Bwp Trust · ASX:BWP
Bwp Trust — Bunnings Property Trust — FY2005 Earnings Presentation
27 slides from Bwp Trust's earnings presentation, August 2005
Slide 1: 2005 Results Presentation
2005 Results Presentation August 2005 www.bunningspropertytrust.com.au
Slide 2: Presentation Outline
Presentation Outline ¾ Structure ¾ Key Events/Results ¾ Tenant Performance ¾ Portfolio ¾ Capital Management ¾ Financial Performance ¾ International Financial Reporting Standards (AIFRS) ¾ Unitholder Meeting ¾ Management Expense Ratio (MER) ¾ Outlook August 2005 2 2
Slide 3: Structure
Structure ¾ Manager: Bunnings Property Management (BPML) – Subsidiary of WES; but… – Independent board Bill Cairns (Chairman); AVR; ex GPT,FAL,WAN John Austin; MREEF, ex JLL, GRW Property Peter Mansell; WAN, FAL, JDV, ZFX Gene Tilbrook; WES, Gresham, ARG – Independent property valuations ¾ T
Slide 4: Key Events
Key Events ¾ Acquisition, development & upgrades ($20.8m) – purchase of Thornleigh ex BBC HWH – completion of BWH at Maitland – upgrades at Fountain Gate, Mile End, Nunawading, Tuggeranong – progression of upgrades at Lismore, Northland ¾ 14.8% uplift from 7 market rent reviews ¾ 30.9% uplift from 1
Slide 5: Key Results to June 2005
Key Results to 30 June 2005 ¾ Revenue $50.6 million 13.8% on pcp ¾ Operating profit $36.1 million 11.8% on pcp ¾ Distribution 11.96 cpu 5.1% on pcp ¾ NTA $1.44 per unit $0.10 on pcp ¾ Market capitalisation $576 million 24% on pcp August 2005 5 5
Slide 6: The Tenant – Warehouses across AUS & NZ
The Tenant – 131 Warehouses across AUS & NZ Sales from Warehouses drive Bunnings Revenue 4,500 450 4,000 400 3,500 350 Operating Revenue ($m) SMI acquisition 3,000 300 EBITA ($m) 2,500 250 BWP established 2,000 200 1,500 150 1,000 100 500 50 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Slide 7: The Tenant – robust recent activity and positive outlook
The Tenant – robust recent activity and positive outlook ¾ FY05 Trading – $4.0b trading revenue; ↑ 6.5% on pcp (cash sales ↑ 9.1%, trade sales ↓ 1.9%) – store on store cash sales ↑ 5.6% Series 3000 Warehouse – $408.3m trading EBITA; ↑ 9.0% on pcp – merchandising, stock, supply chain improvements ¾ N
Slide 8: The Tenant – 100% occupancy; 9.9 yr ave. lease expiry
The Tenant – 100% occupancy; 9.9 yr ave. lease expiry as at 30 Jun 05 20 Number of leases 16 12 8 16 11 4 6 6 5 3 0 1 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Term to lease expiry (years) ¾ Typical lease features – at least 10 yrs term certain (plus lessee options) – annual CPI escalation – 5 year market
Slide 9: Portfolio – properties Australia-wide
Portfolio – 51 properties Australia-wide Jun 05 VIC 19 as at 30 June 05 QLD 10 NSW/ACT 11 WA 9 ) 25 SA 2 TOTAL 511 ) 10 1includes 2 distribution centres and 2 development sites ) 18 )9 )4)2 ) 41 ) 11 ) 131 BWH stores ) 17 ) 32 .2 )8 ) 47 BWP – owned stores )2 )1 . 2 BWP development sites August 2005
Slide 10: Portfolio – steady asset growth
Portfolio – steady asset growth $m 700 600 500 400 300 200 100 0 99 00 01 02 03 04 05 9 0 1 2 3 4 -9 -0 -0 -0 -0 -0 n- n- n- n- n- n- n- ec ec ec ec ec ec Ju Ju Ju Ju Ju Ju Ju D D D D D D At cost Revaluations August 2005 10 10
Slide 11: Portfolio – 14.8% uplift from market rent reviews
Portfolio – 14.8% uplift from 7 market rent reviews (MMRs) Property Passing Market Uplift Effective rent review date $ pa $ pa Albany, WA 476,347 501,720 +5.3% 2 Nov 04 Bibra Lake, WA 857,992 1,071,000 +24.8% 2 Nov 04 Hoppers Crossing, VIC 810,070 995,000 +22.8% 22 Mar 05 Mile End, SA 1,219,620 1,27
Slide 12: Portfolio – FY05 market rent review detail
Portfolio – FY05 market rent review detail ¾ Process – 6 determinations (valuers mutually appointed) – 1 negotiated outcome (Mile End) ¾ Result variance – uplift +4.8% to +24.8% – consistent with variance in FY04 ¾ Impact – $165k kicker to FY05 revenue – $401k contribution on annualised basis August
Slide 13: Portfolio – 30.9% uplift from revaluations
Portfolio – 30.9% uplift from 11 revaluations Property Current Revaluation Capitalisation market value increment rate $000 $000 Albany, WA 5,700 1,205 8.75% Bibra Lke, WA 12,700 4,051 8.50% Coffs Harbour, NSW 7,800 1,293 8.25% Dandenong, VIC 13,000 2,085 7.75% Geraldton, WA 8,650 1,828 8.75% Hervey
Slide 14: Portfolio – capital commitments at June
Portfolio – capital commitments at 30 June 05 Capital Expenditure ($m) Committed Estimated Cairns, QLD 0.7 Croydon, VIC 5.6 Lismore, NSW 0.4 Maribyrnong, VIC 6.7 Morley, WA 11.81 Northland, VIC 2.9 Vermont South, VIC 13.32 Bayswater, VIC 2.0 41.4 2.0 1includes stamp duty 2net of sale of surplus land
Slide 15: Portfolio – Morley acquisition
Portfolio – Morley acquisition ¾ Contracts exchanged FY05, settlement Jul 06 ¾ 8km north of Perth CBD, adjacent Centro Galleria ¾ 1.8ha site, 9,826m2 retail area ¾ $11.1m purchase ¾ Rent $860,000; 7.75% cap rate August 2005 15 15
Slide 16: Portfolio – Vermont South development
Portfolio – Vermont South development ¾ Scheduled to open mid Aug 05 ¾ Largest BWH to date, total retail area 16,500m2 ¾ Built on $10m 5.3ha site purchased by BWP May 03 ¾ Development fee payable $13.3m – net of sale of 4,000m2 surplus land for $0.85m ¾ Rent $1,750,000; 7.5% cap rate August 2005 16
Slide 17: Portfolio – overview of committed upgrades
Portfolio – overview of committed upgrades ¾ Northland ($2.9m) – additional 2,482m2 retail area, 106 car bays – incremental rent $0.23m pa; yield 8.0% ¾ Croydon ($5.6m) – BWP purchase 1.5ha and sell 0.2ha; peppercorn – additional 3,077m2 retail area, 100 car bays – incremental rent $0.49m pa; yield
Slide 18: Capital Management
Capital Management ¾ Overview – borrowings $166.9m (pre Morley) – gearing 26.6% ¾ Borrowings – preferred gearing range of 20% to 40% (debt to total assets) – current gearing level considered too low – weighted average cost 6.0% (inc. margins) – bill facilities with ANZ ($100m), NAB ($100m), WBC ($50
Slide 19: Capital Management – gearing within range but low
Capital Management – gearing within range but low 50% 40% Preferred range 30% 20% 10% 0% 99 00 01 02 03 04 05 8 9 0 1 2 3 4 -9 -9 -0 -0 -0 -0 -0 n- n- n- n- n- n- n- ec ec ec ec ec ec ec Ju Ju Ju Ju Ju Ju Ju D D D D D D D August 2005 19 19
Slide 20: Capital Management – debt actively managed
Capital Management – debt actively managed BWP Hedge Book Overview Jun Jun Jun Jun Jun Jun 00 01 02 03 04 05 % Debt hedged1 86 77 90 86 95 100 Swap Rates (%) - Maximum 6.62 6.64 6.64 6.62 6.62 6.62 - Minimum 5.56 5.46 5.46 5.08 4.97 4.97 1interest bearing debt ¾ 30 Jun 05: 5.73% weighted average (ex
Slide 21: Financial Performance – solid DPU growth
Financial Performance – solid DPU growth Timing of rent CPU End of concessional review results management fee 7.00 6.17 5.51 5.87 5.79 6.00 5.15 5.35 4.68 4.80 4.97 4.50 5.00 4.00 3.00 2.00 1.00 0.00 9 0 1 2 3 4 5 98 99 00 01 02 03 04 -9 -0 -0 -0 -0 -0 -0 - - - - - - - n n n n n n n ec ec ec ec ec e
Slide 22: AIFRS impact to be minimal
AIFRS impact to be minimal AIFRS issue BWP implication •Straight lining of rent •not required for Bunnings leases given CPI rather than fixed escalation •Amortisation of incentives/fitouts •no incentives/fitouts in Bunnings leases •Mark to market of derivatives •minimal impact given hedge book align
Slide 23: Unitholder Meeting will address regulatory issues
Unitholder Meeting will address regulatory issues ¾ Perth, 14 Dec 05 ¾ AIFRS Constitution resolutions – remove fixed duration of BWP (perpetuity clause) – amend definition of Income (avoid distribution of unrealised gains) ¾ Placement capacity (ASIC Class Order 05/26) – currently limited to 10% of u
Slide 24: MER now in line with industry practice
MER now in line with industry practice ¾ Past BWP calculation included property outgoings – inconsistent with industry practice – overstated MER FY01 FY02 FY03 FY04 FY05 MER previously disclosed 0.79% 0.76% 0.71% 0.75% adjusted/actual 0.72% 0.69% 0.65% 0.68% 0.67% August 2005 24 24
Slide 25: Outlook
Outlook ¾ Acquisition opportunities – ex Bunnings rollout (10 to 14 pa) – former BBC properties (ex WES & others) – 3000 Series rollout ¾ Portfolio upgrades/redevelopments ¾ Rent reviews & revaluations FY06 FY07 FY08 FY09 FY10 Rent reviews 1 6 7 25 10 Revaluations 12 26 14 12 26 August 2005 25 25
Slide 26: Financial Performance – consistent total returns
Financial Performance – consistent total returns 29.3% 22.3% 23.1% 18.1% 15.8% BWP 15.2% ASX200 Property 1yr 3yr 5yr Source: UBS Warburg August 2005 26 26
Slide 27: Disclaimer
Disclaimer To the maximum permitted by law, Bunnings Property Management Limited disclaims all liability and responsibility for any direct or indirect loss or damage that may be suffered by any person through relying on anything contained in or omitted from this presentation. August 2005 27 27
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