3 reasons why this top ASX 200 REIT is a buy

详细摘要

This property giant looks like a big bargain, in my view. The post 3 reasons why this top ASX 200 REIT is a buy appeared first on The Motley Fool Australia.

The S&P/ASX 200 Index (ASX: XJO) real estate investment trust (REIT) Charter Hall Long WALE REIT (ASX: CLW) looks to me like one of the best buys in the property sector. It may be one of the best overall picks in the ASX 200 as well.

As the above chart shows, it's down 18% over the past year. It has declined around 35% since April 2022.

The last five years has seen elevated inflation and a significant rise in central bank interest rates to deal with that inflation. In this economic environment, with a hefty fall of the Charter Hall Long WALE REIT unit price in the last five years, I think it's the right time to invest for three reasons.

One of the easiest ways to value an ASX 200 REIT is by looking at its net asset value (NAV) or net tangible assets (NTA).

The NAV or NTA reflects the underlying value of the business if you combine the value of all the properties, the loans, the cash, and other assets and liabilities.

I think it's a useful measure of how much the business is actually worth, as long as there are regular independent valuations of the properties.

Every REIT should tell investors about its NTA or NAV at the half-year and full-year result. If the unit price (share price) is trading significantly under the NTA, then I'd say it's a clear bargain.

In August, it reported its FY26 results for the 12 months to 30 June 2026. It reported a NTA of $4.71 as of June 2026. At the time of writing and at a unit price of $3.52, it's trading at a 25% discount to its latest NTA.

I believe that discount could noticeably close once interest rates start coming down. I'd guess that could happen in late 2027 or 2028, but time will tell. Hopefully it's sooner rather than later.

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