Real estate investment trusts (REIT) have been one sector of the market that have fallen short of expectations so far in 2026.
In fact, the S&P/ASX 200 A-REIT (ASX: XPJ) index is down 11% year to date.
For comparison, the S&P/ASX 200 Index (ASX: XJO) is up roughly 2% in that same period.
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What's the benefit of ASX REITs?
For those unfamiliar, ASX REITs have long been a popular investment option.
Put simply, an REIT is a company that owns and operates property assets that typically produce income.
This can be anything from retirement homes or apartments, to office blocks or petrol stations.
Australian investors generally target ASX REITs because they have historically provided reliable, income-focused returns through mandatory high dividend distributions.
Additionally, it offers exposure to commercial property without directly owning real estate which can lead to capital growth tied to Australia's property market.
They also provide portfolio diversification.
That's because REITs are primarily influenced by factors such as interest rates, property valuations, rental income, occupancy rates, and economic conditions affecting commercial or residential real estate.
Meanwhile, sectors like mining are driven by commodity prices and global demand, and tech stocks are more influenced by innovation cycles, growth expectations, and risk sentiment.
This means the REIT market might move differently to these other sectors like mining or tech.
Morgans lists ASX REIT as a buy
Amidst poor performance from the broader sector, the team at Morgans has identified Waypoint REIT Ltd (ASX: WPR) as a potential REIT to watch.
The company owns a $3 billion portfolio of service station properties across all Australian states and mainland territories.
The vast majority of the company's rental income comes from the ASX-listed Viva Energy Group Ltd (ASX: VEA) which owns, operates, and supplies fuel to the Shell and Liberty service station brands in Australia.
It released FY25 results at the end of February.
The broker said the company's FY25 result was in line with guidance while FY26 guidance was ahead.
Waypoint REIT (WPR) delivered a solid FY25 result with FFO of 16.64c, in-line with upgraded guidance and FY26 outlook modestly ahead of expectations.
The portfolio continues to perform as a yield-focused vehicle, with limited near-term execution risk following the renewal of the majority of FY26 lease expiries with key tenant Viva Energy (VEA), securing ~12% rental uplift.
Upgraded outlook
Based on this guidance, Morgans upgraded the REIT to an accumulate rating (previously hold).
The broker also upgraded its price target to $2.75 (previously $2.70).
From yesterday's closing price of $2.51, this indicates an upside of 9.56%.
WPR trades at ~13% discount to NTA ($2.90) and offers a ~7% FY26F distribution yield.
