The Viva Energy REIT Ltd (ASX: VVR) share price has climbed 2.95% in early trade this morning to hit a new 52-week high of $2.79 per security.
So, what was so good about the REIT's full-year earnings that sent the security price surging higher in early trade?
Why the Viva Energy REIT security price is surging
For the half-year ended 30 June 2019 (1H 2019), VVR reported distributable earnings of 7.18 cents per share (cps), up 2.7% on 1H 2018, while its management expense ratio (MER) of 23 basis points (bps) remains one of the lowest in the sector.
VVR's net tangible assets (NTA) per security dipped marginally to $2.18 (from $2.20 in December 2018) as its portfolio value came in at $2.54 billion.
The Aussie energy REIT reported a weighted average lease expiry (WALE) of 12.1 years with acquired properties and funded developments for the half-year totalling $43.7 million.
Positively for shareholders, VVR's gearing ratio remains at the low end of its target 30% – 45% range (33.4% at year-end) while the company's weighted-average cost of debt fell 1 bp to 3.83% in 1H 2019.
VVR's portfolio remains well-diversified in Australia despite a heavy tilt towards the eastern states, led by New South Wales (31.1%), Victoria (27.7%) and Queensland (21.7%).
VVR continued to grow its portfolio throughout the year with acquisitions of operational sites ($13.5 million), acquisition of development sites ($13.7 million) and fund-through of development costs ($16.5 million) all materially increasing.
The company's tenant mix remains heavily tilted towards Viva Energy Group Ltd (ASX: VEA) with more than 90% of its tenant income, while Liberty Caltex Australia Ltd (ASX: CTX) and 7-Eleven round out the portfolio.
Foolish takeaway
This morning's result pleased investors as the VVR security price surged 3% higher to $2.79 per security at the time of writing, which represents a new 52-week high for the REIT.
The headline numbers appear strong for VVR and it's no surprise to see the REIT performing well, having climbed 22% higher since the start of the year.
VVR's niche within the Energy REIT sector has allowed it to specialise and continue to deliver strong earnings, but it does remain closely tied to the Aussie property cycle.
For this reason, I think AGL Energy Ltd (ASX: AGL) provides better Energy sector exposure, however, VVR may be a good option for investors looking for the best of both worlds.
