Bwp Trust · ASX:BWP
Bwp Trust — H1 FY2015 Earnings Presentation
40 slides from Bwp Trust's earnings presentation, Feb 11, 2015
Slide 1: Half-year results to 31 December 2014
For personal use only Half-year results to 31 December 2014 February 2015
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 > Strategic agenda Managing Director BWP Management Limited > Half year overview > Results Andrew Ross Portfolio Manager > Portfolio BWP Management Limited > Capital management David Hawkins > Outlook Finance Manager BWP Management Limited
Slide 4: Strategic agenda
For personal use only Strategic agenda 4
Slide 5: Total return profile
Total return profile For personal use only BWP total returns1 compared to market – for periods ended 31 December 2014 40% BWP Trust (BWP) ASX All Ordinaries Acc. Index BWP 35% UBS Retail 200 S&P/ASX 200 Prop Acc. Index 30% BWP 25% 20% BWP 15% BWP 10% 5% 0% One Year Three Years Five Years Ten Years S
Slide 6: Half-year overview
Half-year overview For personal use only > 19.1% increase in revenue from acquisitions, rent reviews and developments > Like-for-like rental growth of 2.7% for 12 months to 31 December 2014 > Completed the development of three Bunnings Warehouse stores > Agreed to acquire a Bunnings Warehouse develo
Slide 7: Results – performance vs pcp
Results – performance vs pcp1 For personal use only 6 months to 31 Dec 14 Previous corresponding period Revenue $71.2 million 19.1% Net profit including revaluations $117.3 million $66.7 million Distributable profit (excluding revaluations) $49.1 million 14.6% Number of units on issue 639.7 million
Slide 8: Developments completed in FY2015 – Manly West
Portfolio – developments completed in FY2015 For personal use only > Bunnings Warehouse – Manly West, QLD ($21.3m) – Land acquired in Sep 2013 for $7.2m (including acquisition costs) – Development completed Sep 2014 – 12,870m2 fully-enclosed covered area – Commencing annual rent $2.1m – 12 year leas
Slide 9: Developments completed in FY2015 – West Ipswich
Portfolio – developments completed in FY2015 For personal use only > Bunnings Warehouse – West Ipswich, QLD ($17.9m) – Land acquired in Sep 2013 for $13.1m (including acquisition costs) – Development completed Sep 2014 – 14,977m2 fully-enclosed covered area – Commencing annual rent $2.3m – 12 year l
Slide 10: Developments completed in FY2015 – Brendale
Portfolio – developments completed in FY2015 > Bunnings Warehouse - Brendale, QLD ($19.2m) For personal use only – Land acquired in Jun 2014 for $8.1m (including acquisition costs) – Development completed Dec 2014 – 11,822m2 fully-enclosed covered area – Commencing annual rent $1.9m – 12 year lease
Slide 11: Developments completed in FY2015 – Maribyrnong
Portfolio – developments completed in FY2015 > Bunnings Warehouse - Maribyrnong, VIC ($39.1m) For personal use only – Land acquired in Jun 2001 for $7.1m (including acquisition costs) – Development completed mid-2013 – 14,488m2 fully-enclosed covered area – Commencing annual rent $2.54m – 12 year le
Slide 12: Development pipeline
Portfolio – development pipeline For personal use only > $35.7 million of capital committed to developments and expansions of existing properties > Refer Appendix C for portfolio geographic spread Capital commitment Property Payment date ($m) Acquisitions Australind (land) Apr 15 8.28 8.28 Developme
Slide 13: Rental growth
Portfolio – rental growth > 2.7% like-for-like rental growth for 12 months to 31 December 2014 (3.8% previous For personal use only corresponding period, updated for completed FY2014 MRR outcomes, 2.8% previously) ‒ 52 leases subject to annual fixed or CPI reviews during the period: w/average +3.0%
Slide 14: Market rent review outcomes
Portfolio - market rent review outcomes For personal use only 12 Bunnings reviews resulted in an 8.6% increase, 9 from FY14, and 3 due during the period Passing rent Reviewed Uplift Property location Tenancy Effective date ($pa) rent1 ($pa) (%) Balcatta, WA2 Bunnings 1,841,264 2,170,000 +17.9 24 Sep
Slide 15: Market rent review trends
Portfolio – market rent review trends For personal use only BWP Market Rent Reviews ("MRR") $m Bunnings Warehouses 18.0% 90 16.0% 80 Passing rent subject to MRR 14.0% 70 12.0% FY14 results incomplete: 60 3 Bunnings Warehouse W/avg increase MRR results - actual (LHS) MRRs not concluded 10.0% 50 8.0%
Slide 16: FY2015 rent reviews
Portfolio – FY2015 rent reviews > 3 Bunnings Warehouse market rent reviews due in FY2014 are currently in determination For personal use only > 3 Bunnings Warehouse market rent reviews due in FY2015 resolved with the balance being negotiated or at determination > Refer Appendix F for future market r
Slide 17: Revaluations
Portfolio - revaluations > Dec 2014 weighted average capitalisation rate 7.41% (refer Appendix G & H): For personal use only – Jun 2014: 7.59% and Dec 2013: 7.71% – Stand alone Bunnings Warehouses weighted average cap rate of 7.34% • 10 independent valuations (12% of BWP portfolio value), average ca
Slide 18: Bunnings lease expiries
Portfolio – Bunnings lease expiries For personal use only > 9 Bunnings leases expiring in the next three years > +99% occupancy Property Lease term Options Annual rent Comments expiry ($’000) Morley Jul 2015 4 x 5 yrs 1,290 In discussions with Bunnings Mt Gravatt Dec 2015 5 x 5 yrs 1,163 Too early f
Slide 19: Weighted average lease expiry profile
Portfolio – weighted average lease expiry profile For personal use only 25% 20% 16 15% 11 % of Rental Income 10% 8 11 Number of Bunnings 9 leases expiring 5 5 5% 5 3 2 2 2 0% Vacant CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22 CY23 CY24 CY25 Beyond Industrial Showrooms Bunnings > All leases expiring in t
Slide 20: Non-core property divestments
Portfolio – non-core property divestments For personal use only The sale of four properties completed during the period1 Property Tenancy Sale price Settlement Comments ($m) date Regency Park Ex-Blackwoods 3.9 Jul 14 Completed Hemmant Ex-Bunnings 21.3 Sep 14 Completed Sandown Ex-Bunnings 8.6 Oct 14
Slide 21: Bunnings Warehouse replacements – Cairns
Portfolio - Bunnings Warehouse replacements Cairns For personal use only > Bunnings moving to new site in FY2015 > Well located site in central Cairns > Leased to Bunnings until Feb 2018 > Considering re-leasing, development and/or sale Cairns CBD New Bunnings Warehouse site Trust-owned existing Bun
Slide 22: Bunnings Warehouse replacements – Joondalup
Portfolio - Bunnings Warehouse replacements For personal use only Joondalup > Bunnings has moved to a new site > Well located site, good access and visibility > Leased to Bunnings until Sept 2018 > Considering re-leasing, development and/or sale Lakeside Joondalup Shopping City • New Bunnings Wareho
Slide 23: Bunnings Warehouse replacements – Altona
Portfolio - Bunnings Warehouse replacements Altona For personal use only > Bunnings has moved to a new site > Well located site, good access and visibility > Leased to Bunnings until Sept 2018 > Considering re-leasing, development and/or sale Williamstown Melbourne CBD Folkstone large format Trust-o
Slide 24: Bunnings Warehouse replacements – Mentone
Portfolio - Bunnings Warehouse replacements Mentone For personal use only > Bunnings has moved to a new site > Well located site, good access and visibility > Leased to Bunnings until Sept 2018 > Sub-let to Super A-Mart Southland shopping Melbourne CBD centre New large format centre being developed
Slide 25: Bunnings Warehouse replacements – Burleigh Heads
Portfolio - Bunnings Warehouse replacements Burleigh Heads For personal use only > Bunnings has moved to a new site > Well located site, next to Stockland owned shopping centre > Leased to Bunnings until Oct 2018 > Re-leasing discussions in progress New Bunnings Warehouse Trust-owned existing Stockl
Slide 26: Bunnings Warehouse replacements – Mindarie
Portfolio - Bunnings Warehouse replacements Mindarie For personal use only > Bunnings has moved to a new site > Well located site, next to AMP owned shopping centre > Leased to Bunnings until Sept 2021 > Considering re-leasing, development and/or sale Trust-owned old Bunnings Warehouse site New Bunn
Slide 27: Capital management – debt facilities
Capital management – debt facilities For personal use only > Borrowing costs for the half-year $13.3m (up 40.2% on previous year): - Average borrowings $451.6m (2013: $274.1m) - 5.79% weighted average cost of debt after hedging (2013: 6.65%) > Interest cover: 4.8x at 31 December 2014 (2013: 5.6x) >
Slide 28: Capital management – interest rate hedging
Capital management – interest rate hedging For personal use only > $210.0m interest rate swaps at 4.89% weighted average, including delayed starts > 2.32 years weighted average maturity, including delayed starts Hedge book profile by Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 half-year ending: Active
Slide 29: Outlook – key drivers
Outlook – key drivers For personal use only > Home improvement retail sector performance and growth: – Bunnings continues to trade well on a store-on-store basis, with significant ongoing capital investment in new sites > Developments: – Increased rental income from development properties completed
Slide 30: Outlook – priorities
Outlook - priorities For personal use only > Proactive management of existing assets – Additional upgrades of existing properties to support Bunnings’ evolving business model (to increase rental income, improve building format, and extend lease expiry) – Continue to consider redeployment or divestme
Slide 31: Further information
Further information For personal use only bwptrust.com.au Responsible entity: BWP Management Limited Tel: +61 8 9327 4356 Email: investorrelations@bwptrust.com.au 31
Slide 32: Appendix A: Results – performance: monthly
Appendix A: Results – performance: 6 monthly For personal use only 6 months 6 months 6 months to Dec 14 to Jun 14 to Dec 13 Revenue $71.2m $67.7m $59.8m Distributable profit $49.1m $49.9m $42.9m Unrealised property revaluation gains $68.2m $33.3m $23.8m Net profit including property revaluations $11
Slide 33: Appendix B: Distributions per unit (DPU)
Appendix B: Distributions per unit (DPU) For personal use only (cents) 16 14.67 14.71 14.14 14 12.98 13.27 1.17 7.75 12.61 7.14 11.96 6.72 12.08 11.98 6.87 12 11.38 6.56 11.57 6.39 6.17 5.98 5.80 5.87 4.87 10 8 7.67 6 6.70 6.70 6.10 6.42 6.55 6.63 6.22 6.10 6.09 5.51 5.79 4 2 0 4 5 FY04 FY05 FY06 FY
Slide 34: Appendix C: Portfolio - geographic spread
Appendix C: Portfolio - geographic spread For personal use only 71 Bunnings Warehouses 8 Bunnings Warehouses and showrooms 1 Bunnings Warehouse development site 1 Large format retail showroom 2 Industrial properties 18 14 2 1 BWP rental income 1 2 (as at 31 Dec 2014) 17 1 SA 3% WA 17% VIC 32% 2 QLD
Slide 35: Appendix D: Market rent reviews
Appendix D: Market rent reviews For personal use only > Typical Bunnings Warehouse market rent review clause: – Assumes free and open market with vacant possession – Has regard to the rent paid by Bunnings at other Bunnings Warehouses – Has regard to the rental value of other properties of a similar
Slide 36: Appendix E: Market rent review drivers
Appendix E: Market rent review drivers For personal use only > Property specific factors affecting market rent review outcomes: – High land/development capital outlay results in higher commencing rent – Physical attributes: location and configuration of site; size, format and age of building and imp
Slide 37: Appendix F – Rent reviews and revaluations
Appendix F – Rent reviews and revaluations For personal use only Future market rent reviews and revaluations for Bunnings Warehouses (“BWH”) FY20141 FY20151 FY2016 FY2017 FY2018 FY2019 BWH market reviews 3 7 7 8 8 16 % of total2 4% 9% 8% 9% 8% 17% Independent revaluations - 23 27 29 23 27 % of total
Slide 38: Appendix G: Valuations
Appendix G: Valuations For personal use only > Process – entire portfolio re-valued 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 a
Slide 39: Appendix H: Capitalisation rate trends
Appendix H: Capitalisation rate trends For personal use only Stable historical cap rates, strengthening valuations over the last 12 months Historical BWP cap rates compared to other asset classes Cap Rate WALE (yrs) 9.00% 10 8.50% 9 8 8.00% 7 7.50% 6 7.00% 5 6.50% 4 3 6.00% 2 5.50% 1 5.00% 0 Dec-06
Slide 40: Appendix I: Weighted average lease expiry data table
Appendix I: -Weighted average lease expiry data table For personal use only Total Lease Total Rental Income Rental Income Bunnings Industrial Showrooms Year Year End Expiries ($) (% of Total) (%) (%) (%) 1 31-Dec-15 5 3,055,982 2.1% 1.7% 0.0% 0.4% 2 31-Dec-16 8 2,962,562 2.1% 1.3% 0.0% 0.8% 3 31-Dec