Skip to main content

AI assistant

Sign in to chat with this filing

The assistant answers questions, extracts KPIs, and summarises risk factors directly from the filing text.

Sign up Log in

BWP GROUP Investor Presentation 2008

Sep 8, 2008

64592_rns_2008-09-08_9a403faf-4af8-477f-b2f9-8bad3474f7ba.pdf

Investor Presentation

Open in viewer

Opens in your device viewer

ARSN 088 581 097

9 September 2008

The Manager Company Announcements Office Australian Securities Exchange Limited Level 4, 20 Bridge Street SYDNEY NSW 2000

Dear Sir

RESULTS PRESENTATION FOR THE FULL YEAR TO 30 JUNE 2008

Attached is a copy of a presentation to be presented to institutional investors in Sydney and Melbourne on 9 and 10 September.

Yours sincerely

K A LANGE COMPANY SECRETARY

Presentation outline

Grant Gernhoefer

General Manager Bunnings Property Management Limited

Andrew Ross

Portfolio Manager Bunnings Property Management Limited

  • Overview
  • Results
  • Key growth areas
  • Portfolio
  • Capital management
  • Structure
  • Outlook

Overview

Steady earnings results and growth through acquisitions and upgrades in difficult market conditions

Revaluation of properties increased cap rates from 6.58% to 7.08%

Defensive characteristics - well placed to face further volatile market conditions

Underlying strengths of the Trust

  • Traditional property trust
  • 100% domestic
  • 100% leased
  • 100% payout of distributable profit
  • Low gearing
  • Geographic diversification
  • Strong lease covenant
  • 6.9 year weighted average lease expiry (based on rental income)

Results - performance

R
e
e
n
e
v
u		 \$
6
9
i
l
l
i
5
m
o
n		 1
0
3
%
o
n
p
c
p
f
N
i
t
t
e
p
r
o		 \$
0
i
l
l
i
7
m
o
n		 \$
i
l
l
i
2
0
7
0
m
o
n
p
c
p
D
i
i
b
b
l
f
i
(
l
d
l
i
)
t
t
t
t
s
r
u
a
e
p
r
o
e
x
c
u
e
s
r
e
v
a
u
a
o
n
s		 \$
i
l
l
i
4
0
0
m
o
n		 2
3
%
o
n
p
c
p
F
l
l
d
i
i
b
i
t
t
e
a
r
s
r
o
n
u
y
u		 1
3
2
7
c
p
u		 2
2
%
o
n
p
c
p
T
l
t
t
o
a
a
s
s
e
s		 \$
i
l
l
i
9
7
9
9
m
o
n		 1
7
%
o
n
p
c
p
B
i
o
r
r
o
n
g
s
w		 \$
3
0
8
i
l
l
i
5
m
o
n		 1
9
3
%
o
n
p
c
p
N
i
b
l
t
t
t
e
a
n
g
e
a
s
s
e
s		 \$
2
1
2
i
t
p
e
r
u
n		 \$
0
1
2
o
n
p
c
p
W
i
h
d
t
t
e
g
e
a
e
r
a
g
e
c
a
p
r
a
e
v		 7
0
8
%		 6
5
8
%
p
c
p
G
(
)
i
d
b
l
t
t
t
t
t
e
a
r
n
g
e
o
o
a
a
s
s
e
s		 3
1
%
5		 2
6
8
%
p
c
p

Results - distributions

1 Trust commenced trading in Sep 98 2 end of concessional management fee

Interim DPUFinal DPU

  • 1. Acquire new and established Bunnings Warehouses
  • 2. Improve existing properties
  • 3. Grow rental income from existing properties
  • 4. Acquire or develop bulky goods properties

  • 5. Acquire other properties that meet the Trust's investment criteria

  • 1. Acquire new and established Bunnings Warehouses

Villawood, NSW (\$18.4m + \$0.9m acq. costs) – May 08

  • 26km west of Sydney CBD
  • 2.6ha site; 10,250 m2total retail area

  • 10 years + 5 x 5 year options

  • annual rent \$1,332,500

  • annual 3% escalation
  • market review on options (cap/collar +/-10%)

2. Improve existing properties

Morayfield, QLD (\$3.4m)

  • additional 1,926 m2retail area and 56 car bays
  • incremental rent \$0.27m pa represents 8.0% return on capital outlay
  • completed Feb 08

2. Improve existing properties (continued)

Mile End, SA (\$2.8m)

  • additional 1,469m2 retail area
  • incremental rent \$0.22m per annum
  • 8.0% return on capital outlay
  • completed Apr 08

Mechanical ventilation (\$1.5m)

  • installed in 6 Bunnings Warehouses
  • pay-back over 5 years by special rent commencing Aug 07

2. Improve existing properties (continued)

Hawthorn, VIC (acquired in Apr 07)

  • •new multi-level format 7,462m2Bunnings Warehouse
  • 7 km east of CBD
  • 0.84ha site
  • Trust acquired site for \$19.0m + \$1.2m acq. costs with development agreement and agreement for lease in place
  • development risk remains with vendor/developer
  • final payment of \$24.0m by Trust on completion expected Dec 08
  • commencing annual rent \$2.7m

3. Grow rental income from existing properties

M
k
R
t
t
a
r
e
e
n
R
i
e
e
s
v
w		 P
i
a
s
s
n
g
\$
(
'0
)
t
0
0
r
e
n		 D
i
d
/
t
e
e
r
m
n
e
i
d
t
t
t
n
e
g
o
a
e
r
e
n
\$
(
'0
)
0
0		 U
l
i
f
t
%
p		 E
f
f
i
d
t
t
e
c
v
e
a
e
S
A
N
W
t
r
a
r
m
o
n
,		 1
3
1
3
,		 1
3
9
6
,		 6
3		 9
F
b
0
8
e
B
l
N
S
W
e
r
o
s
e
,		 1
6
1
8
,		 1
7
6
4
,		 9
1		 F
b
9
0
8
e
C
i
Q
L
D
a
r
n
s
,		 1
1
0
7
,		 1
1
0
7
,		 - F
b
9
0
8
e
C
D
d
V
I
a
n
e
n
o
n
g
,		 1
0
7
7
,		 1
1
9
0
,		 1
0
5		 1
1
N
0
7
o
v
i
C
F
h
k,
A
T
s
c
y
w		 1
0
1
5
,		 1
0
1
5
,		 - 2
4
D
0
7
e
c
H
B
Q
L
D
e
r
e
a
v
y
y
,		 9
0
5		 1
0
0
0
,		 1
0
6		 D
2
3
0
7
e
c
W
i
h
d
t
e
g
e
a
v
e
r
a
g
e		 6
2

*Wollongong market rent review effective 9 Feb 08 determined after annual results reported; 4.9% uplift on passing rent of \$1.15m

  • 4. Acquire or develop bulky goods properties

Geraldton Showrooms, WA (\$2.9m + \$0.1m acq. costs)

  • 1.2 ha site
  • adjoins the Trust's Bunnings Warehouse
  • \$0.5m conversion costs
  • gross lettable area 1,511m 2
  • 1,162m2leased to BCF (Super Cheap Auto Group)
  • 349m2vacancy (close to finalising lease negotiations) with national chain

5. Acquire other properties that meet Trust's investment criteria

Blackburn, VIC (\$19.0m + \$1.1m acq. costs)

  • 18 km east of Melbourne CBD; near Nunawading "Golden Mile" bulky goods precinct
  • 4.1 ha site; 20,464m2office/warehouse facility
  • fully leased to 4 tenants; Gainsborough, Sleepmaster, Pacific Labs and Telstra
  • net income \$1.43m per annum
  • 2 major tenants comprise 95% of income
  • weighted average lease expiry of 4 years
  • long term re-development potential

60 properties – good geographic spread

Jun 08VIC *21 NSW/ACT 14 QLD 10 WA 12 SA 3 TOTAL 60 ) 51 Bunnings Warehouses ) 2 Bunnings distribution centres . 2 Bunnings Warehouse development sites ) 4 Industrial properties ) 2 Bulky goods showrooms* ) 10 ) 2 ) 8 ) 13 ) 18 . 2 ) 1 ) 1 ) 1 ) 2 ) 1 ) 1) 1

* Showrooms at Bayswater are on the same site as the Bayswater BWH

6.9 year weighted average lease expiry (by rental income)

Typical Bunnings Warehouse lease features

  • 15 years (plus 2 x 5 year options)

  • annual CPI escalation

  • 5 yearly market rent reviews (majority uncapped)

  • Wesfarmers covenant

Revaluations

  • 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 independent valuer and have regard to the independent valuations completed at the time
  • June 08 weighted average capitalisation rate 7.08% (Dec 07: 6.58% and June 07: 6.58%)

Revaluations (continued)

I
d
d
t
n
e
p
e
n
e
n
l
i
t
v
a
u
a
o
n
s		 D
3
1
0
7
e
c		 J
3
0
0
8
u
n
e		 D
3
1
0
8
e
c		 J
3
0
0
9
u
n
C
V
I		 3 1 4 1
W
A		 2 1 2 -
Q
L
D		 - 3 3 3
N
S
W
/
A
C
T		 - 2 4 1
S
A		 - 2 - -
P
i
f
t
r
o
p
o
r
o
n
o
f
l
i
l
t
p
o
r
o
o
a
e
v
u		 1
1
1
%		 2
1
3
%		 2
2
%
7		 2
9
%

1 percentage based on fair value as at 31 December 2007

2 percentage based on fair value as at 30 June 2008

Market rent reviews

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 size and similar standard of construction and used for similar purposes
  • no regard to store turnover (i.e. no turnover or percentage rent)

Process

  • Trust's asking rent based on advice from an independent valuer
  • negotiation period with Bunnings
  • if not agreed with Bunnings then referred to determination
  • determination by independent valuer jointly agreed or nominated by the President of the Australian Property Institute
  • results binding

21 market rent reviews in FY09

Q
1
t
a
r
e
r
u
F
Y
0
9		 Q
2
t
a
r
e
r
u
F
Y
0
9		 Q
3
t
a
r
e
r
u
F
Y
0
9		 Q
4
t
a
r
e
r
u
F
Y
0
9		 K
e
y
R
k
l
o
c
e
a		 V
I
C
A
l
t
o
n
a		 B
l
i
h
H
d
u
r
e
g
e
a
s		 W
A
B
d
d
r
o
a
m
e
a
o
w
s		 U
d
d
n
e
r
w
o
o		 Q
L
D
M
t
e
n
o
n
e		 S
t
h
t
o
u
p
o
r
S
d
a
n
o
n
w		 H
(
D
C
)
t
e
m
m
a
n		 S
/
C
N
W
A
T
S
b
c
o
r
e
s
y		 P
M
i
t
o
r
a
c
q
u
a
r
e
S
h
i
u
n
s
n
e		 T
u
g
g
e
r
a
n
o
n
g
B
l
t
t
a
c
a
a		 i
i
M
h
b
n
c
n
u
r
y		 C
H
i
l
l
a
n
n
o
n		 i
L
s
m
o
r
e
J
d
l
o
o
n
a
p
u		 M
d
h
a
n
r
a
u		 i
E
p
p
n
g		 B
t
a
y
s
w
a
e
r
P
i
%
f
t
a
s
s
n
g
r
e
n
a
s
o
1
l
f
l
i
t
t
t
o
a
p
o
r
o
o		 1
3
%		 1
6
%		 3
%		 3
%

1 percentage based on rental as at 30 June 2008

Future Bunnings Warehouse revaluations and market rent reviews

F
Y
0
9		 F
Y
1
0		 F
Y
1
1		 F
Y
1
2		 F
Y
1
3
R
i
t
e
n
r
e
e
s
v
w		 1
2
1		 1
2		 4 7 7
R
l
i
t
e
v
a
u
a
o
n
s		 1
8		 2
2		 1
9		 1
8		 2
2

1 two completed - Altona with 3% uplift and Rocklea at existing rental

Capital management

Debt facilities

A
t
s
a
3
0
J
0
8
u
n
e		 \$
i
i
(
)
L
t
m
m		 \$
(
)
D
r
a
w
n
m		 i
R
e
v
e
w		 i
E
x
p
r
y
A
N
Z		 1
0
0		 1
0
0		 1
S
2
0
0
8
e
p		 J
l
2
0
0
9
u
N
A
B		 1
0
0		 1
0
0		 2
O
2
0
0
8
t
c		 E
v
e
r
g
r
e
e
n
C
B
A		 1
0
0		 6
0		 3
O
2
0
0
8
t
c		 3
J
2
0
1
0
a
n
C
W
B		 8
0		 0
5		 4
J
l
2
0
0
9
u
y		 4
J
l
2
0
1
0
u
y
3
8
0		 3
1
0

1 ANZ - review in Sep 2008 for pricing to apply from Feb 2009 to July 2009

2 NAB - pricing review to apply from 1 April 2009 to 31 March 2010 with a further review in March 2009 for pricing to apply from 1 April 2010 to 31 March 2011 and subsequent March pricing reviews on a rolling basis

  • 3 CBA review in Oct 2008 to extend to Jan 2011 at bank's option and subsequently on a rolling basis
  • 4 WBC review in July 2009 to extend to July 2011 at bank's option and subsequently on a rolling basis

Interest cover ratio: 3.3x (2007: 3.9x)

Capital management

Gearing at 31.5%

Capital management

Interest rate management

  • \$240.0 m hedged (77 %)
  • 6.39% weighted average rate for all debt across 2008 after hedging and including margins (2007: 6.06%)
  • 2.4 years weighted average maturity, including delayed starts (2007: 3.5 years)
H
d
b
k
e
g
e
o
o		 F
i
i
l
d
d
n
a
n
c
a
y
e
a
r
e
n
e
i
o
e
r
e
v
v
w		 J
0
4
n
e
u		 J
5
0
n
e
u		 J
0
6
n
e
u		 J
0
7
n
e
u		 J
0
8
n
e
u
%
d
b
h
d
d
1
t
e
e
g
e		 9
5		 1
0
0		 8
8		 8
2		 7
7
S
(
)
%
t
w
a
p
r
a
e
s
M
i
a
x
m
u
m		 6
6
2		 6
6
2		 6
6
2		 6
6
7		 8
8
7
M
i
i
n
m
u
m		 4
9
7		 4
9
7		 4
9
7		 5
0
9		 5
0
9
2
W
i
h
d
t
e
g
e
a
v
e
r
a
g
e		 5
7
5		 5
7
3		 5
7
2		 5
9
9		 6
2
1

1interest bearing debt at 30 June

2at 30 June (excluding margins)

Structure

Manager: Bunnings Property Management Limited

Subsidiary of Wesfarmers Limited but…independent board

  • • John Austin (Chairman); Leighton Properties (Chairman), MREEF, Ringmer Pacific, ex Jones Lang LaSalle
  • Peter Mansell; WAN (Chairman), ThinkSmart (Chairman), OZ Minerals, Great Southern
  • •Peter Johnston; Kresta
  • •Rick Higgins (joined Dec 07); ex Colliers

Major Tenant: Bunnings Group Limited

•subsidiary of Wesfarmers Limited

Register

  • •Wesfarmers 23%
  • •"institutions" approximately 24%
  • •retail, other approximately 53%

The Trust is well placed to weather current market volatility

  • Low gearing and headroom under debt facilities allow selective acquisitions
  • Hedged for short term look for opportunities to extend hedging duration
  • Focus on acquiring Bunnings Warehouses
  • Improve existing properties
  • Grow rental income from existing portfolio (annual CPI escalation and market rent reviews)

More from BWP GROUP

Director's Dealing 2026
Jun 3
Capital/Financing Update 2026
May 26
Share Issue/Capital Change 2026
May 26
Director's Dealing 2026
May 25
Major Shareholding Notification 2026
May 19
Share Issue/Capital Change 2026
May 14
Share Issue/Capital Change 2026
May 13
Share Issue/Capital Change 2026
May 13
Share Issue/Capital Change 2026
May 11
Share Issue/Capital Change 2026
May 11
View all filings →