Slide 1: Half-year results to 31 December 2015
For personal use only Half-year results to 31 December 2015 February 2016
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 > 2016 half-year highlights Managing Director BWP Management Limited > Results > Portfolio Andrew Ross Portfolio Manager > Capital management BWP Management Limited > Strategic agenda David Hawkins > Outlook Finance Manager BWP Management L
Slide 4: 2016 half-year highlights
2016 half-year highlights For personal use only $74.7m $53.3m 8.29 cpu $2.52 12.3% pa Total income 4.9% Dist. profit 8.5% Distribution 8.1% NTA 15.6% 10yr total return Portfolio performance Portfolio management Capital management 2.5% 9 5.06% like-for-like rental growth MRRs finalised w/average cost
Slide 5: Results – performance vs pcp
Results – performance vs pcp1 For personal use only HY2016 Previous corresponding period Total income $74.7m $71.2m Management expense ratio 0.66% 0.63% Other expenses $3.1m $3.3m Distributable profit (excluding revaluations) $53.3m $49.1m Number of units on issue 642.4m 639.7m Half-year distributio
Slide 6: Results - performance monthly
Results - performance 6 monthly For personal use only 6 months to 6 months to 6 months to Dec 15 Jun 15 Dec 14 Total income $74.7m $73.7m $71.2m Distributable profit $53.3m $52.5m $49.1m Property revaluation gains $173.5m $40.3m $68.2m Net profit including property revaluations $226.8m $92.8m $117.3
Slide 7: Lismore expansion
Portfolio – Lismore expansion For personal use only > Bunnings Warehouse expansion – Lismore, NSW ($4.6m) – Development completed August 2015 – 8,105m2 fully-enclosed covered area (subject to survey) – Commencing annual rent $1.26m – 12 year lease with 4 x 5-year options – Annual 3% fixed escalation
Slide 8: Rockingham expansion
Portfolio – Rockingham expansion For personal use only > Bunnings Warehouse expansion – Rockingham, WA ($4.6m) – Development completed October 2015 – 9,308m2 fully-enclosed covered area (subject to survey) – Commencing annual rent $2.02m – 12 year lease with 4 x 6-year options – CPI escalations – Ma
Slide 9: FY2016 rent reviews
Portfolio – FY2016 rent reviews > Fountain Gate Bunnings Warehouse market rent review due in FY2015 is currently in For personal use only determination > 2 Bunnings Warehouse market rent reviews due in FY20161 have been resolved by negotiation > 4 Bunnings Warehouse market rent reviews due in FY2016
Slide 10: Market rent review outcomes
Portfolio – market rent review outcomes Six Bunnings reviews resulted in a 5.5% increase, 4 from FY2015, and 2 due during the period For personal use only Passing rent Reviewed rent1 Variance Property location Customer Effective date ($pa) ($pa) (%) Mornington, VIC2 Bunnings 1,607,814 1,650,000 2.6%
Slide 11: Capitalisation rate trends
Portfolio - capitalisation rate trends For personal use only > Cap rate compression has intensified across most retail sectors in the past 12 months > Compression has been particularly evident in the hardware and home improvement sector with the most recent Bunnings Warehouse transactions yielding w
Slide 12: Independent valuations
Portfolio – independent valuations For personal use only Jun-15 Dec-15 Valuation Dec-15 Jun-15 Dec-15 Cap Rate Property State Valuation Valuation Movement Term Certain Cap Rate Cap Rate Movement ($m) ($m) ($m) (years) Tuggeranong ACT 7.00% 25.2 6.50% 27.6 -0.50% 2.4 7.9 Maitland NSW 8.00% 16.4 7.75%
Slide 13: HY2016 revaluation
Portfolio – HY2016 revaluation > December 2015 weighted average capitalisation rate 6.81% (Jun 2015: 7.33%) For personal use only – Stand alone Bunnings Warehouses weighted average cap rate of 6.70% • 10 independent valuations (12% of BWP portfolio value), average cap rate 6.54%1 • 61 internal valua
Slide 14: Future rent reviews and revaluations
Portfolio – future rent reviews and revaluations For personal use only Future market rent reviews for Bunnings Warehouses (“BWH”) and revaluations FY2016 FY2017 FY2018 FY2019 FY2020 BWH market reviews1 5 7 8 13 11 % of total2 5% 8% 8% 15% 12% Independent valuations 15 30 24 25 30 % of total3 20% 38%
Slide 15: Weighted average lease expiry profile
Portfolio – weighted average lease expiry profile For personal use only 25% 20% 17 15% % of Rental Income 10 9 10% 9 6 8 5 5 5% 5 3 2 0% CY16 CY17 CY18 CY19 CY20 CY21 CY22 CY23 CY24 CY25 CY26 CY27 Industrial Showrooms Bunnings > 11 Bunnings Warehouse leases WALE >10 years, combined property value $3
Slide 16: Bunnings lease term expiries next 3yrs
Portfolio – Bunnings lease term expiries next 3yrs For personal use only Property Lease term Options Annual rent Comments expiry ($’000) Gladstone Feb 2017 4 x 5 yrs 1,121 Notification required by Nov 2016 Oakleigh South Mar 2017 2 x 5 yrs 1,930 Notification required by Dec 2016 Dandenong Nov 2017 2
Slide 17: Re-positioning
Portfolio – re-positioning For personal use only 31 Dec 2015 Lease Property Book value Comment expiry ($m) Altona Sep 2018 16.4 Option agreement expiring in July 2016 to sell property to Folkestone Limited Cairns Feb 2018 11.0 Bunnings re-located to new site in 2015, conditional sale agreement signe
Slide 18: Bunnings Warehouse replacements
Portfolio – Bunnings Warehouse replacements For personal use only Lease Duration of Property Outcome achieved expiry occupancy1 Mentone Sep 2018 20.0 Bunnings has moved to a new site, Trust owned store sub-let to Super Amart Bunnings re-located to new site, lease assigned to Automotive Holdings Grou
Slide 19: Capital management – debt facilities
Capital management – debt facilities > Average borrowings for the half-year $481.2m (up 6.6% on previous year) For personal use only - 5.06% weighted average cost of debt after hedging (2014: 5.79%) - Borrowing costs for the half-year $12.3m (down 7.4% on pcp) > All bank facilities can be extended a
Slide 20: Capital management – interest rate hedging
Capital management – interest rate hedging For personal use only Hedge book profile by Dec 15 Jun 162 Dec 162 Jun 172 Dec 172 Jun 182 half-year ending: Active swaps ($ m) 180 175 135 110 98 58 Swap rates (%) Maximum 5.70 5.54 5.54 5.54 5.54 5.54 Minimum 3.10 2.92 2.92 2.92 2.93 4.12 Weighted average
Slide 21: Strategic agenda
For personal use only Strategic agenda 21
Slide 22: Strategic agenda - priorities
Strategic agenda - priorities For personal use only > Portfolio – Finalise Bunnings Warehouse replacement store outcomes ahead of lease expiry – Reinvestment in existing properties to support Bunnings’ evolving business model – Ongoing review of portfolio for redeployment or divestment opportunities
Slide 23: Outlook
Outlook > Macro economic environment: For personal use only – Demand for Bunnings Warehouse properties expected to remain strong, while interest rates remain low – Further cap rate compression will be a function of the duration of the current interest rate cycle > Rental growth: – Increased rental i
Slide 24: 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 24
Slide 25: Appendix A: weighted average lease expiry table
Appendix A: weighted average lease expiry table For personal use only Total Lease Total Rental Year Year End Rental Income Bunnings Industrial Showrooms Expiries Income ($) (% of Total) (%) (%) (%) 1 31-Dec-16 4 1,472,179 1.0% 0.0% 0.5% 0.5% 2 31-Dec-17 9 8,630,364 5.8% 4.8% 0.0% 1.0% 3 31-Dec-18 14