Insights

These 2 ASX real estate shares could be the best way to invest in property

Brickworks is one of the leading ASX real estate shares.
The post These 2 ASX real estate shares could be the best way to invest in property appeared first on The Motley Fool Australia. –

Key points

ASX real estate shares can provide exposure to the property market
Charter Hall Long WALE REIT owns a large portfolio of commercial properties with long rental contracts
Brickworks is a leader in the building products industry, whilst also owning other assets with growth potential

Financial experts often talk about different asset classes like shares and property. But there are a number of ASX real estate shares out there that might be better options than property.

In other words, the ASX share market can provide exposure to real estate investments so investors can directly or indirectly profit from property.

With that in mind, here are two ideas:

Charter Hall Long WALE REIT (ASX: CLW)

This is a real estate investment trust (REIT) which owns commercial properties. Those properties are predominately leased to corporate and government tenants on long-term leases.

It’s invested in a number of core sectors like office, industrial and logistics and retail.

At the latest count its portfolio amounts to around 550 properties, with an occupancy rate of more than 98% and a property value of $7 billion. Its weighted average lease expiry (WALE) is more than 12 years, providing substantial income visibility and stability.

It has in-built growth with its rental contracts, providing growth for its rental profit and distributions.

The ASX real estate share is experiencing ongoing valuation growth thanks to the current environment, including the low interest rate. In its December 2021 update, the business saw an 8.1% rise of the property valuations on paper.

This update meant the net tangible assets (NTA) per unit grew 14.4% to $5.85. The current Charter Hall Long WALE REIT share price is around 15% less than the NTA.

Ord Minnett currently rates it as a buy with a price target of $5.46. It’s expecting the business to pay a distribution yield of 6.3% in FY23.

Brickworks Limited (ASX: BKW)

This real estate ASX share provides domestic housing exposure through its Australian building products business. It has a number of businesses including Austral Bricks, concrete products and Bristle Roofing. It has 28 manufacturing sites and more than 45 design centres and studios across the country.

Brickworks is a 50% shareholder in an industrial property trust with gross assets of more than $2.5 billion and a long development pipeline. One project, which is scheduled to essentially be done by now, is a big new distribution warehouse for Amazon in Sydney.

The company has expanded to North America and has established itself as the largest brickmaker in the northeast of the US.

It also has a major shareholding in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which is a leading listed investment conglomerate.

The real estate ASX share’s normal dividend has been maintained or increased every year since 1976. That’s 45 years of stability. Brickworks says it’s proud of its long history of dividend growth, and the stability this provides to shareholders.

Brickworks recently announced it had purchased 121 hectares of land at Bringelly in South West Sydney to be used as a clay resource to support Austral Bricks. Brickworks is also selling 75 hectares of land at Oakdale East where a brick plant is located into the property trust. This will extend the development pipeline in order to meet the unprecedented demand for industrial development.

It’s rated as a buy by the broker Ord Minnett, with a price target of $26.20.

The post These 2 ASX real estate shares could be the best way to invest in property appeared first on The Motley Fool Australia.

Should you invest $1,000 in Charter Hall Long WALE REIT right now?

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More reading

An ASX XI to take on the world

Why Brickworks (ASX:BKW) shares are an ASX dividend favourite

Citi rates these 2 ASX dividend shares as buys

What’s the outlook for the Brickworks (ASX:BKW) share price in 2022?

Are these 2 excellent ASX dividend shares buys in January?

Motley Fool contributor Tristan Harrison owns Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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