ASX property shares are underperforming on Thursday as earnings season continues and the market sets a new record.
The S&P/ASX 200 Real Estate Index (ASX: XPJ) is down 3.6% while the S&P/ASX 200 Index (ASX: XJO) is up 1.1%.
The ASX 200 hit a record 9,118.3 points in earlier trading, surpassing its previous record of 9,115.2 points on 21 October.
Stronger-than-expected jobs data released today has added to the case for further interest rate hikes in 2026.
Interest rate increases do not bode well for ASX real estate shares.
However, Morgans reckons there are three real estate stocks worth looking at following their latest earnings reports.
The broker gives all of them a buy rating.
Let's find out why.
Image source: Getty Images
Dexus Industria REIT (ASX: DXI)
This ASX property share is trading at $2.53 apiece, down 1.4% today and 9.8% over the past 12 months.
Dexus Industria reported its 1H FY26 results last week.
Morgans said:
DXI continues to deliver strong operational results, with fixed/CPI rent escalators providing visibility for medium-term earnings growth, despite a normalisation in some industrial markets.
The balance sheet is a key differentiator, with gearing below the target range, and no near-term debt maturities, DXI is afforded the flexibility to pursue value-accretive developments such as the Jandakot.
Whilst these factors underpin DXI's ability to grow income organically and recycle into higher-quality industrial assets, the current interest rate environment is likely to cap near-term valuation momentum across the A-REIT sector.
Morgans has an accumulate rating on this real estate investment trust (REIT) with a $2.80 price target.
The broker said:
On balance, DXI's secure income, development-led value creation, and a 26% discount to NTA justify a stance more constructive than Hold, but rate-driven macro constraints prevent a Buy; we therefore retain an ACCUMULATE rating with a $2.80 price target.
Centuria Industrial REIT (ASX: CIP)
This ASX property share is trading at $3.20 apiece, up 0.16% today and 9.04% over the past 12 months.
Centuria Industrial REIT released its 1H FY26 results last week.
Morgans said:
The CIP portfolio continues to perform well, with +44% rental spreads and a further 20% under-renting to continue driving net property income growth over the medium term.
Offsetting the strong property fundamentals, higher interest costs continue to impact CIP (and peers).
Albeit, CIP's debt book remains in good condition, benefiting from the recently issued exchangeable note ($350m at 3.5% coupon).
To this end, the prospect of higher rates will likely continue to weigh on the sector, offsetting some of the positive fundamentals.
Morgans kept its accumulate rating on this ASX property share with a $3.60 price target.
HomeCo Daily Needs REIT (ASX: HDN)
This ASX property share is trading at $1.31 apiece, down 0.2% today and up 8.4% over 12 months.
HomeCo Daily Needs REIT also reported its 1H FY26 earnings last week.
Morgans commented:
HDN delivered a consistent set of results, with property fundamentals seeing NOI growth at +4.6% (vs pcp) and NTA growth of 5.4% (vs Jun-25).
However, higher rates and increased debt saw FFO growing a more modest 2.8% – a trend we expect to continue as the business navigates potentially higher rates.
Given HDN is trading at a 17% discount to NTA, with a 6.7% distribution yield (FY26), there is cause to see value.
However, it appears FFO growth greater than inflation may remain elusive for the medium term.
Morgans retained its accumulate rating with a $1.40 per share price target.
