Bwp Trust · ASX:BWP
Bwp Trust — H1 FY2013 Earnings Presentation
34 slides from Bwp Trust's earnings presentation, Feb 12, 2013
Slide 1: Half-year results to 31 Dec 2012
For personal use only Half-year results to 31 Dec 2012 February 2013
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 General Manager > Overview BWP Management Limited > Results Andrew Ross > Portfolio Portfolio Manager BWP Management Limited > Capital management > Governance David Hawkins Finance Manager > Outlook BWP Management Limited
Slide 4: Overview
Overview For personal use only > Increased rental income from acquisitions, developments and rent reviews lifts revenue (up 9.3%) and distributable profit (up 8.2%) over comparable period last year > 100% payout ratio resulting in 7.0 cents per unit interim distribution (up 5.6% on last year) > One
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 2012 BWP unit price marginally outperforms the sector for the year 5 years to 31 December 2012 ...and significantly outperforms the market longer term Source: R
Slide 6: Results – total returns
Results – total returns For personal use only > BWP total returns compared to market – periods ended 31 December 2012 45% BWP 35% 25% 15% BWP BWP BWP 5% -5% -15% One Year Three Years Five Years Ten Years BWP Trust (BWP) ASX All Ordinaries Acc. Index UBS Retail 200 S&P/ASX 200 Prop Acc. Index Total r
Slide 7: Results – performance vs pcp
Results – performance vs pcp1 For personal use only 6 months to Dec 12 Previous corresponding period Revenue $54.0 million 9.3%2 Net profit including revaluations $48.8 million $32.0 million Distributable profit (excluding revaluations) $37.4 million 8.2% Number of units on issue 533.6 million 520.0
Slide 8: Results – performance: monthly
Results – performance: 6 monthly For personal use only 6 months 6 months 6 months to Dec 12 to Jun 12 to Dec 11 Revenue $54.0m $51.8m1 $49.4m1 Net profit including property revaluations $48.8m $37.9m1 $32.0m Unrealised property revaluation (gains)/losses ($11.5m) ($2.0m) $2.6m Capital profit from pr
Slide 9: Results – distributions per unit (DPU)
Results – distributions per unit (DPU) For personal use only (cents) 16 14.67 14 13.27 1.17 12.98 12.61 11.96 6.72 12.08 11.98 6.87 6.56 11.57 12 11.38 6.39 6.17 5.98 5.80 10.50 4.87 5.87 9.56 9.77 10 9.18 5.35 4.86 4.97 4.68 8 7.00 6 6.55 6.70 6.63 6.22 6.42 6.10 6.09 5.79 5.51 5.15 4 4.70 4.80 4.5
Slide 10: Results – distribution variance to pcp
Results – distribution variance to pcp1 For personal use only ($m) 40 39 Rent Reviews (32%) 38 Acquisitions (48%) 37 36 Developments (20%) 35 34 33 32 31 30 Distributable profit - Property revenue Net finance costs Responsible entity's Other operating Distributable profit - 1H FY12 fees expenses 1H
Slide 11: Portfolio – geographic spread
Portfolio - geographic spread For personal use only 62 Bunnings Warehouses 5 Bunnings Warehouses and showrooms 1 Bunnings Warehouse development site 1 Bunnings distribution centre 1 Bulky goods showroom 11 3 Industrial properties 1 14 2 1 2 BWP rental income (as at 31 Dec 2012) 1 15 1 SA 4% WA 18% 1
Slide 12: Portfolio – major tenant
Portfolio – major tenant For personal use only > Majority (93%) of BWP income underpinned by the highly successful Bunnings business > 3.4% store-on-store sales growth for 6 months to 31 December 2012 (vs. p.c.p) Revenue ($m) Bunnings Group Limited EBIT ($m) 7,200 900 Trading revenue (LHS) 6,200 800
Slide 13: Portfolio – lease expiry profile
Portfolio – lease expiry profile For personal use only 25% 20% 16 % of annual rental income 10 15% 12 10% 6 8 Number of Bunnings leases expiring 5% 5 3 2 2 2 2 0% Vacant CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22 Beyond Industrial Showrooms Bunnings > All leases expiring in the next 5 years r
Slide 14: Portfolio – Bunnings lease expiries
Portfolio – Bunnings lease expiries For personal use only > 13 Bunnings leases expiring in the next 5 years Property Lease Annual rent Comments expiry ($’000) Ongoing discussions with Bunnings; asset likely to be Sandown Sep 2013 1,107 sold if Bunnings vacates Sunshine Sep 2013 992 Ongoing discussio
Slide 15: Portfolio – rent reviews
Portfolio – rent reviews For personal use only > Finalised 7 market rent reviews during the half-year (refer to next page) resulting in a 7.1% average increase > 6 Bunnings Warehouse market rent reviews remain unresolved in FY13: – Dandenong, Artarmon, Belrose, Cairns, Wollongong and Port Melbourne
Slide 16: Portfolio – market rent reviews completed
Portfolio – market rent reviews completed For personal use only Passing rent Reviewed Uplift Uplift Effective Property location Tenant ($’000) rent1 ($’000) ($’000) (%) date Geraldton, WA2 Bunnings 924 1,219 295 +31.9 10 Dec 11 Oakleigh South, VIC2 Bunnings 1,807 1,807 - - 8 Mar 12 Pacific Laborator
Slide 17: Portfolio – rent reviews and revaluations
Portfolio – rent reviews and revaluations For personal use only > Future market rent reviews and revaluations for Bunnings Warehouses (“BWH”) FY13 FY14 FY15 FY16 FY17 BWH market reviews 6 19 10 7 8 % of total1 9% 24% 16% 10% 11% Independent revaluations 15 25 28 15 25 % of total2 21% 35% 37% 21% 35%
Slide 18: Portfolio – revaluations
Portfolio - revaluations For personal use only > December 2012 weighted average capitalisation rate 7.91% – June 2012: 7.91% and December 2011: 7.81% – net fair value gain of $11.5m on revaluation – refer to Appendix B for valuation process and December 2012 valuation summary by State/Territory > 10
Slide 19: Portfolio – revaluations (cap rates)
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 Prime Industrial Sub-Regional Retail Neighbourhood SC's BWP . Source: IPD Research 1
Slide 20: Portfolio – acquisition of Bunnings/showrooms
Portfolio – acquisition of Bunnings/showrooms For personal use only Gladstone Home, Gladstone, Queensland Boundaries shown are approximate 20
Slide 21: Portfolio – acquisition: Gladstone Home
Portfolio – acquisition: Gladstone Home For personal use only Gladstone, Queensland (acquired September 2012) Purchase price $27m + $1.6m acquisition costs Net annual rent income1 $2.38m Initial yield on net income1 8.84% Land area 5.5ha Retail area 21,443sqm Tenants Bunnings, Harvey Norman + 6 othe
Slide 22: Portfolio – acquisition: Gladstone Home tenancy details
Portfolio – acquisition: Gladstone Home For personal use only > Tenancy details Tenant Gross lettable Proportion of gross Committed lease term area (sqm) rental income (%) remaining2 Bunnings 12,6231 40 4.1 Harvey Norman 4,004 25 4.2 BCF 1,019 8 4.2 Pillow Talk 1,267 9 6.9 Betta Electrical 826 6 2.2
Slide 23: Portfolio – pipeline
Portfolio - pipeline For personal use only > Capital committed to acquisitions & developments at 31 December 2012 Capital Payment Property commitment date ($m) Acquisitions Wallsend (land) Jan 13 2.51 Albany (land) Feb 13 2.62 5.1 Developments Rocklea upgrade Jun 13 3.8 Wallsend (development)3 Nov 1
Slide 24: Capital management
Capital management For personal use only > Financial strength supported by: – low gearing – 21.7% at 31 December 2012 (22.9% covenant gearing) – strong lease covenant in Bunnings/Wesfarmers – solid rental base with growth from CPI, fixed and periodic market rent reviews – low level of maintenance/st
Slide 25: Capital management – debt facilities
Capital management – debt facilities For personal use only > Net borrowing costs1 for the half-year $11.0m (up 9% on December 2011): - average borrowings $290.3m (2011: $236.9m) - 7.5% weighted average cost of debt after hedging (December 2011: 8.2%) > Interest cover: 4.5x at 31 December 2012 (2011:
Slide 26: Capital management – interest rate hedging
Capital management – interest rate hedging For personal use only > $197.5m hedged (66%) at 5.02% weighted average including delayed starts > 3.72 years weighted average maturity, including delayed starts (2011: 3.59 years) Hedge book profile by Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 half-y
Slide 27: Capital management – interest rate hedging
Capital management – interest rate hedging For personal use only Interest rate hedge book profile $m % 250 5.8 5.6 200 5.4 5.2 150 5.0 4.8 100 4.6 4.4 50 4.2 0 4.0 2012 2013 2014 2015 2016 2017 2018 2019 2020 Active swaps as at 31 December 2011 (LHS) Active swaps as at 31 December 2012 (LHS) Hedged
Slide 28: Governance – structure
Governance – structure For personal use only Responsible Entity: BWP Management Limited Subsidiary of Wesfarmers Limited, but majority external directors > John Austin: Chairman, non-executive external director > Bryce Denison: Non-executive external director > Rick Higgins: Non-executive external d
Slide 29: Outlook – key drivers
Outlook – key drivers For personal use only > Low cash/interest rate environment: – improves A-REITs’ attractiveness as yield investment (strength in stock price and liquidity) – improves funding costs and relative affordability of commercial property assets – increases competition for prime propert
Slide 30: Outlook - priorities
Outlook - priorities For personal use only > Property portfolio – Continue to evaluate opportunities to acquire complementary properties on an accretive basis (such as recent Gladstone acquisition) – Upgrades of existing properties as required by Bunnings (to increase rental income, improve building
Slide 31: Further information
Further information For personal use only Visit: www.bwptrust.com.au Responsible entity: BWP Management Limited Tel: +61 8 9327 4356 Email: ggernhoefer@bwptrust.com.au 31
Slide 32: Appendix A: Lease expiry profile data table
Appendix A: Lease expiry profile data table For personal use only Total Lease Total Rental Year Year End Rental Income Bunnings Industrial Showrooms Expiries Income ($) (% of Total) (%) (%) (%) Vacant 0 0 0.0% 0.0% 0.0% 0.0% 1 31-Dec-13 3 2,270,592 2.1% 1.9% 0.0% 0.2% 2 31-Dec-14 6 5,355,897 5.0% 3.
Slide 33: 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 34: 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