BWP Results show Steady growth and limit acquisitions

3 February 2020

BWP Trust today announced the results of the Trust for the six months to 31 December 2019 with income growth and valuation gains providing strong results for the group.


Michael Wedgwood, Managing Director of the RE for BWP Trust, said " in the last few years, the Australian economy has been characterised by low inflation, reducing interest rates and relatively benign GDP growth. The commercial property sector and listed real estate investment entities have been attracting significant investment capital in search of yield which has provided good support for our asset valuations and our unit price".


BWP have not added to the portfolio during the last 6 months as the existing portfolio generates a high return on invested capital and new acquisitions are not generating yields commensurate with the underlying asset risk. BWP continue to repurpose several ex-Bunnings properties, a strategy which is expected to improve returns over the near term. The group currently own 75 properties, 67 of which BWP consider core, and 8 of which are being transitioned from being Bunnings-leased properties to other purposes. At 31 December 2019, the portfolio was 97.5 per cent leased with a weighted average lease expiry term of 4.3 years (30 June 2019: 4.4 years, 31 December 2018: 4.3 years).


During the half-year, the Trust’s entire investment property portfolio was revalued. Property revaluations were performed by independent valuers for 18 properties during the period. The remaining 57 properties were subject to directors’ revaluations. Following the revaluations, the Trust’s weighted average capitalisation rate for the portfolio at 31 December 2019 was 6.08 per cent (30 June 2019: 6.30 per cent; 31 December 2018: 6.40 per cent).


Half-year highlights

  • Net profit for the six months was $135.6 million, which included $78.5 million of unrealised gains in the fair value of investment properties
  • Distributable amount of $57.9 million for the six months – up 1.0 per cent on the previous corresponding period
  • Interim distribution of 9.02 cents per unit – up 1.0 per cent on the previous corresponding period
  • Like-for-like rental growth of 2.2 per cent for the 12 months to 31 December 2019
  • Weighted average lease expiry of 4.3 years as at 31 December 2019 with 97.5 per cent leased
  • Gearing (debt/total assets) 18.0 per cent as at 31 December 2019
  • Weighted average cost of debt of 3.5 per cent for the six month period
  • $2.5 billion portfolio valuation as at 31 December 2019
  • Net tangible assets of $3.04 per unit as at 31 December 2019



Rent reviews are expected to contribute incrementally to property income for the half-year to 30 June 2020. There are 45 leases to be reviewed to the CPI or by a fixed percentage increase during the second half of the 2019/20 financial year. There are also 16 market rent reviews of Bunnings Warehouses in the process of being finalised.


BWP will continue to look to acquire quality investment properties that are value accretive for the Trust, although prevailing market conditions will likely limit opportunities for growth. Likewise, BWP will also continue to assess potential divestments where properties have reached optimum value. For any properties vacated, or to be vacated by Bunnings, the focus is on re-leasing the existing building as is, or after reconfiguring it or in some cases, they may be sold.


The Trust expects the distribution for the year ending 30 June 2020 to be one per cent higher than the ordinary distribution paid for the year ended 30 June 2019, a similar level of growth to the interim distribution. Capital profits will be utilised to support distributions as necessary.