ASX REITs are being hit by the declining property market, but some more than others

Nick Sundich Nick Sundich, February 8, 2023

ASX REITs are proving to be a mixed bag so far in 1HY23 reporting season. Virtually all of them are witnessing a decline in property valuations, but some are more affected than others.

 

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Two ASX REITs report today

Among ASX REITs reporting this morning, BWP Trust (ASX:BWP) was first. It is the largest Bunnings Warehouse landlord in Australia. 

On the positive side, its revenues grew 4% and its profit before gains on investment properties rose 2%, to $78.6m and $57.4m respectively. 

However, gains in the fair value of investment properties was 82% lower than the prior corresponding period, at $53.9m. As a consequence, the company’s total profit from operating activities was down 68% at $111.3m. Nonetheless, its NTA (net tangible assets) grew 5% to $3.95.

Another ASX REIT to report this morning was Dexus Industria REIT (ASX:DXI). It recorded $34m in net fair value losses on investment properties compared to an $86.7m net gain 12 months ago.

However, DXI’s net profit came in at $113.7m and was only $1.4m lower, mostly because of Jandakot Airport – which was not included in its 1HY22 results. 

 

The take home message from this morning for investors

Investors in ASX REITs should all expect an impact from the declining property market. However, the impact will vary depending on two things.

Firstly, what sector it focuses on, And secondly, whether or not there are new assets the ASX REIT may have acquired in the past 12 months that will be contributing to the result. 

 
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