BWP Trust: Removing the Moat

We downgrade BWP Trust’s moat rating to none from narrow. The narrow moat rating leaned heavily on the relationship with key tenant Bunnings and its parent Wesfarmers, which also owns 23% of BWP and is its external manager. We thought BWP could share in the value created by the highly successful tenant, and that may have been true historically. But, more recently, the evidence suggests BWP is treated just like any other landlord. Given its properties lack any intrinsic competitive advantages, we now consider a no-moat rating to be appropriate.