and Partners has a buy rating on BWP Trust shares.
BWP stands for Bunnings Warehouse Properties.
The ASX REIT manages a portfolio of commercial properties, including 66 Bunnings Warehouses.
BWP Trust reported a 47.4% year-over-year increase in net profit to $265.6 million for FY25.
That includes $135.9 million in net unrealised capital gains in the fair value of its investment properties and derivatives.
Revenue rose 16.5% to $203.3 million.
In FY25, BWP Trust paid an annual dividend of 18.65 cents per share.
This gives the ASX REIT a trailing dividend yield of 5%.
Richard likes BWP Trust for its "dependable income and asset quality".
He comments:
The trust owns prime land with low cost buildings, resulting in minimal depreciation and strong capital preservation.
High occupancy, stable cash flow and an attractive dividend yield make BWP a prudent choice for income focused investors seeking low volatility and long term value.
The BWP Trust share price closed at $3.73 on Tuesday, flat.
The REIT is up 12.7% in the year to date.
DigiCo Infrastructure REIT Stapled Securities (ASX: DGT)
Sell this REIT and reduce your risk, says analyst
James Nicolaou from PAC Partners has a sell rating on this ASX REIT.
DigiCo REIT owns, operates, and develops data centres, which are crucial for enabling artificial intelligence (AI) systems.
The REIT made its market debut in December and had an initial public offering (IPO) price of $5.
The stock has fallen 39% since listing to close at $2.70 on Tuesday.
Nicolaou noted DigiCo's recent news that its Sydney-based data centre (SYD1) development had been awarded certified strategic status.
That's the highest level available under the Australian Government hosting certification framework.
The ASX REIT reported annualised underlying EBITDA of $99 million, ahead of prospectus guidance, for FY25.
Nicolaou said DigiCo management stopped short of offering firm FY26 earnings guidance.
Looking ahead, Nicolaou reckons it may be time for investors to cut their losses.
The broker explains his sell rating:
Growth depends on successfully executing its strategy.
Shares in DGT were priced at $5 in the initial public offering prior to listing on the ASX on December 13, 2024.
The shares were trading at $2.895 on September 18.
Investors may want to consider reducing their holdings and risk prior to further news developments.
