ASX real estate investment trusts (REITs) can be a great opportunity for investors seeking exposure to Australia's property market without the challenges of direct property ownership.
REITs can offer predictable cash flow and dividend distributions, as well as diversification and capital growth opportunities. But sometimes it can be difficult to pinpoint the ASX REITs with the best potential for growth.
In a new note to investors, analysts at Macquarie Group Ltd (ASX: MQG) have highlighted the ASX REITs that they expect to outperform over the next 12 months.
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DigiCo Infrastructure REIT Stapled Securities (ASX: DGT)
DigiCo's share price is 0.2% higher on Wednesday morning. At the time of writing, the shares are changing hands for $2.36 a piece. That's a 16.1% drop over the month, and over the year, they're 28.01% lower.
But that shouldn't put you off. Macquarie thinks the low price presents a good buying opportunity. The broker has an outperform rating on the shares and a $4.16 target price. At the time of writing, that implies a potential 76.3% upside over the next 12 months.
Lendlease Group (ASX: LLC)
Lendlease shares are 0.19% lower at the time of writing, trading at $5.21 per share. Over the past month, the ASX REIT's share price has fallen 4.93% and it is now down 24.05% over the year.
Again, Macquarie has an outperform rating on Lendlease shares, with a $6.74 target price. At the time of writing, that implies a potential 29.4% upside for investors over the next 12 months.
Abacus Group (ASX: ABG)
Shares in the diversified property group, which has interests in storage, office, and retail, are 0.43% higher at the time of writing on Wednesday morning, at $1.16 per share. Over the past month, the ASX REIT's share price has dropped 4.51%, and over the year, it's 3.72% lower.
Macquarie has an outperform rating on Abacus shares and a $1.31 12-month target price. That represents a potential 12.9% upside ahead for investors.
Dexus (ASX: DXS)
Dexus shares are trading flat at $7.16 a piece at the time of writing. Over the past month, the Australasian real assets manager and owner's share price has decreased by 4.79%, but over the year, it is 2.43% higher.
Macquarie has assigned an outperform rating and a $8.46 per share target price to the ASX REIT. That implies a potential 18.2% upside for investors over the next 12 months.
Mirvac Group (ASX: MGR)
The Australian property group's shares are up 0.44% at the time of writing, trading at $2.27 each. That's a drop of 6.97% over the month but still 6.34% higher than this time last year.
The broker also has an outperform rating on the shares, with a $2.70 target price. That implies a potential 18.94% upside for investors, using the share price at the time of writing.
Macquarie comments on Lendlease's APPF wind-up
Analysts said that Lendlease expects the wind-up of APPF Retail to be broadly earnings-neutral, with an estimated $17 million contribution in FY25 and a yield of around 5%, similar to debt costs.
The Trustee has determined the appropriate strategy is to sell all assets (~$2.5bn excluding Erina Fair, which is already in its settlement period).
The wind-up could present a potential opportunity for co-owners and property managers to pick up management roles or buy into parts of the old asset pool if the opportunity comes up.
The broker also explained that fee pressure is building across unlisted property funds. Recent changes to fee structures suggest potential earnings softness in the near term. With more APPF funds heading into full liquidity in 2026, there's a chance of more wind-ups, depending on how investor sentiment plays out.
