The BWP Trust (ASX: BWP) share price has jumped more than 4% in response to the REIT’s HY25 result.
BWP Trust is a real estate investment trust (REIT) that owns dozens of properties leased to Bunnings Warehouse, which is a subsidiary of Wesfarmers Ltd (ASX: WES).
BWP HY25 result
Here are some of the main highlights from the six months to 31 December 2024 for BWP:
- Total income grew by 22.2% to $100.6 million
- Profit before revaluations up 15% to $66 million
- Revaluations of $91 million
- Net profit up 195% to $157 million
- Distributable amount increased 13.3% to $65.6 million
- Distribution per unit up 2% to $0.092
- Net tangible assets (NTA) per unit grew by 4.8% to $3.92
- Gearing increased to 21.4% (up from 17.1%)
A key driver of BWP Trust’s result was the 3.3% like for like increase of rental growth for the 12 months to 31 December 2024. This is an important driver for BWP shares, in my view.
The REIT noted that five market rent reviews of Bunnings Warehouse properties were finalised during the period, with an average 2.7% increase on the prevailing rent.
BWP said that its occupancy rate increased by 1.3 percentage points to 98.7% during the period as it “continued to make good progress in the repurposing activities in the reduced number of stores vacated by Bunnings.” It has a weighted average lease expiry (WALE) of 4.4 years.
The business also revealed that in support of profitable growth, it was agreed with Bunnings that there will be a $14 million expansion of the Pakenham location.
It’s expected to complete the sale of its Port Kennedy (WA) location in the second half of FY25.
Revaluations
During the six-month period, BWP’s entre property portfolio was revalued, with independent valuers performing the work on 13 properties and the remaining properties subject to director revaluations.
This led to a $96.4 million increase of the property value to $3.64 billion. This was helped by capital expenditure of $4.7 million.
Outlook for the BWP shares
The business said it will continue to focus on optimising the portfolio, while remaining active in assessing opportunities to grow the portfolio.
Rent reviews are expected to add to property income for the second half of FY25, with 73 leases to be reviewed to CPI or with a fixed percentage increase. There were 77 lease reviews completed in the first half.
In addition, nine market rent reviews of Bunnings Warehouses are in the process of being finalised, which are expected to be completed in the second half.
BWP expects to pay a distribution per unit of $0.0946 in the second half of FY25. That would mean the distribution yield is 5.4% at the current level.
It’s still trading at a 12% discount to the NTA at December 2024, so it could still be a good time to invest, though it’s not as cheap as it was yesterday. It’s one of the interesting ASX dividend shares to keep an eye on this year.
