BWP GROUP — Investor Presentation 2018

Jul 31, 2018

Full-year results to 30 June 2018

August 2018

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.

Presentation Outline

Michael Wedgwood

Managing Director BWP Management Limited

Andrew Ross

Portfolio Manager BWP Management Limited

David Hawkins

Finance Manager BWP Management Limited

• 2018 full-year highlights

• Results

• Portfolio

• Core portfolio

• Alternative use properties

• Capital management

• Outlook

Value drivers

UNIQUE PORTFOLIO	underlying strength of the Australian Home Improvement Market	long duration of occupancy by Bunnings	large sites in high population areas
SOLID CAPITAL STRUCTURE	ongoing capital markets support	low re-financing risk	positioned for growth
DISCIPLINED APPROACH	returns	lease attributes	location

Core values

RESPECTFUL	RESPONSIBLE	RESOURCEFUL
We seek mutually beneficial relationships with all stakeholders	We are professional, honest and transparent in how we operate	We value simplicity and we focus on achieving effective and sustainable outcomes
We treat others as we expect to be treated We are committed to having a safe and inclusive work environment	We are accountable for our actions We operate within the law	We make the most of opportunities We are financially focussed and make decisions based on what creates value

2018 full-year highlights

\$153.4m ⇧ Total revenue 0.6%1	\$114.4m ⇧ Dist. Profit 1.7%1,2	\$17.81cpu ⇧ \$2.85 ⇧ Distribution 1.7%1,2 NTA 4.0%1		14.0% pa 10 yr total return
PORTFOLIO PERFORMANCE		PORTFOLIO MANAGEMENT		CAPITAL MANAGEMENT
2.5% like-for-like rental growth		7 MRRs finalised		A3 Moody's rating
	\$70 million portfolio revaluation uplift			19.3% gearing
6.48% portfolio cap rate		1 property divestment		New \$100m 5yr forward start facility
4.5 years portfolio WALE		98.8% leased		4.5% cost of debt at 30 June 2018

1 In comparison to prior corresponding period

² Current year distribution includes \$1.2m of capital profits released

7

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 cents
Total assets	\$2,369.5m	\$2,312.8m
Borrowings	\$457.6m	\$471.1m
Net tangible assets per unit	\$2.85	\$2.74
Gearing (debt to total assets)	19.3%	20.4%

¹ pcp: prior corresponding period, being the 12 months ended 30 June 2017 or as at 30 June 2017 as relevant

Results – financial performance 6 monthly

	6 months to Jun 18	6 months to Dec 17	6 months 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
Net profit including property revaluations	\$79.7m	\$103.3m	\$150.4m
Number of units on issue	642.4m	642.4m	642.4m
Six month distribution per unit	9.03 cents	8.78 cents	8.88 cents
Total assets	\$2,369.5m	\$2,353.3m	\$2,312.8m
Borrowings	\$457.6m	\$465.5m	\$471.1m
Weighted average cost of debt1	4.46%	4.65%	4.49%
NTA2 per unit	\$2.85	\$2.82	\$2.74
NTA2 per unit excluding hedging liabilities	\$2.86	\$2.82	\$2.75
Weighted average cap rate	6.48%	6.50%	6.59%

¹ Finance costs divided by average borrowings for the six months

² Net Tangible Assets

* Figures above subject to rounding

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 (debt to total assets)	19.3%	20.4%	21.5%	24.1%	24.4%
Weighted average cost of debt2	4.6%	4.6%	5.0%	5.5%	6.1%
Weighted average cap rate	6.48%	6.59%	6.77%	7.33%	7.59%
Management expense ratio	0.60%	0.60%	0.64%	0.65%	0.64%
Total distribution per unit	17.81 cents	17.51 cents	16.79 cents	15.84 cents	14.71 cents

1 Includes any capital profits released

²Finance costs divided by average borrowings

Portfolio – FY2018 like-for-like rental growth

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%	2.4%	2.1%	2.5%
CPI growth4	4.5%	1.6%	2.9%	3.4%	1.7%	2.3%	2.5%	1.6%	1.4%	2.0%

¹ Subject to rounding

²All market rent reviews relating to year ended 30 June 2018

³Like-for-like rental growth compares the passing rent at the end of the period to the passing rent at the end of the previous corresponding period, but excludes any properties acquired, divested, developed or upgraded during or since the previous corresponding period

⁴Reflects the annual average like-for-like growth resulting from CPI rent reviews completed during each period

Portfolio – FY2018 market rent review outcomes

4 Bunnings reviews resulted in a 4.1% increase, three from FY2017, and one due during the year

Property location	Customer	Passing rent (\$pa)	Reviewed rent (\$pa)	Variance	Effective date
Croydon, VIC1	Bunnings	1,868,741	1,900,000	1.7%	31-Oct-16
Gladstone, QLD2	Bunnings	1,137,903	1,308,588	15.0%3	16-Feb-17
Scoresby, VIC1	Bunnings	1,881,763	1,881,763	-	1-Jun-17
Hervey Bay, QLD4	Bunnings	1,252,063	1,300,000	3.8%	23-Dec-17
Weighted Average				4.1%

¹The market rent review was due during the year ended 30 June 2017, but the outcome of the negotiation was only completed during the current financial year

²The market rent review was due during the year ended 30 June 2017, but was determined by an independent valuer in the current financial year

³The independently determined rent was 25.8 per cent above the passing rent however, the market rent review clause in the lease has a 15.0 per cent cap on the increase

⁴The market rent review was negotiated between the parties

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
CPI				Market rent reviews (BWH)
	35	18	55%	Artarmon, NSW
Fixed	20	23	38%	Belrose, NSW
Market	4	5	7%	Fyshwick, ACT
				Hervey Bay, QLD
Total	59	46	100%	Villawood, NSW

Wollongong, NSW ¹Fyshwick ACT, Artarmon NSW, Belrose NSW, Wollongong NSW, Villawood NSW ²Percentage based on portfolio rental as at 30 June 2018

Portfolio – capitalisation rate trends

New Bunnings Warehouse store yields remain stable in the 5.0 to 5.5% range

Bunnings transaction yields

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 6.37%

• FY2018 net fair value gain of \$69.9m on revaluation

• Cap rate compression largely contributed to the net value gain after portfolio average cap rate decreased by 11bps for the 12 months to 30 June 2018
• Cap rate movement; 8 properties decreased, 57 properties no change, and 14 properties increased

Revaluation by state 30 June 2018	No. of properties	Rental \$m/annum1	Cap rate	Value \$m
NSW/ACT	18	34.1	6.61%	519.7
QLD	20	39.9	6.29%	607.2
SA	2	4.0	6.32%	63.5
VIC	23	48.0	6.33%	777.4
WA	16	26.9	6.94%	384.9
Total/weighted average	79	152.9	6 48%	2,352.7

¹ Subject to rounding

Portfolio – June 2018 independent valuations

Property	State	Dec-17 Cap Rate	Dec-17 Valuation (\$m)	Jun-18 Cap Rate	Jun-18 Valuation (\$m)	Cap Rate Movement	Valuation Movement (\$m)	Jun-18 Term Certain (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%	2.4	5.9
Gladstone	QLD	7.00%	41.3	7.00%	44.5	0.00%	3.2	4.4
Southport2	QLD	6.25%	26.5	6.00%	27.0	-0.25%	0.5	5.4
Underwood2	QLD	7.75%	20.0	9.14%	16.9	1.39%	-3.1	0.8
Bayswater	VIC	6.50%	37.2	6.00%	40.6	-0.50%	3.4	2.1
Balcatta2	WA	5.75%	40.6	5.75%	40.6	0.00%	0.0	5.2
Joondalup	WA	7.50%	16.4	7.75%	14.8	0.25%	-1.6	5.2
Total/weighted 1 average		6 49%	238.3	6 40%	243.9	-0 09%	5.6	6 4

¹ Subject to rounding

² Stand alone Bunnings Warehouse

Core portfolio¹ – summary

66	5.0 years
properties	portfolio WALE
3.3ha	14,100m2
average land area	average lettable area
79% metro located properties	40% metro located properties within 20kms of CBD
77% upgrade properties or occupied <12yrs	6.20% weighted average cap rate

¹ excludes any stores being re-positioned

Core portfolio - weighted average lease expiry profile

¹ Includes both proposed and completed upgrades

Core portfolio – lease expiries next 3 years

Property	Lease expiry	Options	Rent (\$'000pa)	Comments
Bayswater	Apr 2019	4 x 5 yrs	1,950	Notification required by Feb 2019; well located property, already upgraded
Browns Plains	May 2019	5 yrs	1,791	Notification required by Feb 2019; Bunnings seeking additional options with no agreement as yet; well located property near Grand Plaza sub-regional shopping centre
Thornleigh	Sep 2019	4 x 5 yrs	1,362	Notification required by Jul 2019; located within 300 metres of shopping centre and passenger train station; zoning allows mixed-use redevelopment opportunities
Noarlunga	Sep 2019	2 x 5 yrs	1,520	Notification required by Jun 2019; zoned Regional Centre
Maitland	Oct 2019	3 x 5 yrs	1,392	Notification required by Aug 2019
Albany	Oct 2019	2 x 5 yrs	870	Notification required by Jul 2019; planning application granted for an upgrade
Bibra Lake	Oct 2019	2 x 5 yrs	1,689	Notification required by Jul 2019
Fountain Gate	Jan 2020	2 x 5 yrs	1,697	Notification required by Oct 2019; potential upgrade
Port Melbourne	Mar 2020	4 x 5 yrs	2,117	Notification required by Dec 2019
Vermont South	Aug 2020	4 x 5 yrs	2,221	Notification required by Jun 2020
Northland	Aug 2020	2 x 5 yrs	1,966	Notification required by Jun 2020
Hawthorn	Oct 2020	4 x 5 yrs	3,255	Notification required by Jul 2020
Coburg	Nov 2020	3 x 5 yrs	1,531	Notification required by May 2020
Mt Gravatt	Dec 2020	4 x 5 yrs	1,326	Notification required by Sep 2020
Broadmeadows	Jan 2021	10 yrs	1,970	Notification required by Oct 2020
Belmont North	Mar 2021	5 yrs	1,191	Notification required by Dec 2020
Portfolio	Mar – May 2021	5 x 5 yrs	12,766	Properties acquired in 2011 portfolio transaction - Belmont, Cockburn, Fairfield Waters, Pakenham, Wagga Wagga, Port Kennedy, Smithfield and Caroline Springs

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 February 2019

• Likely fair value on-completion of development \$31.0 million

• Re-zoning opportunities continue to be assessed for future land use flexibility

Financial performance to date
Purchase date	September 1998
Purchase price	\$9.9 million
Additional capital invested	\$0.4 million
Total invested capital	\$10.3 million
Total rent received (Bunnings)	\$24.7 million
Average annual rent growth since inception	3.5% (CAGR)
June 2018 fair value	\$20.8 million

Other stores being re-positioned

Property	Lease expiry1	Progress
Cairns	Lease expired	Re-leasing campaign ongoing, development options being assessed
Port Macquarie	Nov 2018	Bunnings intend to relocate to a new store on the ex-Masters site. New store due to be complete in 2019. Leasing campaign underway, other re-development options being assessed
Mandurah	Nov 2018	Anchor tenant terms finalised; negotiations with national retailers for remaining lettable area progressing; DA approval in place, building cost being finalised
Underwood	Apr 2019	Leasing campaign underway, other re-development options being considered
Morley	Jul 2020	Re-leasing discussions progressing. Medium term residential and/or mixed-use development potential. Bunnings now trading at new ex-Masters property in Bayswater. Bunnings still trading from Morley store
Hoxton Park	Oct 2020	Large format retail, advanced re-leasing discussions. DA lodged in May 2018
Mindarie	Sep 2021	Scheme amendment and structure plan proposal lodged with council in May 2018

¹To the end of the current lease term

25

Divestments

Property	Sale price (\$m)	Lease expiry1	Status
Dandenong	16.4		Property sold in November 2017
Altona	14.4	Lease surrendered	Option exercised, settlement anticipated for September 2018
Burleigh Heads	19.7	Oct 2018	Option exercised, settlement scheduled for September 2018. Rent payable to BWP until settlement
Epping	16.2	Mar 2019	Conditional purchase contract, settlement anticipated for February 2019. Rent payable to BWP until settlement
Oakleigh South	21.4	Mar 2019	Option exercised, settlement scheduled for February 2019. Rent payable to BWP until settlement

¹To the end of the current lease term

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 invested	\$7.4 million
Total invested capital	\$11.7 million
Total rent received	\$19.9 million
Average annual rent growth since inception	3.5% (CAGR)
Sale price	\$16.4 million
June 2017 fair value	\$13.3 million

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 anticipated for September 2018

Outcome

Purchase date	September 1998
Land & building purchase price	\$7.4 million
Additional capital invested	\$2.8 million
Total invested capital	\$10.2 million
Total rent received	\$17.7 million
Average annual rent growth since inception	3.3% (CAGR)
Sale price	\$14.4 million
December 2016 fair value	\$13.9 million

28

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, settlement scheduled for September 2018. Rent payable to BWP until settlement

Outcome
Purchase date	October 1998
Land purchase price	\$2.4 million
Additional capital invested	\$8.6 million
Total invested capital	\$11.0 million
Total rent received	\$26.5 million
Average annual rent growth since inception	3.5% (CAGR)
Sale price	\$19.7 million
June 2017 fair value	\$16.6 million

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, settlement anticipated for February 2019

Outcome
Purchase date	March 1999
Land purchase price	\$3.0 million
Additional capital invested	\$6.2 million
Total invested capital	\$9.2 million
Total rent received	\$21.0 million
Average annual rent growth since inception	3.3% (CAGR)
Sale price	\$16.2 million
June 2017 fair value	\$13.1 million

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, settlement scheduled for February 2019. Rent payable to settlement

Outcome
Purchase date	April 2001
Land purchase price	\$7.0 million
Additional capital invested	\$10.0 million
Total invested capital	\$17.0 million
Total rent received	\$31.5 million
Average annual rent growth since inception	2.1% (CAGR)
Sale price	\$21.4 million
June 2017 fair value	\$18.3 million

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 further year each year, subject to agreement

• New \$100m forward start 5 year term debt facility with Sumitomo Mitsui Banking Corporation entered into post year-end to commence May 2019

• Cost of debt at 30 June 2018: 4.5%

• Interest cover: 6.5 at 30 June 2018 (2017: 6.3x)

• Gearing: 19.3% at 30 June 2018 (2017: 20.4%)

• A3/ Stable Moodys rating obtained and A- /Stable / S&P rating maintained

As at 30 June 2018	Limit (\$m)	Drawn (\$m)	Expiry
CBA	110	68	31 July 2020
WBC	135	79	30 April 2021
Corporate bond 200		200	27 May 2019
Corporate bond	110	110	11 May 2022
Total/Weighted average	555	457	2 2 years

Capital management – debt duration

34

Capital management – interest rate hedging

Hedge book profile by half-year ending:	Jun 18	Dec 18	Jun 19	Dec 19	Jun 20	Dec 20
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	2.79

• Including fixed rate corporate bonds:

• \$397.5m hedged at 2.72%² weighted average to maturity, at 30 June 2018

¹ Weighted average at balance of active swaps

² excludes margins payable on the fixed corporate bonds

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 finalised this financial year (plus 5 from FY2018)

> Investment

• Strong focus on achieving good outcomes on alternative use sites
• Will progress opportunities to re-invest in existing portfolio and re-zonings
• Portfolio growth opportunities will be influenced by market valuations

> FY2019 distribution

• For FY2019, the Trust expects further rental growth from its core Bunnings warehouse property portfolio. It is likely that the divestment of up to four properties will be completed during the year and that other ex-Bunnings Warehouse stores will be transitioned to alternative uses with some impact on overall rental income.
• We expect to be in a position to at least maintain distribution growth equivalent to that for the year ended 30 June 2018. Capital profits will be utilised to support distributions as required during this period of transition.

Further information

bwptrust.com.au

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

38