ASX top yielding property trusts (AREITs, LPTs)

The March 2020 market drop has many investors chasing the high yields in the reliable Property sector. Since the Australia Government’s announcements of locking down restaurants, cafes, cinemas and other businesses however, the ASX has seen a plethora of updates from Property Trusts.

Many have removed FY20 guidance as well as reducing or cancelling their dividends.

We separate the weak from the strong in a table of top yielding ASX Property Trusts/ AREITs (Australian Real Estate Investment Trusts).

Property Market conditions:

- Essential services remain open such as anchor tenants Coles, Woolworths and Aldi - Reportedly sales are 20-30% above peak periods

- Pharmacies and discount stores are reportedly thriving

- Petrol stations are reportedly seeing increased sales within stores

- Restaurants and cafes are struggling with take-away only

- Retailers are apparently seeing reasonable sales from increased foot traffic, although most expect this to be a peak before a significant trough. Many with international supply chains have limited stock of high demand items.

- Property sales are expected to fall. Auctions and open house inspections have been cancelled. Property developers have been hit hard

- Commercial and industrial LPTs (Listed Property Trusts) are varied dependent upon the nature of the tenants

Yield Hunting:

When hunting for yield on the ASX, the first step is to review the dividends paid over the last 12 months as a fraction of the current share price – that’s Historical Yield. In March 2020, that calculation is a dangerous one to make.

Market conditions are changing quickly. Many of the ‘top yielding’ property trusts have reduced or cancelled their dividends, which does not show up on the Historical Yield calculation – and that is only a month or two after reaffirming guidance in February 2020.

Strong vs Weak:

The critical difference is to read the details of the Property Trust’s updated guidance to see whether they have confidence in their balance sheet, debt covenants, tenants and ability to pay distributions, or dividends.

Below are the top yielding AREITs and a summary of their recent updates to market. Note that some are yet to provide an update in the last month since the lockdown restrictions have been announced.

Note the Green in the far-right column are the companies that have recently reaffirmed guidance. Some have also seen their own directors buying units (shares).