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BWP (ASX:BWP) HY21 report: Is it a good ASX dividend share?

BWP Trust (ASX: BWP) has released its FY21 half-year result to the market. Is it a good ASX dividend share?

This is a property business that owns a large number of Bunnings Warehouse properties and leases them to Wesfarmers Ltd‘s (ASX: WES) Bunnings.

BWP HY21 report

BWP reported that its HY21 revenue was essentially flat at $76 million.

Profit before gains on investment properties was also essentially flat at around $57 million. That was despite an increase of like for like rent of 2% for the 12 months to 31 December 2020. There was $404,000 of rent abatements provided to tenants impacted by the COVID-19 shutdowns.

However, the property business experienced an $87 million gain in the value of its investment properties. That led to a 5% increase in the net tangible assets (NTA) per unit/share to $3.20. This represents the underlying value of the property trust.

Thanks to the growth of the value of the properties, net profit increased by 6% to $144 million.

BWP ended the period with a weighted average lease expiry (WALE) of 4.3 years with 97.4% leased.

The gearing ratio, which is debt compared to total assets, was 17.8% at 31 December 2020. This is pretty low for the real estate investment trust (REIT) sector.

There were no properties acquired or divested during the period. However, it has entered into an unconditional contract of sale to sell the ex-Bunnings Warehouse property at Underwood in Queensland to an unrelated third party for $16 million with settlement scheduled in May 2021.

BWP distribution

BWP announced an interim distribution of 9.02 cents per unit, which was in line with the previous corresponding period.

Outlook and summary thoughts

There are upcoming rent reviews that are expected to contribute to property income in the six months to 30 June 2021. There are 41 leases to be reviewed to CPI inflation or by a fixed percentage increase during the second half of FY21.

BWP Trust currently has a distribution yield of 4.25%. That’s not bad I suppose, in this low interest rate era. There’s going to be a shift to online shopping over time, will the Bunnings Warehouse properties be the places for e-commerce sales and pickup? If so, BWP could be a solid long term option. If not, then it may not be a good long term idea for income.

There are other ASX dividend shares I like more such as Brickworks Limited (ASX: BKW) which actually has e-commerce warehouse exposure with Amazon soon becoming a tenant at a major warehouse property.

Instead of BWP, I suggest getting a free Rask account and accessing our full stock reports. Click this link to join for free and access our analyst reports.

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