Is the REIT Boom Back? APN Industria Shares Lift on New Acquisition
With record low interest rates and easing lending restrictions, Aus property is back in the mix.
It seems that Aussies are finally looking beyond the pandemic, with house prices across the board either lifting or at the very least, stopped falling.
However, when it comes to industrial property and related REITs, the market never really left. Despite a few blips here and there, e-commerce has kept turnover high. With plenty of demand and deals still being executed.
Take APN Industria REIT [ASX:ADI] for instance.
After the ADI share price plummeted in the March crash, it has been steadily recovering. Clawing its way back to its February highs. And today, news of a new acquisition has helped deliver a 3.14% gain for shareholders.
APN divulged a new $16 million deal for a 10,230 square metre warehouse in Rowville. A site that is currently occupied by CMW Homewares with three years of the lease remaining.
But APN is confident that this deal will present great future value. With a 5.75% capitalisation rate in terms of the purchase price, but a 5.1% initial yield. A figure that the company will be looking to improve upon in coming years, no doubt.
As Fund Manager, Alex Abell, comments:
‘This acquisition continues the delivery of our strategy of growing through selectively acquiring assets that are high quality and located close to key infrastructure, with the ability to add-value.
‘Post acquisition, gearing will be 31%, the bottom end of the 30-40% target gearing range, and providing meaningful capacity to fund further investments we anticipate over the coming months.’
So, not only has APN perceivably scooped up a deal, they’re still on the hunt for more property targets as well.
Needless to say, it seems to be a prosperous time for well-run REITs — at least for those with an eye for long-term value and opportunity.
Something that any property investor, whether via REIT or of their own volition should be paying heed to.
Boom or bust?
As the local economy continues to recover post-pandemic, property looks to be one of the biggest winners. Especially relatively to the overwhelming doom and gloom spread earlier in the year.
Any signs of a major crash now seem like a fantasy. Demonstrating once again just how resilient the local market for property has become.
Indeed, our resident expert — Catherine Cashmore — sees a huge boom coming. One that will likely eclipse even the astounding performance of past years. All in the lead up to the real crash in 2026.
It’s all part of a much bigger cycle. Which you can learn about in our latest report, right here.
For The Daily Reckoning Australia