Bwp Trust · ASX:BWP
Bwp Trust — H1 FY2014 Earnings Presentation
33 slides from Bwp Trust's earnings presentation, Feb 12, 2014
Slide 1: Half-year results to 31 Dec 2013
For personal use only Half-year results to 31 Dec 2013 February 2014
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 Grant Gernhoefer > Overview General Manager BWP Management Limited > Results > Portfolio Andrew Ross Portfolio Manager > Capital management BWP Management Limited > Governance David Hawkins > Outlook Finance Manager BWP Management Limited
Slide 4: Overview
Overview For personal use only > Acquisition of 10 Bunnings Warehouse properties across Australia > Increased rental income from acquisitions, developments and rent reviews lifts revenue (up 10.7%) and distributable profit (up 14.7%) over comparable period last year > 100% payout ratio resulting in
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 31 December 2013 BWP unit price marginally underperforms the sector for the year 5 years to 31 December 2013 ...but significantly outperforms the sector longer term Source:
Slide 6: Results – total returns
Results – total returns For personal use only > BWP total returns1 compared to market – periods ended 31 December 2013 1 Total returns include distributions and movement in price (assumes distributions are reinvested). Source: UBS 6
Slide 7: Results – performance vs pcp
Results – performance vs pcp1 For personal use only 6 months to Dec 13 Previous corresponding period Revenue $59.8 million 10.7% Net profit including revaluations $66.7 million $48.8 million Distributable profit (excluding revaluations) $42.9 million 14.7% Number of units on issue 627.2 million 533.
Slide 8: Results – performance: monthly
Results – performance: 6 monthly For personal use only 6 months 6 months 6 months to Dec 13 to Jun 13 to Dec 12 Revenue $59.8m $55.2m $54.0m Distributable profit $42.9m $38.4m $37.4m Unrealised property revaluation gains $23.8m $23.3m $11.5m Net profit including property revaluations $66.7m $61.7m $
Slide 9: Results – distributions per unit (DPU)
Results – distributions per unit (DPU) For personal use only (cents) 16 14.67 14.14 14 13.27 1.17 12.98 7.14 12.61 11.96 6.72 12.08 11.98 6.87 12 11.38 6.56 11.57 6.39 10.50 6.17 5.98 5.80 5.87 4.87 9.56 9.77 10 9.18 5.35 4.86 4.97 4.68 8 6.70 7.00 6.83 6 6.42 6.55 6.63 6.22 6.10 6.09 5.51 5.79 5.15
Slide 10: Results – distribution variance to pcp
Results – distribution variance to pcp1 For personal use only ($m) 46 44 Developments (3%) 42 Acquisitions (74%) 40 Rent Reviews (23%) 38 36 34 32 30 Distributable profit - Property revenue Net finance costs Responsible entity's Other operating Distributable profit - 1H FY13 fees expenses 1H FY14 10
Slide 11: Portfolio – geographic spread
Portfolio - geographic spread For personal use only 68 Bunnings Warehouses 6 Bunnings Warehouses and showrooms 5 Bunnings Warehouse development sites 1 Bunnings distribution centre 1 Large format retail showroom 15 3 Industrial properties 1 15 2 2 1 2 BWP rental income (as at 31 Dec 2013) 1 15 1 SA
Slide 12: Portfolio – new properties in 1HFY14
Portfolio – new properties in 1HFY14 For personal use only Rent Purchase price State Property Description ($000)1 ($000)2 BWH3-anchored NSW Hoxton Park 3,401 40,750 centre QLD Arundel BWH 2,120 26,470 QLD Bethania BWH 1,724 21,720 BWH development QLD Manly West N/A 6,7984 site QLD North Lakes BWH 2,
Slide 13: Portfolio – major tenant
Portfolio - major tenant For personal use only > Majority (94%) of BWP income underpinned by the highly successful Bunnings business > 7.1% store-on-store sales growth for 3 months to 30 September 2013 (vs. pcp) Revenue ($m) Bunnings Group Limited EBIT ($m) 8,000 1,000 Trading revenue (LHS) EBIT (RH
Slide 14: Portfolio – acquisition: Bunnings-anchored centre
Portfolio – acquisition: Bunnings-anchored centre For personal use only Lincoln Mills – Coburg, Victoria Bunnings Warehouse-anchored large format Brief description: retail centre Bunnings, Harvey Norman, Officeworks, BCF Tenants: and 5 other tenancies Gross lettable area 24,728 sqm (estimated): Car
Slide 15: Portfolio – pipeline
Portfolio - pipeline For personal use only > $193 million of capital committed to acquisitions and developments at 31 December 2013 > Gearing levels are expected to remain within target levels of 20-30% Property Payment date Capital commitment ($m) Acquisitions Lincoln Mills1 Jan 14 57.39 Rydalmere
Slide 16: Portfolio – lease expiry profile
Portfolio – lease expiry profile For personal use only 25% 20% 16 12 % of Rental Income 15% 12 10% 7 Number of Bunnings leases expiring 8 5 5% 5 3 3 2 2 0% Vacant CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22 CY23 Beyond Industrial Showrooms Bunnings > All leases expiring in the next five years repre
Slide 17: Portfolio – Bunnings lease expiries
Portfolio – Bunnings lease expiries > 24 Bunnings leases expiring in the next five years For personal use only Property Lease expiry Annual rent Comments ($’000) Sandown Apr 2014 1,140 Considering re-leasing or sale Hemmant (distribution centre) Apr 2014 2,292 Re-leasing campaign underway Browns Pla
Slide 18: Portfolio – rent reviews
Portfolio – rent reviews For personal use only > 33 leases subject to annual fixed or CPI reviews: w/average +2.6% > Finalised two market rent reviews during the half-year Passing rent Reviewed rent1 Uplift Uplift Tenancy & location Effective date ($’000) ($’000) ($’000) (%) Bunnings Warehouse 1,673
Slide 19: Portfolio – market rent reviews
Portfolio – market rent reviews For personal use only > 22 Bunnings Warehouse market rent reviews remain to be completed this financial year > Most of the outstanding market reviews are likely to be referred for independent determination and may not be finalised by year-end (refer Appendix C for rev
Slide 20: Portfolio – revaluations
Portfolio - revaluations For personal use only > December 2013 weighted average capitalisation rate 7.71% – June 2013: 7.86% and December 2012: 7.91% – Stand-alone Bunnings Warehouses weighted average cap rate of 7.61% – Net fair value gain of $23.8m on revaluation – Refer to Appendix B for valuatio
Slide 21: Portfolio – revaluations
Portfolio – revaluations For personal use only Historical BWP cap rates 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% Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Prime Industrial Sub-Regional Retail Neighbourhood SC's BWP Source: IPD Resea
Slide 22: Portfolio – rent reviews and revaluations
Portfolio – rent reviews and revaluations For personal use only > Future market rent reviews and revaluations for Bunnings Warehouses (“BWH”) FY141 FY15 FY16 FY17 FY18 BWH market reviews 17 10 7 8 7 % of total2 20% 13% 10% 10% 8% Independent revaluations 26 26 27 26 26 % of total3 33% 32% 31% 33% 32
Slide 23: Capital management
Capital management For personal use only > Financial strength (A- credit rating with S&P) supported by: – Low gearing: 19.8% at 31 December 2013 (20.4% covenant gearing) – Strong lease covenant in Bunnings/Wesfarmers – Solid rental base with growth from CPI, fixed and periodic market rent reviews –
Slide 24: Capital management – debt facilities
Capital management – debt facilities For personal use only > Net borrowing costs1 for the half-year $9.5m (down 13.6% on December 2012): - Average borrowings $274.1m (2012: $290.3m) - 6.65% weighted average cost of debt after hedging (December 2012: 7.46%) > Interest cover: 5.6x at 31 December 2013
Slide 25: Capital management – interest rate hedging
Capital management – interest rate hedging For personal use only > $210.0m hedged (64%) at 4.96% weighted average including delayed starts > 3.32 years weighted average maturity, including delayed starts (2012: 3.72 years) Hedge book profile by Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 half-y
Slide 26: Governance – Board & management
Governance – Board & management For personal use only > Responsible Entity: BWP Management Limited Subsidiary of Wesfarmers Limited, but majority external directors - John Austin: Chairman, non-executive external director - Rick Higgins: Non-executive external director - Fiona Harris: Non-executive
Slide 27: Outlook – key drivers
Outlook – key drivers For personal use only > Low cash/interest rate environment: – Improves A-REITs’ attractiveness as yield investment compared to cash, but increased investor focus on growth is emerging – Improves funding costs and relative affordability of commercial property assets, although so
Slide 28: Outlook – acquisition/development schedule
Outlook – acquisition/development schedule For personal use only > Authority approvals, tendering process and revised construction programs have delayed the likely date for completion of property settlement and some developments Previous estimated Revised estimated Property completion completion Acq
Slide 29: Outlook – priorities
Outlook - priorities For personal use only > Property portfolio – Complete currently committed acquisitions and developments – Continue to evaluate opportunities to acquire complementary properties on an accretive basis (stand-alone Bunnings Warehouses or Bunnings-anchored centres such as Hoxton Par
Slide 30: Further information
Further information For personal use only Visit: www.bwptrust.com.au Responsible entity: BWP Management Limited Tel: +61 8 9327 4356 Email: investorrelations@bwptrust.com.au 30
Slide 31: 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 1 875,0001 0.7% 0.0% 0.7% 0.0% 1 31-Dec-14 7 6,631,461 5.3% 4.0% 1.0% 0.3% 2 31-Dec-15 5 2,866,707
Slide 32: Appendix B: Valuations
Appendix B: Valuations For personal use only > Process – entire portfolio revalued every six months – independent valuations on a three year cycle for each property – balance of portfolio – directors’ valuation using recognised valuation methodology – directors’ valuations methodology reviewed by an
Slide 33: 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 five-year tenant options) – Predominantly five-yearly market rent reviews (majority uncapped) – Annual CPI or 3% escalation – Wesfarmers covena