The ASX dividend share Waypoint REIT Ltd (ASX: WPR) looks like a leading passive income opportunity because of how cheap it is, its large distribution yield, and its potential for growth.

As the chart above shows, the Waypoint REIT share price has fallen around 25% from October 2021, which is a large decline for a large and predictable business.

Its market capitalisation is currently approximately $1.6 billion. The business owns a portfolio of service stations around Australia – it had 402 properties at 30 June 2024. Its major tenant is the ASX-listed Viva Energy Group Ltd (ASX: VEA).

Let's have a look at the three areas that could make it an interesting idea.

ASX dividend share distribution yield

The business pays its distribution to investors quarterly, which is good for regular cash flow payments.

Despite the headwind of high interest rates, the business has provided investors with very consistent distribution payments over the last three years, which I think is commendable for a real estate investment trust (REIT).

According to the Commsec forecast, the business is projected to pay a distribution per unit of 16.5 cents in FY25. At the current Waypoint REIT share price, that translates into a forward distribution yield of 6.9%.

Underlying growth

I'm not about to say the service station sector has massive growth tailwinds. But, with the price at which this ASX dividend share is trading, any growth is an exciting prospect, in my view.

The business expects organic rental income growth of approximately 3% per year in the foreseeable future.

In the first half of FY24, the business reported a 3.1% growth of rental income to $80.3 million and a 3.8% growth of operating profit (EBIT). The main downside was a 16.2% rise in the net interest rate expense to $20.1 million due to higher-costing debt. But, interest costs shouldn't keep rising forever because central bank interest rates seem to have peaked.

In HY24, distributable earnings were flat at $55.6 million, allowing the business to pay a stable distribution.

Cheap price

With each result, the business tells investors its underlying value – that's the value of the properties and other assets minus the liabilities, such as debt.

At 30 June 2024, it had net tangible assets (NTA) of $2.79. This may slightly drop in the upcoming FY24 result (to be released in February), but the current Waypoint REIT share price suggests there's a double-digit NTA discount in percentage terms to the share price, which seems attractive to me.

Remember, it's widely expected that the Reserve Bank of Australia (RBA) is going to cut rates soon, which could help the REIT's distributable earnings and the underlying property value.