Is the Viva Energy REIT share price a buy?

The VIVA Energy REIT Ltd (ASX: VVR) share price is trading at 52-week highs and is up 26.5% in 12 months. Is it a buy?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The VIVA Energy REIT Ltd (ASX: VVR) share price has climbed 2.02% higher to hit a 52-week high of $2.53 in Tuesday afternoon trade. The REIT has seen its share price grow by 26.5% over the last 12 months and 12.5% since the beginning of 2019. 

What is VIVA Energy REIT?

Viva Energy REIT is an Australian REIT group that owns a high-quality portfolio of service stations around Australia. The company has a market cap of around $1.92 billion. As a stapled entity, VIVA Energy REIT shares provide investors with one share in Viva Energy REIT Ltd and one unit in the Viva Energy REIT Trust.

Buying shares in a company like Viva Energy REIT provides investors with exposure to commercial property without the complications that come with direct property ownership.

With a portfolio of 437 Shell-branded service station properties around Australia, VIVA Energy REIT's properties are typically operated by Coles Group Ltd (ASX: COL) as Coles Express service stations.

Based on the latest consensus data published on 20 March, Viva Energy REIT is classed as a strong buy with three analysts currently classifying the company as a buy, and one analyst classifying it as a hold.

How does VIVA Energy REIT compare to other Australian REITs?

VIVA Energy REIT's performance is on par with other big Australian REITs including Scentre Group (ASX: SCG), Shopping Centres Australasia Property Group Re Ltd (ASX: SCP), Unibail-Rodamco-Westfield (ASX: URW), and Vicinity Centres Re Ltd (ASX: VCX).

The company's current P/E ratio is 10.97 – compared to the market average P/E ratio of 14.80 and the sector's average P/E ratio of 15.7.

VIVA Energy REIT's P/E growth is 0.00 compared to 1.11 for the market and 1.45 for the sector. A P/E growth ratio of less than 1 generally means a stock is undervalued and it could be a good time to buy. This is good news for investors looking at VIVA Energy REIT as a buy opportunity.

So, is Viva Energy REIT a buy?

A look at VIVA Energy REIT's majority shareholders demonstrates that the company is owned by some of the worlds largest financial institutions.

Viva Energy REIT's five largest substantial shareholders include Viva Energy Australia Group (38.04%), HSBC Custody Nominees (Australia) Limited (15.38%), JP Morgan Nominees Australia Limited (13.09%), BNP Paribas Nominees Pty Ltd (4.41%), and Citicorp Nominees Pty Limited (4.37%).

In the company's HY18 results released in August 2018, it was reported that Coles Express' revenue has grown at a compound annual growth rate (CAGR) of 5% since Viva Energy REIT and Coles Express formed its alliance in 2003. This alliance will go until 2024 with the possibility of a 5-year extension.

The Petrol and Convenience industry is an $8.4 billion market in Australia, growing between 3.4% and 4.5% per annum for the 5 years to 2017.

On the back of Viva Energy REIT's attractive P/E growth ratio, its alliance with Coles Express and the steady growth of the Petrol and Convenience industry in Australia now could be a great time to buy Viva Energy REIT shares.

No, this isn't a tech unicorn stock that could soar by year-end, but it's a great way to get exposure to commercial property in an industry that sells some of our household essentials.

Motley Fool contributor Nicola Smith has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET. The Motley Fool Australia owns shares of Shopping Centres Australasia Property Group. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on REITs

An Australian farmer wearing a beaten-up akubra hat and work shirt leans on a fence with livestock in the background and a blue sky above.
REITs

Why is the Rural Funds share dropping today?

This may be the reason investors are exiting Rural Funds.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
REITs

Want the latest quarterly dividend from Rural Funds? You'd better hurry

Here's what you need to do to secure the latest dividend from this income stock.

Read more »

An industrial warehouse manager sits at a desk in a warehouse looking at his computer while the Centuria Industrial share price rises
REITs

Why bond yields are bruising ASX property shares on Monday

It's a bad day to own property shares this Monday...

Read more »

Rising real estate share price.
REITs

How are ASX REITs smashing 52-week highs despite today's market meltdown?

If you own ASX REITs, you're probably feeling pretty chuffed today.

Read more »

An Australian farming woman of the land wears an akubra hat and work shirt smiles broadly as she looks out over turned soil paddocks with a mountain range far off in the distance and blue sky above.
Dividend Investing

Want passive income? This high-yielding ASX dividend stock pays cash every quarter

The list of ASX dividend stocks making quarterly income payouts isn’t overly large. Here's why I like this one.

Read more »

Increasing blue arrow with wooden property houses representing a rising share price.
Broker Notes

3 ASX 200 REITs receiving broker upgrades today

These three ASX 200 REITs have earned a thumbs up from brokers today.

Read more »

a man sits on a ridge high above a large city full of high rise buildings as though he is thinking, contemplating the vista below.
REITs

Here are 4 ASX 200 REITs results catching the eye on Wednesday

A mixed set of results have been announced by these property companies.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
REITs

2 ASX 200 shares making big moves on strong earnings

These two REITs are soaring, despite swinging to big losses.

Read more »