The S&P/ASX 200 A-REIT Index (Index:^AXPJ) (ASX: XPJ) has risen this week over last week's levels and it seems A-REITs (Australian Real Estate Investment Trusts) remain an attractive growth area for investors seeking yield. Week-on-week, the XPJ index is up 1.89% and 23% since the start of the year.
Let's take a look at how the big ASX REITs are faring this week:
Goodman Group (ASX: GMG)
Goodman has had a bumpy week, with GMG shares rising up to $15.38 on Friday afternoon before being hit with a downgrade by investment bank Goldman Sachs – who think Goodman shares might be a touch overvalued. This slapped GMG shares back down to finish trading on Monday at $14.96 – a similar level to last week. With a price-to-earnings (P/E) ratio sitting at 25.3 and a running yield of 1.7%, it's easy to see where Goldman is coming from.
Scentre Group (ASX: SCG)
Scentre has had a very nice week, with SCG shares up 3.54% over last week's levels to finish trading on Monday at $4.10. Looking much cheaper than Goodman, Scentre has a current P/E ratio of just 9.54 and a running yield of 5.3%. In my view, investors remain wary of any REIT with a base in retail shopping and as such are pricing Scentre at a discount. Scentre's strong performance this week has likely underpinned the XPJ index's rise.
Vicinity Centres (ASX: VCX)
Vicinity tells a similar tale to Goodman, with a Friday spike and a Monday slump. VCX shares start this week at a similar level to last week, closing on Monday for $2.62. Vicinity is also trading with a P/E ratio under 10 (8.38 in this instance) and offers a running yield of 6.16% – also reflecting the retail shopping centre base on which it sits.
Rural Funds Group (ASX: RFF)
Although Rural Funds is a smaller REIT, it makes the cut today after posting a 2.17% weekly gain to close Monday at $2.35. Rural Funds is a REIT specialising in agricultural land and currently offers a 4.11% yield at a P/E ratio of 16.86. It appears as though investors are loving the defensive nature of agricultural land and are taking a shine to RFF shares as a result.
Foolish Takeaway
Although it is clear that REITs are very much 'in vogue' in this era of record-low rates, investors are clearly expressing a preference for non-retail REITs. This is understandable (Amazon is a scary competitor after all), but there are diamonds in the rough too. I think Scentre for instance, is offering an attractive set of numbers at the current price.
