BWP Trust: Bunnings warehouse profit and values marginally fall for FY23

Bunnings warehouses, owned by ASX-listed BWP Trust, reported a profit of $113.6 million, reflecting a 1 per cent decrease from the previous financial year.

Rental and other property income was $4.7 million higher than the previous year largely due to annual increases in rent and rent from repositioned properties. Distributions of 18.29 cents per unit has been reported, the same amount reported for the prior corresponding period.

BWP Trust is reporting good progress on the repurposing and re-leasing of properties that have recently been vacated by Bunnings. A development application has been approved for the repurposing of the Hervey Bay, Queensland ex‑Bunnings Warehouse property. Lease commitments are in place for 100 per cent of the available space post-redevelopment. A development application has been approved for the repurposing of the Port Kennedy, Western Australia ex-Bunnings tenancy for large format retail and pre-leasing of the retail space is progressing.

During the year, Bunnings exercised a 10-year option for Balcatta, Western Australia, and five-year options for Artarmon, New South Wales, and Belrose, New South Wales. Construction is progressing for the upgrade of the Lismore, New South Wales and Coburg, Victoria Bunnings Warehouse stores with works expected to be completed this financial year. A construction contract has been signed for the upgrade of the Dubbo, New South Wales Bunnings Warehouse store, with works expected to be completed in the 2025 financial year.

The assessed valuation of the BWP property portfolio decreased by a net amount of $64.6 million during the year to $2.9 billion, down 2.2 per cent from the prior year, largely reflecting adjustments to take into account current capitalisation rates.

In the current economic environment of high inflation, high construction costs and higher interest rates, BWP is expecting low gearing and a high-returning property portfolio, so is well-positioned for any unexpected circumstances and to be able to participate in investment opportunities that might become available.

Approximately 53 per cent of the BWP’s rental income is subject to CPI annual adjustment, and 47 per cent is subject to fixed annual adjustment, other than in years in which respective properties are due for a market rent review.

For the year ending 30 June 2024, CPI reviews will apply to 44 per cent of the base rent, with leases subject to a market rent review comprising 11 per cent of the base rent and with the balance of 45 per cent reviewed to fixed increases of two to four per cent.

BWP has reported that the primary focus for the 2023/24 financial year is progressing the repurposing of ex‑Bunnings properties in the portfolio, filling any vacancies, progressing and completing store upgrades, extending existing leases with Bunnings through the exercise of options, completion of market rent reviews, and the continued rollout of energy efficiency improvements at its properties.