The S&P/ASX 200 A-REIT (INDEXASX: XPJ) index has fallen this week, down about 2.5% over last week's levels. A-REITs (or Australian Real Estate Investment Trusts) are still doing very well in 2019 so far, with the XPJ index recording a 19% rise YTD on today's figures. REITs have significant tailwinds behind them at this point of the economic cycle.
With renewed expectations the Reserve Bank of Australia will cut interest rates tomorrow, REITs are likely to keep receiving attention over the next few months.
Here's how the major A-REITs have moved over the past week:
Stockland Corporation Ltd (ASX: SGP)
Stockland (with its 9% weighting on the XPJ) is largely responsible for the index's negative movements this week. Stockland shares went ex-dividend on Thursday, resulting in the stock price falling 4.29% (which incidentally is smaller than the 6.56% Stockland is currently yielding). This was not aided by Citi issuing a sell rating on Stockland shares, citing continuing concerns about the future of retail property. Stockland shares close today trading for $4.22.
Goodman Group (ASX: GMG)
Goodman shares are relatively flat for the week, closing today at $15.25. Goodman, with an index weighting of 18% is the largest A-REIT in the XPJ index. Goodman shares are still looking expensive, with a current price-to-earnings ratio of 25.8 and a running yield of 1.67%.
Scentre Group (ASX: SCG)
Scentre shares are holding last week's gains and close trading today at a price of $3.88. Although Scentre is flat on a week-to-date basis, the shares did spike up to $4.02 on Friday after Goldman Sachs issues a buy rating for the stock and lifting its price target to $4.72. Scentre holds a 17% weighting in the XPJ index and is running on a yield of 5.6%.
Vicinity Centres (ASX: VCX)
Vicinity shares are down over 5% week-to-date, despite there being no major news from this shopping centre renter. Vicinity is now approaching its 52-week low of $2.42 after a volatile 2019 so far. Only a month ago, VCX shares were going for almost $2.70, so it might be some institutional adjusting going on with Vicinity (which can happen at this time of year). Vicinity has a 7% weighting in the index and is yielding 6.46% on current prices.
Foolish takeaway
Despite the ructions happening over the past week in the A-REIT space, I continue to expect further upside in the sector, especially if rates come down again tomorrow. It remains an interesting spot to watch in 2019.
