The S&P/ASX 200 A-REIT (INDEXASX: XPJ) index is up 3.27%, week-to-date, as last week's interest rate cut spurs renewed interest in income-producing assets like real estate investment trusts (REITs).
Investors chasing yield are continuing to show interest in the Australian REITs (A-REITs) as well as traditional dividend-paying companies like Commonwealth Bank of Australia (ASX: CBA). REITs also provide some diversification to an income-orientated portfolio and investors are clearly appreciating the earning streams that property trusts can provide.
Let's take a look at how the big A-REITs are faring this week.
Stockland Corporation Ltd (ASX: SGP)
Stockland shares have bounced back after last week's ex-dividend dip, with SGP shares up 4.5% since last Monday. This has all but erased Stockland's 4.29% drop after going ex-dividend and then some. Stockland is one of the more diversified REITs on offer, with the company owning interests in retirement villages, shopping centres, housing estates and industrial parks. Stockland has a 9% weighting on the XPJ index and is currently yielding 6.27%.
Goodman Group (ASX: GMG)
With its 18% weighting on the XPJ, Goodman is the REIT that dominates this index. Saying this, Goodman has had a positive week, with GMG shares up around 2%. Given that Goodman has already appreciated by almost 45% YTD, I expect this REIT has the least upside going forward, and its current yield of 1.64% supports this thesis (in my opinion).
Scentre Group (ASX: SCG)
Shares of this former Westfield star were up 4.9% for the week, although Scentre has been one of the more volatile A-REITs in 2019 so far, with the share price see-sawing between $3.68 and $4.13 over the last 3 month alone. Scentre owns all of the Westfield shopping centres in Australia and New Zealand and investors are clearly seeing the appeal this week. Scentre has an XPJ weighting of 17% and is yielding 5.35% on current prices.
Vicinity Centres (ASX: VCX)
Vicinity shares have regained last week's 5% fall to be right back where they were two weeks ago. VCX shares closed yesterday's trading at $2.64 after hitting the $2.45 level as late as last Friday. Although Vicinity only has a 7% weighting on the XPJ, VCX shares are yielding a healthy 6.12% on current prices.
Foolish takeaway
With interest rates continuing to fall, there is bound to be renewed interest in A-REITs going forward. With the end-of-financial-year volatility looking to have subsided in the XPJ index, there looks to be continuing upside in REIT demand going forward.
