With a market value of roughly $2 billion, BWP Trust (ASX: BWP) – formerly "Bunnings Warehouse Property Trust" – invests in commercial real estate throughout Australia. As the previous name suggests, most of its properties are leased to Bunnings Warehouse, which is owned by Wesfarmers Ltd (ASX: WES).
BWP Trust has generated a solid stream of income and capital growth for long-term investors, with the shares rising another 0.7% today following its half-year earnings report.
The property trust announced a 4.9% increase in rental income to $74.7 million, compared to the prior corresponding period, driven mostly by rental growth from its existing property portfolio, while new stores and store expansions also contributed to the end result. Like-for-like rental growth rose 2.5% for the 2015 calendar year.
What's more, the group's entire investment property portfolio was revalued during the six-month period: 11 were revalued by independent valuers, while the remaining 71 were revalued at the directors' discretion.
BWP Trust reported a net revaluation gain of $173.5 million at 31 December 2015, taking its full-year net profit to $226.8 million. Excluding that figure however, its earnings rose 8.6% compared to the prior corresponding period to $53.3 million with the directors declaring an 8.3 cent dividend per share as a result, representing an 8.1% increase from last year.
Although the shares have had a volatile 12 months or so, they have risen strongly over the last five years and still appear to represent decent value for investors. Not only do they have a strong primary tenant in Bunnings Warehouse, they also offer a 5.4% dividend yield which is particularly compelling in this low interest rate environment.
