It’s been a hectic couple of weeks for REITs.
Both the market and investors are still trying to make heads or tails of the commercial property landscape. Especially the discrepancy between retail and industrial assets.
For Scentre Group [ASX:SCG] this is something we discussed a few months ago. Such as this article from May.
Back then; we could see the makings of a retail dilemma. An outcome that could see Scentre struggling compared to some of their more industrial competitors. Like Goodman Group [ASX:GMG] for example.
Today, it seems that call was spot on.
Results still to come, but expectations laid bare
Scentre has confirmed that it will release results for the six-month period to 30 June, later this month. On 25 August to be exact.
However, while those results are still subject to audit and review, the early signs aren’t great. Which is precisely why Scentre has chosen to dim expectations ahead of time.
As of right now, it looks as though their net cash flow for the period will be roughly $250 million.
A result that is a far cry from the $629.1 million they managed during the same period last year.
On top of that, they’ve also flagged a 10% decrease in their total portfolio valuation. All of which has been levelled at the impact of the pandemic.
Needless to say, the retail hit has been felt hard. And with the virus far from eradicated, there may be more pain to come.
Two-speed property market
For shareholders, that pain is already a grim reality.
After falling all the way down to $1.35 amidst the March sell-off, Scentre had a strong bounce back. Climbing all the way back to around $2.70 by early June.
Since then though, the stock has been falling once again. Slowly coming to terms with the fact that retail is suffering right now.
As previously mentioned, this is in stark contrast to the boom of Goodman.
Once again highlighting the incredible difference between retail and industrial assets. A sign of just how divisive the property market is at the moment.
It’s a similar story for the residential market as well. With plenty of ups and downs across the board. But, if you know where to look, there are potential bargains to be found. In fact, you might be surprised by some of the suburbs that are screaming ‘buy’ right now.
For Profit Watch