The portfolio of 425 service station sites offers an attractive 2016 annualised distribution yield around 5.3%, Morgans observes. Potential catalysts include accretive acquisitions and inclusion in the index.
The portfolio is secured by income from leases with terms of 10-18 years, with fixed rental increases of 3% per annum.
Risks relate to higher interest rates and, longer term, to tenant default or disruptions to petrol-based retailing. Morgans initiates coverage on the stock with an Add rating and $2.56 target.
Sector: Real Estate.
Target price is $2.56.Current Price is $2.43. Difference: $0.13 – (brackets indicate current price is over target). If VVR meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges – negative figures indicate an expected loss).