Full-year results to 30 June 2017 August 2017
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. 2
Presentation Outline > 2017 full-year highlights Michael Wedgwood Managing Director > Results BWP Management Limited > Portfolio Andrew Ross Portfolio Manager > Core portfolio BWP Management Limited > Alternative use properties David Hawkins > Capital management Finance Manager BWP Management Limited > Primary business objectives > Outlook 3
2017 FULL-YEAR HIGHLIGHTS
2017 Full-year highlights $2.74 9.8% pa $152.5m $112.5m 17.51 cpu Dist. profit 4.2% NTA 7.0% 10 yr total return Total revenue 1.5% Distribution 4.3% Portfolio performance Portfolio management Capital management 2.1% 5 4.7% MRRs finalised cost of debt at 30 June 2017 like-for-like rental growth 5.1% 4.5% 9.5% portfolio revaluation uplift MRR growth achieved reduction in borrowing costs 6.59% 1 2.8 years property divestment debt duration portfolio cap rate 5.0 Years 99.9% 20.4% leased gearing portfolio WALE 5
Results – financial performance vs pcp 1 FY2017 Previous corresponding period Total revenue $152.5m $150.2m Management expense ratio 0.60% 0.64% Other expenses $5.9m $6.2m Distributable profit (excluding revaluations) $112.5m $107.9m Number of units on issue 642.4m 642.4m Full-year distribution per unit 17.51 cents 16.79 cents Total assets $2,312.8m $2,200.5m Borrowings $471.1m $472.3m Net tangible assets per unit $2.74 $2.56 Gearing (debt to total assets) 20.4% 21.5% 1 pcp = previous corresponding period, being the 12 months ended 30 June 2016 or as at 30 June 2016 as relevant 7
Results - financial performance 6 monthly 6 months 6 months 6 months to Jun 17 to Dec 16 to Jun 16 Total revenue $76.7m $75.8m $75.5m Management expense ratio 0.60% 0.62% 0.64% Other expenses $2.9m $3.0m $3.1m Distributable profit $57.0m $55.5m $54.6m Property revaluation gains $93.4m $17.9m $29.1m Net profit including property revaluations $150.4m $73.4m $83.7m Number of units on issue 642.4m 642.4m 642.4m Six month distribution (per unit) 8.88 cents 8.63 cents 8.50 cents $2,312.8m $2,218.7m $2,200.5m Total assets $471.1m $470.4m $472.3m Borrowings 4.49% 4.69% 4.95% Weighted average cost of debt 1 $2.74 $2.60 $2.56 Net Tangible Assets (per unit) $2.75 $2.60 $2.58 NTA per unit excluding hedging liabilities 6.59% 6.77% 6.77% Weighted average cap rate 1 Finance costs divided by average borrowings for the six months 8
Results - 5 year financial summary 30 June 2017 2016 2015 2014 2013 Revenue $152.5m $150.2m $144.9m $127.4m $109.2m Distributable profit $112.5m $107.9m $101.6m $92.8m $75.8m Total assets $2,312.8m $2,200.5m $2,018.0m $1,837.4m $1,398.7m Borrowings $471.1m $472.3m $485.4m $448.3m $296.5m Gearing (debt to total assets) 20.4% 21.5% 24.1% 24.4% 21.2% Weighted average cost of debt 1 4.6% 5.0% 5.5% 6.1% 7.3% Weighted average cap rate 6.59% 6.77% 7.33% 7.59% 7.86% Management expense ratio 0.60% 0.64% 0.65% 0.64% 0.62% Total distribution per unit 17.51 cents 16.79 cents 15.84 cents 14.71 cents 14.14 cents 1 Finance costs divided by average borrowings 9
Results - FY2017 like-for-like rental growth Proportion of rental income 1 Average increase 5% Market 2.1 % 2 2.1 % Fixed 3.1 % 40% like-for-like rental growth 1.4 % CPI 55% Like-for-like rental growth FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Rental growth 3 2.8% 7.1% 2.9% 3.4% 4.0% 2.1% 4.0% 2.9% 2.4% 4 2.1% CPI growth 5 2.3% 4.5% 1.6% 2.9% 3.4% 1.7% 2.3% 2.5% 1.6% 1.4% 1 Subject to rounding 2 Comprises four Bunnings Warehouse market rent reviews due during FY2017 out of five completed, excluding market rent reviews relating to the previous year 3 Like-for-like rental growth compares the passing rent at the end of the period to the passing rent at the end of the previous corresponding period, but excludes any properties acquired, divested, developed or upgraded during or since the previous corresponding period 4 Revised from 2.3% following completion of one market rent review relating to the year ending 30 June 2016 completed in the year ending 30 June 2017 5 Reflects the annual average like-for-like growth resulting from CPI rent reviews completed during each period 10
Results – FY2017 market rent review outcomes 5 Bunnings reviews resulted in a 4.5% increase, 1 from FY2016, and 4 due during the period Reviewed rent Property location Passing rent ($pa) Variance Effective date Customer ($pa) Belmont North, NSW 1 Bunnings 954,629 1,145,000 19.9% 5-Mar-16 Midland, WA 2 Bunnings 1,635,825 1,785,765 9.2% 5-Sep-16 Mindarie, WA 2 1,635,825 1,639,695 5-Sep-16 Bunnings 0.2% Geraldton, WA 3 Bunnings 1,318,888 1,318,888 0.0% 10-Dec-16 Frankston, VIC 3 Bunnings 2,043,580 2,043,580 0.0% 20-Dec-16 Weighted Average 4.5% 1 The market rent review was due during the year ended 30 June 2016, but was determined by a independent valuer in the current financial year 2 The market rent review was determined by an independent valuer The market rent review was negotiated between the parties 3 11
Portfolio – FY2018 rent reviews > 3 Bunnings Warehouse market rent reviews due in FY2017 1 currently in negotiation Rent review type FY18 (all leases) % of First- Second- rental half half income 2 Market rent reviews (BWH) CPI 36 18 55% Artarmon, NSW Fixed 19 24 38% Belrose, NSW Fyshwick, ACT Market 4 5 7% Hervey Bay, QLD Total 59 47 100% Villawood, NSW 1 Croydon VIC, Scoresby VIC and Gladstone QLD Wollongong, NSW 2 Percentage based on portfolio rental as at 30 June 2017 13
Portfolio – capitalisation rate trends > Solid transactional support for new store yields at current levels > Secondary market sales with short remaining term certain seeing strong capitalisation rate compression Bunnings and Masters transaction yields 10.00% 9.00% 8.00% 7.00% 6.00% Bunnings Portfolio Acquisitions by BWP 5.00% 4.00% Dec‐10 Jun‐11 Jan‐12 Jul‐12 Feb‐13 Sep‐13 Mar‐14 Oct‐14 Apr‐15 Nov‐15 May‐16 Dec‐16 Jul‐17 New Bunnings Store Transactions Masters Transactions BWP Portfolio Cap Rate Secondary Market Bunnings Transactions Portfolio Transaction Average Cap Rate Linear (All Bunnings Transactions) 14
Portfolio – June 2017 revaluation > June 2017 weighted average capitalisation rate 6.59% (Dec 2016: 6.77%) Stand alone Bunnings Warehouses weighted average cap rate of 6.51% – 11 independent valuations (14% of BWP portfolio value), average cap rate 6.27% • 60 internal valuations, average cap rate 6.55% • > FY2017 net fair value gain of $111.3m on revaluation Cap rate compression largely contributed to the net value gain after portfolio average cap – rate decreased by 18bps for the 12 months to 30 June 2017 Cap rate movement; 58 properties decreased, 9 properties no change, and 13 properties – increased No. of Rental Revaluation by state 30 June 2017 Cap rate Value $m properties $m/annum 1 NSW/ACT 18 33.5 6.80% 497.3 QLD 20 40.0 6.39% 586.4 SA 2 3.9 6.16% 62.7 VIC 24 49.5 6.54% 761.0 WA 16 26.3 6.78% 387.2 Total/ weighted average 80 153.2 6.59% 2,294.6 1 Subject to rounding 15
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