BWP GROUP — Investor Presentation 2011

Nov 6, 2011

7 November 2011

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MERRILL LYNCH 2011 AUSTRALIAN REIT CONFERENCE PRESENTATION MATERIALS

Attached are the investor presentation materials to be presented by BWP Management Limited, the responsible entity for BWP Trust, at the Merrill Lynch 2011 Australian REIT Conference taking place in Sydney over 8 and 9 November 2011.

For further information please contact:

Grant Gernhoefer

General Manager BWP Management Limited

Telephone: +61 8 9327 4318 E-mail: ggernhoefer@bwptrust.com.au Website: www.bwptrust.com.au

Australian REIT Conference Sydney 8-9 November 2011

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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 responsible entity for BWP Trust. The information provided is for information purposes only and does not constitute an offer to issue or arrange to issue, securities or other financial products, nor is it intended to constitute legal, tax or accounting advice or opinion. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. This presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person.

All reasonable care has been taken in preparing the information contained in this presentation, however no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. Without limiting the preceding sentence, no representation or warranty, express or implied, is given as to the accuracy, completeness, likelihood of achievement or reasonableness of any forward looking statements, forecasts, prospects or returns contained in this presentation. Such forward looking statements, forecasts, prospects or returns are by their nature subject to significant uncertainties and contingencies, many of which will be outside the control of BWP Trust or BWP Management Limited. Also, past performance is no guarantee of future performance.

Before making an investment decision, you should conduct your own due diligence and consult with your own legal, tax or accounting adviser as to the accuracy and application of the information provided in this presentation and in respect of your particular investment needs, objectives and financial circumstances.

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Information outline

Grant Gernhoefer

General Manager BWP Management Limited

Andrew Ross Portfolio Manager BWP Management Limited

BWP profile > Portfolio overview > Strategy > Domain Central > Outlook

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BWP profile – snapshot

• Traditional real estate investment trust (exposed to direct property only, limited development risk, no funds management activity, externally managed)

• Domestic focus, with predominantly warehouse retailing properties, particularly Bunnings Warehouse home improvement big box stores

• Listed in 1998 as Bunnings Warehouse Property Trust with 20 Bunnings Warehouse properties valued at $170 million

• Name change to BWP Trust in April 2011 to reflect the operational and legal independence of the Trust from Bunnings, the main tenant, and to recognise the Trust’s own credentials

• 70 investment properties valued at $1,225 million including 62 of 174 operating Bunnings Warehouses in Australia (36%)[1]

• Annualised rental income of approximately $92.6 million[1]

• Weighted average lease expiry of 8.4 years[2]

• 100% occupancy

• Gearing 17%[1 ] (debt to total assets)

1 as at 30 June 2011

2 as at 30 September 2011

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BWP profile – market performance

BWP unit price has outperformed during exceptionally difficult market conditions

BWP unit price vs S&P/ASX 200 A-REIT index & All Ordinaries index 3 years to 30 September 2011

Source: Reuters, rebased to 100 for periods ended 30 September 2011

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BWP profile – total returns

BWP total returns compared to market – periods ended 30 September 2011

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Total returns include distributions and movement in price (assumes distributions are reinvested). Source: UBS

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BWP profile – distributions

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13.27 13.30
12.98
12.61
11.96 12.08 11.98
11.57
11.38
10.50
9.56 9.77
9.18
1 2 3 4 5
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• 1 BWP commenced trading in Sep 98

• 2 end of concessional management fee

• 3 final distribution FY09 – impacted by additional units issued from $150 million capital raising and one-off termination costs of interest rate derivatives closed out to pay down debt from capital raising

• 4 includes $0.4m (0.09cpu) capital profit on sale of Canning Vale

• 5 as per BWP guidance at 17 February 2011

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Portfolio – geographic spread1

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60 Bunnings Warehouses
2 Bunnings Warehouse and showrooms
3 Bunnings Warehouse development sites
1 Bunnings distribution centre
1 Bulky goods showrooms
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13
3 Industrial properties 1
1
1 2
BWP rental income [1]
1
15
WA 18% 1
SA 4% 1
VIC 39%
QLD
19%
20
NSW
17% 1
1
2
ACT 3%
1 As at 30 June 2011
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Portfolio – lease expiry

8.4 year weighted average lease expiry (by rental income) at 30 September 2011

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Lease expiry profile
16
Non Bunnings Bunnings
14
1
12
10
8
14
6 12
2 10
3 3
4
3
5
2 4 4
1 3 3 3
2 2
1 1
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Years to expiry (ended 30 September)
Number of leases
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Portfolio – rental income

• Typical Bunnings Warehouse leases feature:

• Minimum 10 year initial term (plus 5 year tenant options)

• Annual CPI or 3% escalation with periodic market reviews

• Generally, 5 yearly market rent reviews (majority uncapped)

• Wesfarmers covenant (A- (stable) credit rating)

• Non-Bunnings rental income represents 4.3% of portfolio rental income at 30 June 2011

Average like-for-like annual rental growth over the 5 years to 30 June 2011 is 4.2%

Like-for-like rental growth

	FY04	FY05	FY06	FY07	FY08	FY09	FY10	FY11
BWP	8.2%	4.1%	3.0%	4.4%	2.8%	7.1%	3.4%	3.4%

Note: Like-for-like rental growth compares the passing rent at the end of the period to the previous corresponding period

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Portfolio – major tenant

Majority of BWP income underpinned by the highly successful Bunnings business

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Revenue ($m) Bunnings Group Limited EBIT ($m)
7,000 900
Trading revenue (LHS) EBIT (RHS)
800
6,000
700
5,000
600
4,000 500
400
3,000
300
2,000
200
1,000
100
- -
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
EBIT/revenue 11.0% 10.3% 10.4% 10.6% 10.1% 11.6% 11.3% 11.3% 11.4% 11.8%
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Source: Wesfarmers Limited ASX Announcements Notes: > Trading revenue excludes property rental income and non-trade items > EBIT is earnings before interest and taxes

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Portfolio – pipeline

Capital committed to Bunnings Warehouse acquisitions & developments[1]

		Property	$m
	Acquisitions	Craigieburn2	18.42
		Wallsend3	2.50	20.92
	Developments	Greenacre	16.75
		Fyshwick	15.00
		Rocklea	3.83
		Scoresby	6.26
	Total	Wallsend3	18.79	60.63 81.55

• 1 As at 30 September 2011 - not including acquisition costs

• 2 Subject to subdivision

• 3 Subject to exercise of Bunnings’ option to purchase from third-party owner

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Strategy – planning process

Annual review of strategic direction and on-going monitoring of business plans

Core purpose Strategies Objectives Business plan

Reviewed annually to ensure continued relevance

Actions set annually and progress reviewed at each board meeting

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Strategy – strategic direction

> 3 main strategies directed towards BWP’s core purpose

Core purpose

Provide a premium commercial real estate investment product, providing unitholders with a secure and growing income stream and long-term capital growth

Strategies

Drive better returns from existing assets through focused and pro-active asset management

Deliver efficiency, sustainability and value through effective management of the Trust and its capital

Generate growth by acquiring quality commercial properties that meet the Trust’s investment criteria

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Strategy – asset management

Extract more from existing assets

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Strategies
Drive better returns Deliver efficiency, Generate growth by
from existing assets sustainability and value acquiring quality
through focused and through effective commercial properties
pro-active asset management of the that meet the Trust’s
management Trust and its capital investment criteria
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Objectives

1. Diligent approach to rent reviews

2. Focus on full occupancy and strong tenant covenants Income focused

3. Generate efficiencies in outgoings and stay in business capital expenditure

4. Pursue value enhancing capital improvements 5. Implement longer term enhancements, such as rezoning; lease Capital value improvements; improving accessibility and format focused

5. Divest or redeploy assets at an appropriate time

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Strategy – stewardship

> Operate effectively for competitive advantage

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Strategies
Drive better returns Deliver efficiency, Generate growth by
from existing assets sustainability and value acquiring quality
through focused and through effective commercial properties
pro-active asset management of the that meet the Trust’s
management Trust and its capital investment criteria
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Objectives

1. Maintain reliable cash flow and access to funding at a competitive cost

2. Demonstrate a disciplined investment approach

3. Command a competitive advantage from reputation, capital management and smart and efficient operations

4. Uphold and improve the Trust’s reputation and profile

5. Undertake genuine environmental, social and governance endeavours

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Improved
competitiveness
Governance
focused
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1. Maintain a skilled, experienced and credible Board and management team

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Strategy – acquisitions

> Build the portfolio selectively

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Strategies
Drive better returns Deliver efficiency, Generate growth by
from existing assets sustainability and value acquiring quality
through focused and through effective commercial properties
pro-active asset management of the that meet the Trust’s
management Trust and its capital investment criteria
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Objectives

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1. Source quality Bunnings Warehouses from primary and secondary
Remains “core”
markets
2. Pursue prime big-box and bulky goods retailing properties
No more than
20% of total
gross annual
rental income
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Strategy – current priorities

Asset management

• Upgrades of existing properties (to increase income, improve building format, and extend lease expiry)

• Redeploy or divest properties that have reached optimal value for BWP (crystallise capital growth for unitholders, recycle capital, refine portfolio quality)

• Diligent approach to market rent reviews

Stewardship

• Improve the efficiency, diversity and duration of debt funding

• Genuine and relevant sustainability endeavours – improve measurement and reporting, increase understanding and implement practical improvements

Acquisitions

• Consider quality properties providing earnings accretion

• Bunnings Warehouses remain main focus

• Over-riding consideration: secure and growing income stream and long-term capital growth

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Strategy – acquisition diversification

• Bunnings Warehouses provide a successful and high profile tenant and attractive property characteristics (strong covenant, long-term leases, low on-going capital and management requirement, moderate purchase price)

• Consequently, buying opportunities can be limited:

• Finite market dependent on expansion of Bunnings’ network

• Strong competition for acquisition by private and institutional investors

• Third-party owned Bunnings Warehouses tightly held

• Not all Bunnings Warehouses suit BWP’s focus on quality locations and lease terms likely to deliver the required income and capital growth

• Access to non-Bunnings properties broadens scope for BWP to continue to deliver income and long-term capital growth

• Prime bulky goods (refer to next page) and other stand-alone big box retailing properties similar to Bunnings Warehouses offer the best fit for BWP, with similar property and investment fundamentals

• 20% non-Bunnings property income is a limit not an aspiration (not a target, but a ceiling should appropriate non-Bunnings properties become available)

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Domain Central – acquisition rationale

Super homemaker centres – emerging format for growth

• Large scale prime homemaker centres, anchored by a range of national and chain retailers offer a refinement on conventional bulky goods concept

• Predominance of national and chain retailers provides drawing power for other tenants creating single-destination comparative shopping for customers

• Critical mass to help maintain and potentially increase dominance of their catchment

• Lower occupancy cost base and larger floor space for retailers than traditional shopping centres

• More flexibility structurally to adapt to changes in retailing and consumer trends

Complementary to BWP portfolio

Strong property fundamentals with additional diversification benefits

• Scale, dominance and competitive occupancy costs of prime centres underpin the security and growth of income and long term capital growth required by BWP

• Bulky goods increasingly co-located with Bunnings Warehouses

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Domain Central – impact on BWP portfolio

Increased portfolio exposure to Queensland

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Geographic diversification (by value)
4% 3% 4% 3%
18% 17%
19% 18%
Post transaction
NSW NSW
VIC VIC
QLD QLD
WA WA
16%
SA 20% 38% SA
40%
ACT ACT
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Acquisition diversifies BWP portfolio tenant base by 5% (by income)

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Bunnings covenant (by income)
4% 9%
91%
96%
Post transaction
Bunnings Bunnings
Non‐Bunnings Non‐Bunnings
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Domain Central – transaction summary

• Agreement to acquire a 50% interest in Domain Central Homemaker Centre

• Subject to conditions precedent relating to refinancing by the vendor (outcome likely to be determined late 2011)

• Vendor retains 50% ownership and will manage the property

• Vendor/manager has extensive experience in owning and managing bulky goods/retail (owns/manages Home Hub Hills homemaker centre in Sydney and Armadale Plaza Shopping Centre in regional NSW, formerly managed Terrace Tower portfolio)

• Acquisition to be fully funded from existing and new BWP finance facilities

• Forecast to be accretive to earnings and distributions from settlement

• Strong regional economy underpinned by a diverse industry base including mining, manufacturing, defence, construction, government and tourism

• Trade area population forecast to grow by 2.5% p.a. to 2016[1]

• 1 Office of Economic and Statistical Research—Queensland Treasury estimate as at 30 June 2010

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Domain Central – property overview

• Property located 6km south-west of Townsville CBD

• Domain Central forms part of an integrated homemaker precinct (Appendix A)

• The precinct incorporates a freestanding Bunnings Warehouse, Harvey Norman, Spotlight and Anaconda complex—not included in the acquisition

Purchaseprice 1	$61.5m
Independent valuation 1	$61.5m
Caprate	9.0%
Site area	12.3ha
Gross lettable area	48,721m2
Number of tenancies	65
Car bays	1,600
Vacancyrate2	0.4%
Weighted average lease expiry2	3.9yrs
Retailer occupancycosts	9.4%

• 1 Relates to 50% interest only

2 As at 1 October 2011 by rental income

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Domain Central – tenancy profile

Broad tenancy mix: national/chain retailers comprise 88% of gross lettable area > 90% of national/chain retailers are company operated stores

Top 10 tenants (by rent) account for 37% of rental income and 43% of area > No rental arrears at 30 June for the last three years > MAT [1] of +5.1% (like-for-like) as at 30 September 2011

Retailer category as a proportion of total GLA

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4%
5%
Furniture
5%
27% Leisure/entertainment
6%
Household
Electrical appliances
10% Clothing/fashion
General retail
Bedding
16%
13% Other
Food
14%
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1 Moving Annual Turnover of those retailers that have been at the centre for at least 2 years and are required to report sales figures (34 retailers)

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Domain Central – lease expiry profile

• Leases are generally 5–10 years with annual fixed or consumer price index reviews and periodic market rent reviews

• Staggered lease expiry profile of Domain Central reduces re-leasing risk

Lease expiry profile (by area)

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Outlook

• Rental income strengthened as a result of the acquisitions of Bunnings Warehouse properties, upgrades of existing properties and rent reviews during 2011

• Proposed acquisition of Domain Central and committed upgrades and developments of Bunnings Warehouses will bolster earnings in 2012

• Further tenant-driven upgrades will be considered to improve earnings and value

• Assessing options for accessing debt capital markets to further improve the efficiency, diversity and duration of financing and to increase capacity for appropriate acquisitions and capital expenditure

• Gearing post Domain Central acquisition and committed capital expenditure anticipated to remain below 25% (debt to total assets)

• Entry of Masters into hardware and home improvement market will be monitored (refer to next page)

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Outlook – impact of Masters

Preliminary assessment

• Too early to assess impact on hardware industry and property market. Preliminary view is that there is sufficient differentiation in offer and relative pricing to support two major players

Potential impacts for BWP

• Reinforces the success of the big-box hardware format

• Creates competitive market for properties – land values and market rents

• Potential alternative source for BWP of warehouse retailing properties with similar characteristics as Bunnings Warehouses

• May generate increased demand for upgrades of BWP’s existing Bunnings Warehouses for some properties and redeployment of others should Bunnings relocate

Sustainability of big-box hardware market

• Well established and popular concept

• Part of a large and generally fragmented hardware and home improvement market

• Relatively low market penetration compared with overseas

• Potential for category and product line expansion

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Further information

Visit: www.bwptrust.com.au

Responsible entity: BWP Management Limited Tel: +61 8 9327 4356 Email: ggernhoefer@bwptrust.com.au

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Appendix A Domain Central site plan

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Subject property
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