Bwp Trust · ASX:BWP
Bwp Trust — H1 FY2019 Earnings Presentation
29 slides from Bwp Trust's earnings presentation, Feb 6, 2019
Slide 1: Half-year results to 31 December 2018
For personal use only Half-year results to 31 December 2018 February 2019
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 Michael Wedgwood >Summary Managing Director >Results BWP Management Limited >Portfolio >Core portfolio Andrew Ross >Alternative use properties Portfolio Manager >Capital management BWP Management Limited >Outlook David Hawkins Finance Manager BWP Management
Slide 4: Summary
Summary For personal use only Hawthorn, VIC 4 SUMMARY | HALF-YEAR RESULTS TO 31 DECEMBER 2018
Slide 5: Value drivers
Value drivers For personal use only UNDERLYING UNIQUE STRENGTH OF LONG DURATION OF LARGE SITES IN HIGH AUSTRALIAN HOME OCCUPANCY BY POPULATION AREAS PORTFOLIO IMPROVEMENT BUNNINGS MARKET SOLID STRONG BALANCE LOW RE-FINANCING POSITIONED FOR CAPITAL SHEET RISK GROWTH STRUCTURE DISCIPLINED RETURNS LEAS
Slide 6: 2018/19 Half-year at a glance
2018/19 Half-year at a glance For personal use only $79.0m ⇧ $57.4m ⇧ 8.93 cpu ⇧ $2.89 ⇧ 15.3% pa Total revenue 2.7%1 Dist. amount 1.7%1 Distribution 1.7%1 NTA 2.5%1 10 yr total return PORTFOLIO PORTFOLIO CAPITAL PERFORMANCE MANAGEMENT MANAGEMENT 2.5% 99.1% A- S&P rating/ like-for-like rental growth
Slide 7: Results
Results For personal use only Southport, QLD 7 RESULTS | HALF-YEAR RESULTS TO 31 DECEMBER 2018
Slide 8: Financial performance
Financial performance 6 monthly For personal use only 6 months to 6 months to Dec 18 Dec 17 Total revenue $79.0m $76.9m Management expense ratio 0.62% 0.61% Other expenses $3.5m $2.9m Distributable amount $57.4m1 $56.4m Property revaluation gains $20.1m2 $46.9m Net profit including property revaluat
Slide 9: Portfolio
Portfolio For personal use only Maribyrnong, VIC 9 PORTFOLIO | HALF-YEAR RESULTS TO 31 DECEMBER 2018
Slide 10: FY2019 Bunnings market rent review outcomes
FY2019 Bunnings market rent review outcomes For personal use only > 2 Bunnings market rent reviews from FY2018 were resolved via negotiation at the current passing rental Property location Passing rent Reviewed rent Effective date ($pa) ($pa) Artarmon, NSW1,2 1,705,451 1,705,451 9-Feb-18 Fyshwick, A
Slide 11: Capitalisation rate trends
Capitalisation rate trends For personal use only > New Bunnings Warehouse store yields remain stable in the 5.0 to 5.5% range Bunnings transaction yields 10.00% 9.00% 8.00% 7.00% Bunnings Portfolio Acquisitions by BWP 6.00% 5.00% 4.00% 3.00% Jul-10 Jan-11 Aug-11 Feb-12 Sep-12 Apr-13 Oct-13 May-14 No
Slide 12: December 2018 revaluation
December 2018 revaluation For personal use only > December 2018 weighted average capitalisation rate 6.40% (June 2018: 6.48%) – 11 independent valuations (12% of BWP portfolio value), average cap rate 6.79% – 66 internal valuations, average cap rate 6.34% – Stand alone Bunnings Warehouses weighted a
Slide 13: December 2018 independent valuations
December 2018 independent valuations For personal use only Jun-18 Dec-18 Valuation Dec-18 Jun-18 Dec-18 Cap Rate Property State Valuation Valuation Movement Term Certain Cap Rate Cap Rate Movement ($m) ($m) ($m) (years) Cannon Hill QLD 5.50% 43.3 5.50% 43.3 0.00% 0.0 5.3 Croydon VIC 5.75% 33.7 5.50%
Slide 14: Core portfolio
Core portfolio For personal use only Mornington, VIC 14 CORE PORTFOLIO | HALF-YEAR RESULTS TO 31 DECEMBER 2018
Slide 15: Core portfolio summary
Core portfolio summary For personal use only 67 4.5 years properties portfolio WALE 14,025m2 3.3 ha average lettable average land area area 77% 82% upgrade metro located properties or properties occupied <12yrs 6.17% weighted average cap rate 15 CORE PORTFOLIO | HALF-YEAR RESULTS TO 31 DECEMBER 2018
Slide 16: Weighted average lease expiry profile
Weighted average lease expiry profile For personal use only 25% 20% 15% % of Rental Income 10% 5% 0% CY19 CY20 CY21 CY22 CY23 CY24 CY25 CY26 CY27 CY28 1 BWH <12 yrs occ. + upgrades BWH >12 years occ. Showrooms 1 Includes both proposed and completed upgrades 16 CORE PORTFOLIO | HALF-YEAR RESULTS TO 3
Slide 17: Lease expiries next years
Lease expiries next 3 years For personal use only Property Lease expiry Options Rent Comments ($’000pa) Notification required by Jul 2019; located within 300 metres of shopping centre Thornleigh Sep 2019 4 x 5 yrs 1,420 and passenger train station; zoning allows mixed-use redevelopment opportunities
Slide 18: Alternative use properties
Alternative use For personal use only properties Hawthorn, VIC 18 ALTERNATIVE USE PROPERTIES | HALF-YEAR RESULTS TO 31 DECEMBER 2018
Slide 19: Mentone repositioning
Mentone repositioning For personal use only > Bunnings surrendered its lease in August 2018 > Two new large format retail leases secured > Landlord works completed in December 2018 > Rezoning opportunities continue to be assessed for future land use flexibility Property financials Jun 2018 fair valu
Slide 20: Mandurah repositioning
Mandurah repositioning For personal use only > Bunnings surrendered its lease in July 2018 > Landlord capex works completed in December 2018 > Amart Furniture commenced trading in December 2018 > Strong leasing interest for the remaining lettable area Property financials Jun 2018 fair value $14.0 mi
Slide 21: Cairns repositioning
Cairns repositioning For personal use only > Redevelopment options being reviewed comprising building reconfiguration for industrial use and possible divestment of surplus land > Working with local developer to refine and progress concept Original site footprint Redevelopment option 21 ALTERNATIVE U
Slide 22: Other stores being repositioned
Other stores being repositioned For personal use only Property Lease expiry1 Progress DA for large format retail redevelopment lodged in Jan 2019; Port Macquarie Nov 2019 anchor tenant terms finalised; leasing campaign progressing for remaining 2,200sqm of lettable area Bunnings continue to trade fr
Slide 23: Divestments
Divestments For personal use only Property Lease Sale price Progress expiry1 ($m) Underwood Apr 2019 Undisclosed Under conditional option agreement to sell to unrelated third party Belmont North Mar 2021 Undisclosed Under conditional option agreement to sell to unrelated third party Lease Altona 14.
Slide 24: Capital management
Capital For personal use only management Gladstone, QLD 24 CAPITAL MANAGEMENT | HALF-YEAR RESULTS TO 31 DECEMBER 2018
Slide 25: Debt facilities
Debt facilities For personal use only > Average borrowings for the half-year $460.8m (down 3.2% on pcp) – 4.31% p.a. weighted average cost of debt after hedging (2017: 4.65% p.a.) – Borrowing costs for the half-year $10.0m (down 10.5% on pcp) > Bank facilities with CBA and WBC can be extended a furt
Slide 26: Debt duration
Debt duration For personal use only Debt maturity profile as at 31 December 2018 Volume (A$M) 300.0 118.0 200.0 200.0 127.0 100.0 110.0 100.01 0.0 FY FY FY FY FY FY 19 20 21 22 23 24 Bonds Drawn bank facilities Undrawn bank facilities 1 Forward start five year term debt facility with SMBC entered in
Slide 27: Interest rate hedging
Interest rate hedging For personal use only Hedge book profile Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 by half-year ending Active swaps ($m) 58 98 98 85 85 70 Swap rates (%) Maximum 4.92 4.92 4.92 4.12 4.12 2.60 Minimum 2.39 2.39 2.39 2.39 2.39 2.39 Weighted average (%)1 3.39 3.07 3.07 2.79 2.79 2
Slide 28: Outlook
Outlook For personal use only Nunawading, VIC 28 OUTLOOK | HALF-YEAR RESULTS TO 31 DECEMBER 2018
Slide 29: Outlook
Outlook For personal use only Macro economic environment > Demand for Bunnings Warehouse properties should remain stable, subject to any significant risk events interrupting capital flows into the Australian property sector > The Trust is well positioned in the event of any change in the macro econo