BWP Trust [ASX:BWP] is a property trust that owns a whole lot of Bunnings Warehouse land and premises. They posted their annual report and full-year results this morning. The report was full of good news for investors.
Investors will get a final dividend of $0.0817 per share. This takes total dividends up to $0.1584 for the year. That’s up 7.7% compared to the same time last year. But it seems this dividend news didn’t move the market. At the time of publication, the the Trust’s share price was down 0.9% at $3.29.
Source: Google Finance
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Revenue was up 14% on last year, from $127.4 million to $144.9 million. Profit before gains on investment properties was up 10%, from $92 million to $101.6 million.
Perhaps the most exciting part was the capital gain. The gains in the fair value of all BWP’s properties was up a whopping 90%. Last year, the portfolio achieved a $149 million gain. This time, it was more like $210.1 million.
The Trust reviewed rents on 20 store sites over the last financial year. The average rent went up 8.2% at each of these sites.
At the moment, the Trust has about 80 different Bunnings properties in their portfolio. They’re changing the focus of the portfolio to suit shifting risk/return characteristics. For example, in the last year, they got rid of six ‘non-core’ properties. But they also completed five new developments, in key areas including Manly West in Sydney, and Maribyrnong in Melbourne.
At the moment, BWP chairman John Austin expects the Trust will get most of its income growth from higher rents. In his letter to investors, he said ‘Looking forward, the Trust expects further rental growth from its existing property investment portfolio, and from the full year rental contribution of properties acquired for which development was completed during the 2014/15 financial year.’ They’ll also be on the lookout for more sites, but they’re cautious about overinvesting. ‘The Trust will remain active in seeking out acquisition opportunities, however, property investment activity is expected to continue to be competitive in the current year, which may limit opportunities for asset purchases, in the near term,’ said Mr Austin.
Compared to some other real estate investment trusts (REITs), BWP is still pretty affordable. And if the strength of Bunnings is anything to go by, it’s got plenty of room to grow. That’s part of the reason why BWP is one of the property plays suggested by Money Morning publisher Kris Sayce in his exclusive report.
‘The Three Best Investments in Australia for 2015 and Beyond’ is available here for free. In this report, Kris explains how you can gain exposure to different property markets via the ASX. Read this report and you’ll also discover two more hot opportunities that Kris believes will yield impressive results throughout this year and in to the next.
The future of the Trust is looking pretty good. At the moment, they’ve got 100% occupancy, with an average lease expiry date of six and a half years from now. That’s not something that the average investor can get from residential property investment. Combine that with the impressive jump in value, and you’ve got a compelling reason to look closer at investing in property via the ASX. Don’t forget to find out how to download your free copy of Kris’s report, and read more.
Contributor, Money Morning