BWP Trust: Finalizes Acquisition of Newmark

Narrow-moat-rated BWP Trust has secured 93% of Newmark Property REIT and moved to compulsorily acquire the remaining shares. We make no change to our forecasts as we had already factored in the successful acquisition, given that the offer was attractive from the highly geared Newmark’s perspective. We maintain our AUD 3.60 fair value estimate for BWP and consider the stock fairly valued at current prices. BWP is a small but defensive REIT with conservative gearing, offering a 5% distribution yield. We forecast distributions to remain relatively flat for the medium term as solid rental growth is offset by a rising average cost of debt. But growth should improve over the longer term as debt costs stabilize.