Viva Energy Reit Ltd (ASX: VVR) has reported its result for the year to 31 December 2019.
What is Viva Energy Reit?
It is a real estate investment trust (REIT) which is invested in over 460 service stations across Australia, with a lot of them in metropolitan areas. A vast majority of them are leased to Viva Energy Group Ltd (ASX: VEA) as Coles Express locations.
What did Viva Energy Reit report?
The REIT reported that its rental income from investment properties rose by 8.6% to $148.5 million. It also experienced a $99.9 million rise in property valuations. Thankfully, finance costs actually reduced by 10.4% for the year to $30.9 million.
Statutory net profit increased by 18.2% to $197.6 million.
Viva Energy REIT's distributable earnings per share grew by 3.7% to 14.54 cents, which was the top end of its guidance growth of 3.3% to 3.7%. It also reported that its net tangible asset (NTA) value grew by 4.1% to $2.29 in the year to December 2019 thanks to valuation increases and acquisitions.
During the year the REIT acquired 15 properties, equating to $88.5 million of new assets.
It finished the year with a gearing of 30.4%, which is at the bottom end of its target gearing range from 30% to 45%.
Viva Energy REIT's property portfolio
At the end of the year it finished with 469 properties with 73% of them in metropolitan area. Its portfolio weighted average capitalisation rate (the net operating income) wass 5.8% with a weighted average lease expiry (WALE) of 11.7 years.
Viva Energy distribution
Viva Energy Reit's second half distribution is 7.19 cents per security, bringing the full-year distribution to 14.37 cents per security, an increase of 2.5% compared to last year.
Is Viva Energy Reit a buy?
The REIT expects distributable earnings to grow by another 3% to 3.75% in FY20 assuming there are no negative factors that affect financial performance.
It offers a trailing distribution of 5%, which is solid in this environment considering how low interest rates are.
It's trading at a bit of a premium to its NTA at December 2019, so I'd only buy Viva Energy REIT (and any REIT) if I were interested in income.
