Slide 1: Full-year results to 30 June 2018
Full-year results to 30 June 2018 August 2018
Slide 2: Important Notice
Important Notice 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 Management Limited as r
Slide 3: Presentation Outline
Presentation Outline Michael Wedgwood > 2018 full-year highlights Managing Director BWP Management Limited > Results > Portfolio Andrew Ross Portfolio Manager > Core portfolio BWP Management Limited > Alternative use properties David Hawkins > Capital management Finance Manager BWP Management Limite
Slide 4: Highlights
HIGHLIGHTS
Slide 5: Value drivers
Value drivers underlying strength of the long duration of UNIQUE large sites in high Australian Home occupancy by PORTFOLIO Improvement Bunnings population areas Market SOLID ongoing capital low re-financing positioned for CAPITAL markets support risk growth STRUCTURE DISCIPLINED returns lease attri
Slide 6: Core values
RESPECTFUL We seek mutually beneficial relationships with all stakeholders We treat others as we expect to be treated We are committed to having a safe and inclusive work environment We make the most of apportunities We are accountable for our actions We are financially focussed We operate within th
Slide 7: 2018 full-year highlights
2018 full-year highlights $153.4m ⇧ $114.4m ⇧ $17.81cpu ⇧ $2.85 ⇧ 14.0% pa Total revenue 0.6%1 Dist. Profit 1.7%1,2 Distribution 1.7%1,2 NTA 4.0%1 10 yr total return PORTFOLIO PORTFOLIO CAPITAL PERFORMANCE MANAGEMENT MANAGEMENT 2.5% 7 A3 Moody’s rating like-for-like rental growth MRRs finalised $70
Slide 8: Results
a; RESULTS
Slide 9: Results – financial performance vs pcp
Results – financial performance vs pcp1 FY2018 PCP Total revenue $153.4m $152.5m Management expense ratio 0.60% 0.60% Other expenses $6.0m $5.9m Distributable profit (excluding revaluations) $113.2m $112.5m Number of units on issue 642.4m 642.4m Full-year distribution per unit 17.81 cents 17.51 cent
Slide 10: Results – financial performance 6 monthly
Results – financial performance 6 monthly 6 months 6 months 6 months to Jun 18 to Dec 17 to Jun 17 Total revenue $76.5m $76.9m $76.7m Management expense ratio 0.60% 0.61% 0.60% Other expenses $3.0m $2.9m $2.9m Distributable profit $56.8m $56.4m $57.0m Property revaluation gains $23.0m $46.9m $93.4m
Slide 11: Results – year financial summary
Results – 5 year financial summary 30 June 2018 2017 2016 2015 2014 Revenue $153.4m $152.5m $150.2m $144.9m $127.4m Distributable profit1 $114.4m $112.5m $107.9m $101.6m $92.8m Total assets $2,369.5m $2,312.8m $2,200.5m $2,018.0m $1,837.4m Borrowings $457.6m $471.1m $472.3m $485.4m $448.3m Gearing (
Slide 12: Portfolio
PORTFOLIO
Slide 13: Portfolio – FY2018 like-for-like rental growth
Portfolio – FY2018 like-for-like rental growth Proportion of rental income1 Average increase 2% Market 5.5%2 2.5% 40% Fixed 3.1% like-for-like rental growth 58% CPI 2.0% Like-for-like rental growth FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Rental growth3 7.1% 2.9% 3.4% 4.0% 2.1% 4.0% 2.9% 2.
Slide 14: Portfolio – FY2018 market rent review outcomes
Portfolio – FY2018 market rent review outcomes 4 Bunnings reviews resulted in a 4.1% increase, three from FY2017, and one due during the year Passing rent Reviewed rent Property location Customer Variance Effective date ($pa) ($pa) Croydon, VIC1 Bunnings 1,868,741 1,900,000 1.7% 31-Oct-16 Gladstone,
Slide 15: Portfolio – FY2018 rent reviews
Portfolio – FY2018 rent reviews > 5 Bunnings Warehouse market rent reviews due in FY20181 currently in negotiation Rent review type FY18 (all leases) First-half Second- half % of rental income2 Market rent reviews (BWH) CPI 35 18 55% Artarmon, NSW Fixed 20 23 38% Belrose, NSW Market 4 5 7% Fyshwick,
Slide 16: Portfolio – capitalisation rate trends
Portfolio – capitalisation rate trends > New Bunnings Warehouse store yields remain stable in the 5.0 to 5.5% range Bunnings transaction yields 10.00% 9.00% 8.00% 7.00% Bunnings Portfolio 6.00% Acquisitions by BWP 5.00% 4.00% 3.00% Jul-10 Feb-11 Aug-11 Mar-12 Sep-12 Apr-13 Oct-13 May-14 Dec-14 Jun-1
Slide 17: Portfolio – June 2018 revaluation
Portfolio – June 2018 revaluation > June 2018 weighted average capitalisation rate 6.48% (Dec 2017: 6.50%) – Stand alone Bunnings Warehouses weighted average cap rate of 6.36% • 5 independent valuations (6% of BWP portfolio value), average cap rate 6.19% • 63 internal valuations, average cap rate 6.
Slide 18: Portfolio – June 2018 independent valuations
Portfolio – June 2018 independent valuations Dec-17 Jun-18 Valuation Jun-18 Dec-17 Jun-18 Cap Rate Property State Valuation Valuation Movement Term Certain Cap Rate Cap Rate Movement ($m) ($m) ($m) (years) Lismore2 NSW 6.00% 22.4 5.75% 23.2 -0.25% 0.8 9.2 Wallsend2 NSW 6.00% 33.9 5.75% 36.3 -0.25% 2
Slide 19: Core Portfolio
CORE PORTFOLIO
Slide 20: Core portfolio – summary
Core portfolio1 – summary 66 5.0 years properties portfolio WALE 3.3ha 14,100m2 average land area average lettable area 79% 40% metro located properties metro located properties within 20kms of CBD 77% 6.20% upgrade properties or weighted average cap rate occupied <12yrs 1 excludes any stores being
Slide 21: Core portfolio - weighted average lease expiry profile
Core portfolio - weighted average lease expiry profile 25% 20% % of Rental Income 15% 10% 5% 0% FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 1 BWH <12 yrs occ. + upgrades BWH >12 years occ. Showrooms 1 Includes both proposed and completed upgrades 21
Slide 22: Core portfolio – lease expiries next 3 years
Core portfolio – lease expiries next 3 years Property Lease expiry Options Rent Comments ($’000pa) Bayswater Apr 2019 4 x 5 yrs 1,950 Notification required by Feb 2019; well located property, already upgraded Notification required by Feb 2019; Bunnings seeking additional options with no agreement Br
Slide 23: Alternative Use Properties
gis] ALTERNATIVE USE PROPERTIES
Slide 24: Mentone re-positioning
Mentone re-positioning > Strong returns achieved to date as a Bunnings Warehouse (refer table below) > Bunnings relocated to a nearby site in 2013, with rent payable until September 2018 > Two new large format retail leases finalised, combined WALE 11.2 years > Capex approx. $4.5 million, completion
Slide 25: Other stores being re-positioned
Other stores being re-positioned Property Lease expiry1 Progress Cairns Lease expired Re-leasing campaign ongoing, development options being assessed Bunnings intend to relocate to a new store on the ex-Masters site. New store due to be Port Macquarie Nov 2018 complete in 2019. Leasing campaign unde
Slide 26: Divestments
Divestments Sale price Lease Property Status ($m) expiry1 Dandenong 16.4 Property sold in November 2017 Lease Altona 14.4 Option exercised, settlement anticipated for September 2018 surrendered Option exercised, settlement scheduled for September 2018. Rent Burleigh Heads 19.7 Oct 2018 payable to BW
Slide 27: Dandenong
Dandenong > Property sold to an unrelated third party for $16.4 million in November 2017 > Bunnings relocated to the Dandenong South ex-Masters > Solid rental returns and land value appreciation over life of asset Outcome Purchase date April 2002 Land purchase price $4.3 million Additional capital i
Slide 28: Altona
Altona > Bunnings relocated to the adjoining property in late 2014, with lease in place to September 2018 > Option to purchase contract terms agreed in first-half CY2017 with remaining rent included as part of sale price > Unconditional contract now in place with an unrelated third party, settlement
Slide 29: Burleigh Heads
Burleigh Heads > Bunnings relocated to a nearby site in 2014 with rent payable until September 2018 > Pursued a number of re-development options including divestment > Option to sell contract terms agreed in second-half CY2017 > Unconditional contract now in place with an unrelated third party, sett
Slide 30: Epping
Epping > Bunnings relocated to a nearby site in October 2015 with rent payable until March 2019 > Pursued a number of re-development options including divestment > Option to sell contract terms agreed in second-half CY2017 > Conditional contract now in place to sell to an unrelated third party, sett
Slide 31: Oakleigh South
Oakleigh South > Bunnings intend to relocate from property, lease expires in March 2019 > Have considered a number of re-development options including divestment > Option to sell contract terms agreed in second-half CY2017 > Unconditional contract now in place with an unrelated third party, settleme
Slide 32: Capital Management
ii $ ) CAPITAL MANAGEMENT
Slide 33: Capital management – debt facilities
Capital management – debt facilities > Average borrowings for the year $470.6m (down 1.8% on the previous year) - 4.6% weighted average cost of debt after hedging (2017: 4.6%) - Borrowing costs for the year $21.5m (down 2.4% on pcp) > All existing bank facilities (CBA and WBC) can be extended a furt
Slide 34: Capital management – debt duration
Capital management – debt duration Debt maturity profile as at 31 July 2018 300.0 Volume (A$M) 98.0 200.0 200.0 147.0 100.0 110.0 100.0 0.0 FY FY FY FY FY FY FY 18 19 20 21 22 23 24 Bonds Drawn bank facilities Undrawn bank facilities 34
Slide 35: Capital management – interest rate hedging
Capital management – interest rate hedging Hedge book profile by Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 half-year ending: Active swaps ($m) 88 58 98 98 85 85 Swap rates (%) Maximum 5.54 4.92 4.92 4.92 4.12 4.12 Minimum 2.39 2.39 2.39 2.39 2.39 2.39 Weighted average (%)1 4.09 3.39 3.07 3.07 2.79 2
Slide 36: Outlook
OUTLOOK
Slide 37: Outlook
Outlook > Macro economic environment – Demand for Bunnings Warehouse properties is expected to remain stable, subject to any significant risk events interrupting capital flows into the Australian property sector. > Rental growth – 45 CPI/ 42 fixed rent reviews in FY2019 – 8 Bunnings MRRs to be final
Slide 38: Further information
Further information bwptrust.com.au Responsible entity: BWP Management Limited Tel: +61 8 9327 4356 Email: investorrelations@bwptrust.com.au 38