Dividend downer? BWP (ASX:BWP) share price slips following first-half results

Income investors should be pleased with the consistent dividend payout.

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Key points

  • BWP Trust share price edges higher on results
  • Interim dividend in line with the corresponding half-year
  • Big lift in fair values of investment properties

The BWP Trust (ASX: BWP) share price is down 1.5% at time of writing after opening up 1.9% this morning.

BWP Trust shares closed yesterday at $4.01 and are currently trading at $3.95 per share.

Below we take a look at the highlights from the real estate investment trust's (REIT) financial results for the half-year ending 31 December 2021.

BWP Trust share price falls with flat dividend outlook

  • Revenue from ordinary activities of $75.9 million, equivalent to the corresponding half year
  • Profit before gains on investment properties of $56.5 million, down 1% from the prior corresponding half year
  • Profit from ordinary activities attributable to shareholders increased 142% year-on-year to $348.3 million
  • Dividend of 9.02 cents per share, unfranked, equivalent to the corresponding half year

What else happened during the half year?

The big variance profit before gains on investment properties and profits attributable to shareholders stems from the $291.8 million gains in fair value of investment properties for the REIT during the half year.

That also saw net tangible assets per share increase 17% to $3.75 per share, up from $3.20 per share in the half year ending 31 December 2020.

The interim dividend was paid on 30 December 2021 and the Distribution Reinvestment Plan (DRP) was in effect during this time. Management expects the DRP to remain in place.

BWP Trust also reported like-for-like rental growth of 2.2% for the full 2021 calendar year. And the weighted average lease expiry (WALE) stood at 4.3 years as at 31 December, with 97.6% of assets leased.

The REIT's gearing as at 31 December was 15.5%, measuring its debt to total assets. The portfolio is valued at $2.9 billion.

What did management say?

Commenting on the revaluation of the portfolio, management wrote:

During the half-year, the Trust's entire investment property portfolio was revalued. Property revaluations were performed by independent valuers for 10 properties during the period. The remaining 63 properties were subject to directors' valuations…

The value of the Trust's portfolio increased by $280.6 million to $2,916.7 million during the half-year following capital expenditure of $2.3 million and revaluation gains of $291.8 million, after adjusting for the straight-lining of rent of $1.0 million and less net proceeds from divestments of $14.5 million.

What's next?

BWP Trust intends to focus on filling any vacancies in its portfolio, progress store upgrades, and extend its Bunnings leases through the exercise of options. It will also keep searching for new assets "where there is good potential for value creation".

Investors can expect a dividend for the year ending 30 June 2022 in line with the current payout, so long as there are no major COVID-19 or other economic disruptions. Judging by the sliding BWP Trust share price, investors may have been hoping for more.

BWP share price snapshot

Over the past 12 months the BWP Trust share price is up 1%, trailing the 6% gains posted by the S&P/ASX 200 Index (ASX: XJO) over that same time.

So far in 2022, BWP Trust shares are down 5%.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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