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

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
REITs

This ASX 200 stock just tanked 4% amid a $1.9 billion sale

Millions of Goodman shares were just sold off.

Read more »

A woman peers through a bunch of recycled clothes on hangers and looks amazed.
REITs

A 5.5% yield but down 30%! Is it time for me to buy this ASX 200 stock at a bargain-basement price?

Investors building passive income flows may love this defensive play idea.

Read more »

Smiling couple looking at a phone at a bargain opportunity.
REITs

I think these 2 cheap ASX 200 shares are buys for value investors

These stocks are exciting options for investors focused on bargains.

Read more »

Group of successful real estate agents standing in building and looking at tablet.
Dividend Investing

1 ASX dividend stock down 25% to buy right now

I think this income business is a compelling buy right now.

Read more »

a cute jack russell dog closes its eyes and yawns as if waking up from a long sleep underneath a doona cover next to a pair of feet with an old-fashioned alarm clock nearby.
REITs

Get paid like clockwork with this 6% Australian dividend stock

Investors can harvest good cash flow with this stock.

Read more »

a man with hands in pockets and a serious look on his face stares out of an office window onto a landscape of highrise office buildings in an urban landscape
REITs

Is it time to grab these cheap ASX 300 stocks before it's too late?

Here’s why these ASX shares seem very cheap in my view.

Read more »

Group of successful real estate agents standing in building and looking at tablet.
Opinions

Should ASX REITs be on your buy list right now?

Analysts offer their views.

Read more »

An older couple dance in their living room as they enjoy their retirement funded by ASX dividends
REITs

Why I think this could be the #1 ASX property stock for retirement

I believe this stock is offering everything that retirees could want.

Read more »