Slide 1: Full-year results 2012
For personal use only Full-year results 2012 August 2012
Slide 2: Important notice
Important notice For personal use only The information provided in this presentation should be considered together with the financial statements for the period and previous periods, ASX announcements and other information available on the Trust’s website. This presentation has been prepared by BWP M
Slide 3: Presentation outline
Presentation outline For personal use only > Overview 04 Grant Gernhoefer > Results 06 General Manager BWP Management Limited > Portfolio 11 > Strategy 24 Andrew Ross > Capital management 31 Portfolio Manager > Outlook 35 BWP Management Limited
Slide 4: Overview
Overview For personal use only > Increased revenue (up by 19.7%) and distributable profit (up 35.7% including special distribution; up 25.6% excluding special distribution) > Special distribution of $6.2 million (1.17 cents per unit) capital profit1 from sale of a property > 100% payout ratio result
Slide 5: Overview – market performance
Overview – market performance For personal use only BWP unit price vs S&P/ASX 200 A-REIT index & All Ordinaries index 1 year to 30 June 2012 BWP unit price movement broadly in line with the property index and outperforms the broader market for one to three years… 5 years to 30 June 2012 ...longer te
Slide 6: Results – total returns
Results – total returns For personal use only > BWP total returns compared to market – periods ended 30 June 2012 1 2 2 2 1 total returns include distributions and movement in price (assumes distributions are reinvested) 2 compound annual returns Source: UBS 6
Slide 7: Results – performance
Results – performance For personal use only 2011/12 Previous corresponding period Revenue $102.1 million 19.7% Net profit including revaluations $69.9 million $81.5 million Distributable profit (excludes revaluations) $76.7 million1 35.7% Distributable profit excluding profit on property sale $70.5
Slide 8: Results – performance: half-yearly
Results – performance: 6 monthly For personal use only 6 months 6 months 6 months to Jun 12 to Dec 11 to Jun 11 Revenue $52.3m $49.8m $44.9m Net profit including revaluations $37.9m1 $32.0m $27.3m Unrealised (gain)/loss in fair value of investment ($2.0m) $2.6m $2.9m properties Capital profit from p
Slide 9: Results – distributions per unit (DPU)
Results – distributions per unit (DPU) For personal use only (cents) 16 14.67 14 13.27 12.98 12.61 11.96 6.72 12.08 11.98 6.56 11.57 12 11.38 6.39 6.17 5.98 5.80 10.50 4.87 5.87 8.04 9.56 9.77 10 9.18 5.35 4.86 4.97 4.68 8 6 6.55 6.70 6.63 6.22 6.42 6.18 6.10 5.79 5.51 5.15 4 4.70 4.80 4.50 2 0 FY00
Slide 10: Results – distribution variance to pcp
Results – distribution variance to pcp1 For personal use only ($m) 80 75 Capital profit on sale of Other income 8% Hoppers Crossing Rent reviews 11% 70 Developments 11% 65 Acquisitions 70% 60 55 50 45 40 35 Distributable profit - Property revenue Net finance costs Responsible entity's Other operatin
Slide 11: Portfolio - geographic spread
Portfolio - geographic spread For personal use only 62 Bunnings Warehouses 4 Bunnings Warehouse and showrooms 1 Bunnings Warehouse development sites 1 Bunnings distribution centre 1 Bulky goods showrooms 11 3 Industrial properties 1 14 1 1 2 BWP rental income (as at 30 Jun 12) 1 15 1 SA 4% WA 18% 1
Slide 12: Portfolio – new properties in FY12
Portfolio – new properties in FY12 For personal use only Rent Purchase price State Property Description ($000)1 ($000)2 NSW Greenacre Development 2,215 30,0003 NSW Dubbo Acquisition 1,324 15,790 QLD Browns Plains Acquisition 2,160 24,000 VIC Craigieburn Acquisition 1,400 18,420 WA Harrisdale Develop
Slide 13: Portfolio – acquisition of Bunnings/showrooms
Portfolio – acquisition of Bunnings/showrooms For personal use only > Browns Plains, Queensland ($24.0m purchase price, plus $1.4m acquisition costs) – tenants comprise Bunnings, Spotlight, – cap rate on net income 9.0% The Good Guys and Healthy Pharmacy – annual CPI escalations on all leases – 25 k
Slide 14: Portfolio – divestment of Bunnings Warehouse
Portfolio – divestment of Bunnings Warehouse For personal use only > Hoppers Crossing, Victoria ($14.55m sale price) – sold June 2012 to a private investor – $6.2 million capital profit distributed to – passing annual rent $1.2m unitholders – cap rate on rent of 8.5% – $8.2 million capital recycled
Slide 15: Portfolio – developments completed FY12
Portfolio – developments completed FY12 For personal use only > New Bunnings Warehouses > Greenacre, NSW ($16.75m) > Harrisdale, WA ($8.6m) – land acquired April 2011 for $13.25m – land acquired April 2011 for $10.0m (excl. acquisition costs) (excl. acquisition costs) – development completed April 2
Slide 16: Portfolio – developments completed in FY12
Portfolio – developments completed in FY12 For personal use only > Upgrade - Bunnings Warehouse, Scoresby, Vic ($5.8m) – 3,477m2 expansion of the fully-enclosed covered area of the Bunnings Warehouse completed in June 2012 – incremental annual rent $0.49m – new 10-year lease with 2 x 5-year options
Slide 17: Portfolio – lease expiry profile
Portfolio – lease expiry profile For personal use only 20% 13 18% 16% 10 % of Rental Income 14% 12 10 12% 10% 8% Number of Bunnings 7 leases expiring 6 6% 4 4% 2% 3 2 0% Vacant FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 Beyond Industrial Showrooms Bunnings All leases expiring in the
Slide 18: Portfolio – lease expiry profile
Portfolio – lease expiry profile For personal use only > 9 Bunnings leases expiring in the next 5 years Property Lease Annual rent Comments expiry ($’000) Sandown Sep 2013 1,094 Asset likely to be sold if Bunnings vacates Sunshine Sep 2013 980 Ongoing discussions with Bunnings. Well located site Hem
Slide 19: Portfolio – major tenant
Portfolio – major tenant For personal use only > Majority (95%) of BWP income underpinned by the highly successful Bunnings business > 3.9% store-on-store sales growth for 12 months to 30 June 2012 (vs. p.c.p) Revenue ($m) Bunnings Group Limited EBIT ($m) 8,000 1,000 Trading revenue (LHS) EBIT (RHS)
Slide 20: Portfolio – FY12 rent reviews
Portfolio – FY12 rent reviews For personal use only Proportion of rental income Average increase 9% Market 6.7%* 16% Fixed 3.1% 3.7% like-for-like 75% CPI 3.4% rental growth * 6 properties, refer to slide 28 Like-for-like rental growth FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 BWP 8.2% 4.1% 3.0%
Slide 21: Portfolio – market rent reviews
Portfolio – market rent reviews For personal use only > Finalised 6 market rent reviews during the year: 2 Bunnings Warehouse market rent reviews remain unresolved in FY12 - Geraldton and Oakleigh South Passing rent Reviewed rent1 Uplift Uplift Property location Effective date ($’000 pa) ($’000 pa)
Slide 22: Portfolio - revaluations
Portfolio - revaluations For personal use only > June 2012 weighted average capitalisation rate 7.91% – December 2011: 7.81% and June 2011: 7.65% – net fair value gain of $2.0m since Dec 2011 – refer to Appendix B for valuation process and June 2012 valuation summary by State/Territory > 10 independ
Slide 23: Portfolio – revaluations
Portfolio – revaluations For personal use only Historical BWP cap rate compared to other asset classes Cap rate 9.00% 8.50% 8.00% 7.50% 7.00% 6.50% 6.00% 5.50% 5.00% Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Prime Industrial Sub-Regional Retail Neighbourhood SC's BWP Source: IPD Research . 23
Slide 24: Strategy – strategic direction
Strategy – strategic direction For personal use only > 3 main strategies directed towards BWP’s core purpose Core purpose Provide a premium commercial real estate investment product, delivering unitholders with a secure and growing income stream and long-term capital growth Strategies Drive better r
Slide 25: Strategy – asset management
Strategy – asset management For personal use only > Extract more from existing assets Strategies Drive better returns Deliver efficiency, Generate growth by from existing assets sustainability and value acquiring quality through focused and through effective commercial properties pro-active asset ma
Slide 26: Strategy – asset management
Strategy – asset management For personal use only > Capital committed to acquisitions & developments Property Date Capital expenditure ($m) Acquisitions Wallsend (land) Oct 12 2.921 2.92 Developments Rocklea Apr 13 3.83 Wallsend Jun 13 18.52 22.35 Total 25.27 1 including acquisition costs of $0.2m >
Slide 27: Strategy – stewardship
Strategy – stewardship For personal use only > Operate effectively for competitive advantage Strategies Drive better returns Deliver efficiency, Generate growth by from existing assets sustainability and value acquiring quality through focused and through effective commercial properties pro-active a
Slide 28: Strategy – acquisitions
Strategy – acquisitions For personal use only > Build the portfolio selectively Strategies Drive better returns Deliver efficiency, Generate growth by from existing assets sustainability and value acquiring quality through focused and through effective commercial properties pro-active asset manageme
Slide 29: Strategy – acquisitions
Strategy – acquisitions For personal use only > Bunnings Warehouses provide a successful and high profile tenant and attractive property characteristics (strong covenant, long-term leases, low on-going capital and management requirement, moderate purchase price) > Bunnings Warehouses remain BWP’s pr
Slide 30: Strategy – current priorities
Strategy – current priorities For personal use only Asset management > Upgrades of existing properties (to increase income, improve building format, and extend lease expiry) > Diligent approach to market rent reviews > Consider redeployment or divestment opportunities for properties that have reache
Slide 31: Capital management
Capital management For personal use only > Financial strength supported by: – low gearing – 21.6% at 30 June 2012 (22.8% covenant gearing) – strong lease covenant in Bunnings/Wesfarmers – solid rental base with growth from annual CPI and fixed rent reviews – low level of maintenance/stay in business
Slide 32: Capital management – debt facilities
Capital management – debt facilities For personal use only > Interest cover: 4.5x at 30 June 2012 (FY11: 4.1x) > Net borrowing costs1 for the year $20.5m (up 7.5% on FY11): – average borrowings $250.6m (FY11: $194.2m) – 8.0% average rate of net borrowings2 after hedging (FY11: 9.2%) > 3.8 years aver
Slide 33: Capital management – interest rate hedging
Capital management – interest rate hedging For personal use only > $190.0m hedged (66%) at 5.28% weighted average including delayed starts > 4.05 years weighted average maturity, including delayed starts (2011: 3.34 years) Hedge book profile by half-year ending: Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 De
Slide 34: Capital management – interest rate hedging
Capital management – interest rate hedging For personal use only Restructuring is not considered as delivering sustained benefits: > EPU and DPU neutral at best > terminating “out of money” swaps crystallises the unrealised loss, which would revert to zero if run to their full term > the costs to te
Slide 35: Outlook
Outlook For personal use only > Improve the efficiency, security and flexibility of funding – Alternate sources of debt capital – Manage debt facilities to balance the need for financial flexibility by maintaining sufficient liquidity and cost efficiency by not holding excess funding capacity – Main
Slide 36: Further information
Further information For personal use only Visit: www.bwptrust.com.au Responsible entity: BWP Management Limited Tel: +61 8 9327 4356 Email: ggernhoefer@bwptrust.com.au 36
Slide 37: Appendix A: Lease expiry profile data table
Appendix A: Lease expiry profile data table For personal use only Total Lease Total Rental Year Year End Rental Income Bunnings Industrial Showrooms Expiries Income ($) (% of Total) (%) (%) (%) Vacant 0 0 0.0% 0.0% 0.0% 0.0% 1 30-Jun-13 1 425,984 0.4% 0.0% 0.0% 0.4% 2 30-Jun-14 8 7,468,971 7.2% 5.5%
Slide 38: Appendix B: Valuations
Appendix B: Valuations For personal use only > Process – entire portfolio revalued every 6 months – independent valuations on a 3 year cycle for each property – balance of portfolio – directors’ valuation using recognised valuation methodology – directors’ valuations methodology reviewed by an indep
Slide 39: Appendix C: Typical lease structure
Appendix C: Typical lease structure For personal use only > Typical Bunnings Warehouse lease in BWP portfolio features: – Minimum 10 year initial term (plus 5-year tenant options) – 5-yearly market rent reviews (majority uncapped) – annual CPI or 3% escalation – Wesfarmers covenant (A- (stable) cred
Slide 40: Appendix D: FY13 rent reviews
Appendix D: FY13 rent reviews For personal use only > Rent review type FY13 Market rent reviews Pacific Labs, Blackburn, VIC % of Spotlight Browns Plains, QLD First Second rental Dandenong, VIC half half income2 Hervey Bay, QLD CPI 351 16 67% Fyshwick, ACT Fixed 6 18 21% Artarmon, NSW Market 5 6 12%