Slide 1: Half-year results 2012
For personal use only Half-year results 2012 February 2012
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 > Overview General Manager > Results BWP Management Limited > Portfolio Andrew Ross > Capital management Portfolio Manager > Outlook BWP Management Limited
Slide 4: Overview
Overview For personal use only > Outperformed the broader market for the 12 months to 31 December 2011 > Increased revenue and distributable profit growth over comparable period resulting in 7.3% increase in DPU compared to previous corresponding period > Acquisition and development pipeline to gene
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 2011 BWP unit price outperforms the broader market for the year 3 years to 31 December 2011 ...and outperforms the property index longer term Source: Reuters, r
Slide 6: Results – total returns
Results – total returns For personal use only > BWP total returns compared to market – periods ended 31 December 2011 Total returns include distributions and movement in price (assumes distributions are reinvested). Source: UBS 6
Slide 7: Results – performance vs pcp
Results – performance vs pcp1 For personal use only 6 months to Dec 11 Previous corresponding period Revenue $49.8 million 23.4% Net profit including revaluations $32.0 million $54.2 million Distributable profit (excluding revaluations) $34.5 million 30.6% Half-year distribution 6.63 cpu 7.3% Total
Slide 8: Results – performance: monthly
Results – performance: 6 monthly For personal use only 6 months 6 months 6 months to Dec 11 to Jun 11 to Dec 10 Revenue $49.8m $44.9m $40.4m Net profit including revaluations $32.0m $27.3m $54.2m Unrealised loss/(gain) in fair value of $2.6m $2.9m ($28.2m) investment properties Distributable profit
Slide 9: Results – distributions
Results – distributions For personal use only 14 13.27 12.98 12.61 6.72 12.08 11.96 6.56 11.98 12 11.38 6.39 11.57 6.17 5.98 5.80 10.50 5.87 4.87 9.56 9.77 10 5.35 9.18 4.86 4.97 4.68 8 6 6.55 6.70 6.63 6.22 6.42 6.18 6.10 5.79 5.51 5.15 4.70 4.80 4 4.50 2 0 FY00 1 FY01 2 FY02 FY03 FY04 FY05 FY06 FY
Slide 10: Results – distribution variance to pcp
Results – distribution variance to pcp1 For personal use only ($m) 38 36 Reviews – 12% Developments – 6% 34 32 30 Acquisitions – 82% 28 26 24 22 20 Distributable profit - Property revenue Net finance costs Responsible entity's Other operating Distributable profit - 1HY11 fees expenses 1HY12 pcp = pr
Slide 11: Results – DPU variance to pcp
Results – DPU1 variance to pcp2 For personal use only (DPU) 6.70 6.60 6.50 72% - effect of lower bank fees and margins and greater utilisation of undrawn bank debt capacity 6.40 28% - reduced net interest payments 6.30 6.20 6.10 6.00 5.90 5.80 Distributable profit - Property revenue Net finance cost
Slide 12: Portfolio - geographic spread
Portfolio - geographic spread For personal use only 61 Bunnings Warehouses 3 Bunnings Warehouse and showrooms 2 Bunnings Warehouse development sites 1 Bunnings distribution centre 1 Bulky goods showrooms 11 3 Industrial properties 1 14 1 2 BWP rental income (as at 31 Dec 2011) 1 14 1 SA 4% WA 19% 1
Slide 13: Portfolio - leases
Portfolio - leases For personal use only > Bunnings rental income represents 96% of the portfolio rental income at 31 December 2011 > Typical Bunnings Warehouse lease in BWP portfolio features: – Minimum 10 year initial term – annual CPI or 3% escalation (plus 5 year tenant options) – Wesfarmers cov
Slide 14: Portfolio – major tenant
Portfolio – major tenant For personal use only > Majority of BWP income underpinned by the highly successful Bunnings business > 4.6% store-on-store sales growth for 6 months to 31 December 2011 (vs. p.c.p) Revenue ($m) Bunnings Group Limited EBIT ($m) 7,000 900 Trading revenue (LHS) EBIT (RHS) 800
Slide 15: Portfolio - pipeline
Portfolio - pipeline For personal use only > Capital committed to acquisitions & developments Property Date $m Acquisitions Craigieburn May 12 18.42 Wallsend (land) May 12 2.83 Domain Central (50%) Jun 12 59.56 80.81 Developments Greenacre Apr 12 16.75 Fyshwick Apr 13 15.00 Rocklea Feb 13 3.83 Score
Slide 16: Portfolio – asset management
Portfolio – asset management For personal use only > Increasing scale and maturity of portfolio requires more active asset management to ensure quality and growth is maintained > Tenant-driven upgrades of existing Bunnings Warehouses likely > Currently assessing opportunities for divesting or redepl
Slide 17: Portfolio – rent reviews
Portfolio – rent reviews For personal use only > 35 leases subject to annual fixed or CPI reviews: w/average +3.5% > Finalised 3 market rent reviews during half-year Passing rent Reviewed Uplift Uplift Property location Effective date ($’000) rent1 ($’000) ($’000) (%) Coffs Harbour, NSW 820 828 8 +0
Slide 18: Portfolio - revaluations
Portfolio - revaluations For personal use only > December 2011 weighted average capitalisation rate 7.81% – June 2011: 7.65% and December 2010: 7.62% – net fair value loss of $2.6m – refer to Appendix A for valuation process and December 2011 valuation summary by State/Territory > 15 independent val
Slide 19: Portfolio – rent reviews and revaluations
Portfolio – rent reviews and revaluations For personal use only > Future market rent reviews and revaluations for Bunnings Warehouses (“BWH”) FY12 FY13 FY14 FY15 FY16 BWH rent reviews 7 7 19 12 6 % of total1 11% 11% 31% 19% 10% Portfolio revaluations 24 15 25 24 15 % of total2 36% 22% 36% 36% 22% Re
Slide 20: Portfolio - Domain Central update
Portfolio - Domain Central update For personal use only > Acquisition of 50% interest subject to conditions precedent relating to refinancing by the vendor (outcome likely to be determined by March 2012) > Property continues to perform well – No rental arrears at 31 December 2011 – MAT1 of +5.7% (li
Slide 21: Capital management
Capital management For personal use only > Financial strength supported by: – low gearing – 18.9% at 31 December 2011 (19.8% covenant gearing) – strong lease covenant in Bunnings/Wesfarmers – solid rental base with growth from CPI and programmed rent reviews – low level of maintenance/stay in busine
Slide 22: Capital management – debt facilities
Capital management – debt facilities For personal use only > Interest cover: 4.6x at 31 December 2011 (2010: 3.8x) > Net borrowing costs1 for the half-year $9.8m (up 7% on December 2010): – average borrowings $236.9m (2010: $194.3m) – 8.2% cost of net borrowings after hedging (December 2010: 9.4%) 1
Slide 23: Capital management – interest rate hedging
Capital management – interest rate hedging For personal use only > $170.0m hedged (71%) at 5.46% weighted average1 > 3.59 years weighted average maturity, including delayed starts (2010: 3.37 years) Hedge book profile by half-year ending: Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Active swaps
Slide 24: Outlook
Outlook For personal use only > Rental income strengthened as a result of the acquisitions of Bunnings Warehouse properties, upgrades of existing properties and rent reviews during 2011 > Finalisation of a further 2 Bunnings Warehouses, potential acquisition of 50% of Domain Central Homemaker Centre
Slide 25: Masters hardware and home improvement
Masters hardware and home improvement For personal use only Assessment of impact on hardware industry and property market purely speculative at this stage Potential positives for BWP > Reinforces the success of the big-box hardware format > Creates competitive market for properties – land values and
Slide 26: 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 26
Slide 27: Appendix A: Valuations
Appendix A: 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 28: Appendix B: Market rent reviews
Appendix B: 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