Why there could be hidden value in REITs right now

Here is who Bell Potter believes investors should be targeting.

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REITs (Real Estate Investment Trusts) are a listed investment vehicle that owns, operates, or finances income-producing real estate.

Instead of buying a property directly, you buy units in a REIT, giving you exposure to a professionally managed portfolio of properties.

REIT typically owns assets such as:

  • Office buildings
  • Shopping centres
  • Industrial warehouses
  • Logistics facilities
  • Data centres
  • Healthcare properties
  • Residential developments (less common)

The properties generate rental income, which the REIT collects and distributes to investors after expenses.

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Why real estate stocks and REITs are down in 2026

In 2026, the S&P/ASX 200 Real Estate (ASX: XRE) index is down almost 10%. 

There have been several headwinds affecting the sector. 

Firstly, REITs are highly sensitive to rates because they typically use debt to finance property portfolios. 

The RBA has raised rates multiple times in 2026, increasing borrowing costs and reducing the present value of future rental income streams.

Additionally, more expensive and less available financing makes it harder for REITs to acquire assets, refinance debt, or fund developments, reducing expected growth. 

Finally, as bond yields and cash rates rise, investors can earn higher returns from lower-risk assets such as term deposits and government bonds, making REIT distributions relatively less attractive. 

Despite these headwinds, a new report from Bell Potter has identified REITs that have been oversold or offer long-term upside. 

Here is what the broker is tipping. 

REITs with upside

According to Bell Potter's weekly report, several REITs are worth targeting. 

Firstly, the broker has a buy recommendation on Goodman Group (ASX: GMG). 

Its share price has been largely flat in 2026 and is currently trading at $31.20 per share. 

However, Bell Potter has a $35.50 price target, indicating a healthy 13% upside. 

The broker is also optimistic about Aspen Group Ltd (ASX: APZ). Its share price is down 14% year to date. 

Bell Potter has a 12-month price target of $6.50, which indicates roughly 40% upside. 

Finally, the broker has a buy rating on Cedar Woods Properties Ltd (ASX: CWP). 

Cedar Woods Properties shares have fallen almost 23% year to date, and now offer considerable value. 

The broker has a buy rating and $9.65 price target, indicating 46% upside from current levels. 

REITs to avoid 

While some REITs have fallen to a value, the broker has also highlighted that not every REIT is a buy-low candidate. 

The broker has a sell rating on HomeCo Daily Needs REIT (ASX: HDN), an Australian property group focused on the ownership, development, and management of Australian shopping centres. 

Bell Potter also changed its rating on Abacus Storage King (ASX: ASK) to a hold (previously buy) due to emerging pressure in the storage sub-sector.

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

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