Viva Energy REITs Income Growth on Track


VIVA Energy REIT which focus on Petrol Station investments continues to deliver its strategic objectives with the results for FY19 released this week.

Highlights

  • Distributable Earnings per security 7.18cps up 2.7% HY2018

  • $2.5 billion portfolio 464 high-quality service stations and convenience properties with WACR 5.8%

  • WALE of 12.1 years

  • NTA $2.18 per security (down from $2.20 in December 2018)

  • 33.4% gearing ratio

  • 3.83% Weighted average cost of debt

  • Raised $115.6m of new equity

The REIT has completion acquisitions or is in the process of funding through commitments for $65m of assets in 2019 with a further $120m of assets in the pipeline. The REIT is adding Caltex, 7Eleven, Liberty and Viva brands to its asstes, broadening the mix of tenants.

Market Overview

• Vehicle ownership in Australia grew by 1.7% in 20181

• Diesel vehicle ownership in 2018 now represents 25% of all registered vehicles in Australia, an increase from 19% in 2014

• In 2019 fuel retailers have been impacted by weaker market conditions primarily impacted by rising oil prices.

• Fuel retailers continue to focus on premium fuels and linkage to shop and loyalty programs to drive stronger connection to the customer

• Premium locations with strong brand positioning to capture the growth in convenience sales and expand site profitability are increasingly important beyond fuel only Long-term future of Australian fuel industry landscape

• Changes in the fuel mix of the car park take time. E.g. Branded PULP introduced in the 1990s and now represents 30% of total automotive gasoline sales in 2018

• Growth in pure electric vehicles to be modest, with hybrid vehicles more likely to be successful due to :

  • Relatively small domestic selection of affordable EVs

  • Government policies (subsidies or tax credits) that support the transition; these are typically present in countries where there has been stronger uptake

  • Minimal EV infrastructure rollout, such as fast charging stations

  • Australia’s sparsely populated and spread out geography contributing to “range anxiety”

Guidance

Viva Energy REIT are on track to deliver FY2019 earnings growth of 3 - 3.75%.

VVR Trading Chart vs ASX200 AREITs

Blue - VVR

Purple - ASX200 AREITs

#Viva

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