BWP Trust (ASX: BWP)

BWP Details

Uncertainty on transition of Bunnings warehouses: BWP Trust has a good chunk of its properties which are large format retailing properties, in particular, Bunnings Warehouses, leased to Bunnings Group Limited. The group’s FY17 performance entailed total revenue growth of only 1.5% while distribution was up 4.3% to 17.51 cents per unit and there was a $111.3 million or 5.1% net increase in the assessed valuation of the Trust’s property investment portfolio. However, the group has highlighted that Bunnings might vacate up to seven Trust-owned properties, and re-locate its operations in those locations to nearby ex-Masters Home Improvement properties. There is uncertainty relating to the timing of the proposed vacancies while BWP is finding alternative uses for the properties. The likely impacted properties are said to be witnessing lease expiries between November 2017 and October 2020. The group also could not leverage any acquisition opportunities on account of unmet conditions on short-term or long-term returns to the group. For FY18, BWP intends to maintain its distribution, however, rental growth from its core Bunnings Warehouse property portfolio may be impacted by any transition of warehouses to alternative uses. BWP stock has risen only 6.9% in last three months, as at November 24, 2017. Given some limitations, we put an “Expensive” recommendation at the current price of $3.13
 

BWP’s Returns (Source: Company Reports)
 

Industria REIT (ASX: IDR)

IDR Details

Growth in Net Tangible Assets: Industria REIT’s stock has moved up 18% in last six months, as at November 24, 2017, and is peaking towards its 52-week high price. The group, having $638 portfolio across 21 properties, reported for FY17 Net Tangible Asset growth of 23.6% at the back of leasing outperformance with better rent profiles and de-risking of cashflows. Funds from operations also grew 3.4%, touching the top of a previously upgraded guidance range. The group’s strategy to invest in office and industrial properties that provide businesses with better priced and well-located workspaces, is expected to deliver improved tenant satisfaction and retention. For instance, IDR’s 1 megawatt solar installation underway at Brisbane Technology Park is said to provide securityholders with a 15% yield on cost and reduce the volatility of energy charges passed onto Industria’s tenants. While the performance has been healthy, the stock’s trading scenario indicate for a slightly ‘Overvalued’ state at the current price of $2.61
 

National Storage REIT (ASX: NSR)

NSR Details

Acquisition growth: National Storage REIT, which is Australia’s largest self-storage provider that tailors self-storage solutions to over 35,000 residential and commercial customers at over 100 storage centres across Australia and New Zealand, had witnessed a healthy FY17 with support from strong portfolio acquisitions and now aims to target $100 million acquisitions for FY18 with ROE target in excess of 10%. NSR has delivered a 5.7% growth in FY17 underlying earnings per share per stapled security with a stupendous 57% rise in underlying earnings. NSR also executed $138 million of acquisitions during the year and its assets under management rose by 21% to $1.163 billion. With ongoing healthy performance, the group expects its underlying EPS to be ranging from 9.6 – 10.1 cents per stapled security. NSR stock has risen 5.8% in last one month, as at November 24, 2017. With multiple revenue streams tracking well on delivery for NSR and market drivers such as optimisation of existing warehouse spaces for online retailers specifically, we give a “Hold” on the stock at the current price of $1.565
 

EPS Growth (Source: Company Reports)

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