The ASX property sector is expected to rebound in 2025. And that could be positive for ASX 200 real estate investment trusts (REITs).
Two names have just reported their H1 FY25 numbers today, and the market is reacting positively.
These are Centuria Industrial REIT (ASX: CIP) and Ingenia Communities Group (ASX: INA). Both stocks are in the green today, so let's take a closer look at what they posted for the first half.
Image source: Getty Images
ASX 200 REITs book solid H1 numbers
The first ASX 200 REIT is Centuria Industrial REIT. It reported $56.6 million in funds from operations (FFO) in the first half, which translated to FFO per unit rising to 8.9 cents.
It also declared a distribution of 8.1 cents per unit.
Its portfolio continued to expand, now claiming 79,000 square metres of new leases signed, with re-leasing spreads averaging 50% "across 13 lease deals".
The ASX 200 REIT also saw a $47 million valuation gain across its properties.
Centuria left the half with a 33.5% gearing ratio, with 85% of its debt hedged against interest rate fluctuations.
Management reaffirmed its FY25 guidance, calling for an FFO of 17.5 cents per unit and a distribution target of 16.3 cents per security.
Meanwhile, Ingenia Communities put up a reasonable set of numbers for H1 FY25 today.
The company reported a 21% increase in revenue to $256.9 million, while pre-tax earnings surged 48% year over year.
This saw earnings per share (EPS) rise 58% to about 17 cents.
Management said a driver of this growth was the 258 new homes settled in the first half, a 47% increase from last year.
The company now has 5,225 development sites in progress as part of its "extensive pipeline".
The ASX 200 REIT also popped back in January when it raised its FY25 guidance, calling for 20% to 23% growth in pre-tax profit to $165 million at the upper end of the range.
Management reaffirmed this guidance in today's update.
REITs set to run higher?
It's been a difficult period for the ASX 200 REIT space these past few years. First, COVID-19, then the so-called 'work from home' (WFH) trend, both of which hit the segment.
But that could all be set to change from 2025.
According to global Real Estate company CBRE Group Inc, the Australian housing market is set to grow this year.
CBRE notes that the Australian economy is projected to grow by around 2% this year, with "scope for three interest rate cuts". This, it says, should flow positively to the housing market.
We forecast +15% growth in investment volumes in 2025. Investors have indicated net buying intention and assets such as Office are trading at 30% below replacement value. The yield tightening cycle should commence in 2025.
The majority of lenders that we survey have also indicated a willingness to grow their commercial real estate exposures.
CBRE isn't alone, either. As reported in The Australian, investment bank JP Morgan sees value in the sector this year.
As my colleague Tristan noted, the firm is joined by Citi, which reckons now might be the time for ASX 200 REITs to perform.
Foolish takeout
These 2 ASX 200 REITs are catching a bid today after posting their results for the first half of FY25.
Zooming out, Centuria is down 10% in the past year, with Ingenia up 18% in the same time.
