Australia Real Estate Investment Trusts (AREIT) or Listed Property Trusts (LPT) make up one of the largest sectors on the Australian Stock Exchange. The total market capitalisation of the sector rivals the Banks and Resource stocks.
For most investors it is unfeasible to own commercial assets by it self or it would not be efficient from a portfolio diversification perspective. REITs allows individual investors to gain exposure to direct real estate assets in their portfolio.
While Australian investors love invest in property. REITs is one of the most accessible means for individual investors to gain exposure to Commercial Real Estate. It is also tax efficient. REIT Distributions does not have franking credits because the income is not taxed if its paid out to investors.
We have compiled a list of Real Estate stocks that are listed on the ASX. List of REITs also include some Real Estate sector specialists and Developers for completeness.
|AREIT Name||ASX Symbol||Investment Strategy|
|360 Capital Industrial Fund||TIX||Industrial|
|360 Capital Group||TGP||Real Estate Fund Manager|
|360 Capital Office Fund||TOF||Office - Metro|
|ALE Property Group||LEP||Retail - Pubs|
|Apn Property Group||APD||Real Estate Fund Manager|
|Asia Pacific Data||AJD||Data Centre|
|Astro Jap Property||AJA||Japanese Real Estate|
|Aventus Retail Fund||AVN||Retail - Bulk Goods|
|BWP Trust||BWP||Retail - Bulk Goods|
|Carindale Property||CDP||Retail - Shopping Centre|
|Centuria Metro REIT||CMA||Office - Metro|
|Charter Hall Group||CHC||Real Estate Fund Manager|
|Charter Hall Retail||CQR||Retail - Neighbourhood Centres|
|Cromwell||CMW||Office / Real Estate Fund Manager|
|Dexus Property Group||DXS||Office - Core / Core Plus|
|Elanor Investors||ENN||Real Estate Fund Manager|
|Folkestone Limited||FLK||Real Estate Fund Manager|
|Galileo Japan Trust||GJT||Japanese Real Estate|
|Garda Div Prop Fund||GDF||Diversified|
|Gateway Lifestyle||GTY||Manufactured Housing|
|GDI Property Grp||GDI||Office / Real Estate Fund Manager|
|Generation Healthcare REIT||GHC||Healthcare|
|Goodman Group||GMG||Industrial / Real Estate Fund Manager|
|Gpt Metro Office Fnd||GMF||Office - Metro|
|Hotel Property||HPI||Retail - Pubs|
|Ingenia Group||INA||Manufactured Housing / Tourist Parks|
|Investa Office Fund||IOF||Office - Core / Core Plus|
|Lendlease Group||LLC||Developer - Diversified|
|Lifestyle Communities||LIC||Retirement Village|
|Mirvac Group||MGR||Office / Residential Developer|
|Rural Funds Group||RFF||Agricultre|
|SCA Property Group||SCP||Retail - Shopping Centre|
|Scentre Grp||SCG||Retail - Shopping Centre|
|Stockland||SGP||Retail / Developer|
|Sunland Group Ltd||SDG||Developer - Residential|
|Vicinity Centres||VCX||Retail Diversified|
|Villa World Ltd.||VLW||Developer - Residential|
|Westfield Corp||WFD||Retail - Shopping Centre|
Listed Property Trusts Asset Classes
Each segment and assets within segments has its own risk and reward profile.
Office – Core and Core plus office can be considered the blue chip Commercial Office buildings.The best Prime and Grade A Office properties are tightly held and rarely traded on the market.
Dexus, GPT and Mirvac can be considered the major players in the Core Office Real Estate Investment segment and owns some of the best Offices in Australia. Metro Office funds focus on suburban Office assets.
Industrial – Assets included in this sub sector include Warehouses, Logistic Centres and in some instances even business parks. Growth in industrial rents are linked to overall economic activity, rollout of ecommerce retailers and limited land supply in key industrial markets.
Retail – Retail assets can range from Prime Shopping centres like Scentre, operator of Westfield in Australia to Charter Hall Retail Trust and SCA predominantly owns neighbourhood shopping centres.
Developers – REITs are rent collection vehicles which pass on the rents it collect to its investors. Developers on other hand aim to profit from turning empty lots to something worthwhile.
Large commercial developers like Lend Lease and CIMIC are diversified across sector and geography. Mirvac provides Office and Residential exposure. Westfield focus just on Shopping Centres internationally.
Listed residential developers like Mirvac and Stockland primarily focus on Apartment and Master Planned Communities.
Real Estate Fund Manager – These are listed Funds management platforms. Earnings are based on the base and performance fees it charges in the property funds it manage.
Specialist REITs – Specialist REITs invests in niche properties that are suited for particular sector. These include healthcare, childcare, Data Centres, Storage and Hotels. While the US REIT market can support number of specialist REITs within the same sector. There are limited comparables within each niche due to limited asset availability for competitor funds to gain scale.
Australian REITs were burnt pre GFC investing in international assets. Most can invest overseas but due to investor pressure only owns Australian assets.
REIT Distributions (LPT Distributions)
Investors love REITs due to the income heavy nature of the asset class. Trusts by law have to distribute between 90% to 100% of its earnings. Hence it is a typical long duration asset that are mainly sought by for its steady cashflows.
Australian company dividends have franking credits is tax has already being paid. AREIT distributions do not have franking credits because income are not taxed at the trust level. A trust governs the relationship between the Trustee and the individual investors. In the simplest sense, trusts collect the income and pass it onto the investors.
Distributions are taxed on the individual tax rate. REIT distribution also included a tax deferred component. Tax deferred component represent the return of capital rather than income. This exist because as REITs collect income, the manager can decide if the payments made to its owners are the income collected or capital the investor put in.
A tax deferred portion of the distribution means that portion is a return of capital. Tax is not payable but the investors reduce the cost basis of the units owned.
Tax Deferred Distribution
If REIT distributes 10 cents, with 5 cents as tax deferred with investors cost base of the share as $1. Followed in the distribution, 5 cents is taxable as income and the cost basis of the investment falls by 5 cents to 95 cents.
Investing in REIT
The income stream of a real estate investment trust is typically measured verses 10 year bond. Hence overall returns in the short and medium term can be influenced by interest rate expectations.
REIT ETFs are listed Exchange traded funds which invests in a portfolio of REITs. Similar to AREITs, these are passive investment funds which aim to track the index. It does not take active risk e.g stock selection. It just owns the sector.
It is important to note that there is a large portion of Commercial Office assets not held on listed real estate investment funds. Long term investors like Super Funds have dedicated portfolio allocation to Real Estate and there are huge portion of the sector in unlisted funds.