Aussie industrial REIT stocks face volatility on likely valuation decline - Citi

Goodman

13/12/2023 18:33

** Australian real estate firms with exposure to
industrial/logistics assets are likely to face volatility in
December on potential valuation declines, analysts at Citi wrote
    ** Adds Goodman Group  GMG.AX , Charter Hall Group  CHC.AX ,
Dexus  DXS.AX , Scentre Group  SCG.AX , Charter Hall Long WALE
 CLW.AX , GPT Group  GPT.AX , Mirvac Group  MGR.AX  and
Growthpoint Properties Australia  GOZ.AX  among exposed to
volatility
    ** Says "lack of transaction evidence" resulted in valuers
moving towards a discounted cash flow approach for valuation -
resulting in lower valuation for long-lease assets
    ** Brokerage says REITs with longer WALEs - average lease
terms - likely to see largest downside to their industrial book
values
    ** Long lease assets likely to be worst hit given
uncertainty of future rental income with long-dated rental
reviews - Citi
    ** Continues to prefer GMG despite potential weakness given
potential offsets from growth in development earnings driven by
data centres
    ** Says GMG's globally diversified portfolio and shorter
WALE across most regions will work in its favour
    ** Warns of risks to CHC and CLW in near term given
longer-than-peer industrial WALEs
    
           Company              RIC      Price Target   Rating
                                             (A$)       
     Charter Hall Group        CHC.AX       14.00         Buy
 Charter Hall Long WALE REIT   CLW.AX        4.00       Neutral
            Dexus              DXS.AX        8.20       Neutral
       Goodman Group           GMG.AX       25.50         Buy
          GPT Group            GPT.AX        4.90         Buy
   Growthpoint Properties      GOZ.AX        2.70         Buy
          Australia                                     
        Mirvac Group           MGR.AX        2.50         Buy
        Scentre Group          SCG.AX        2.95       Neutral
 
 (Reporting by Sameer Manekar in Bengaluru)
 ((Sameer.Manekar@thomsonreuters.com; Twitter: https://twitter.com/sameer_manekar))