Stable Growth at Bunnings Trust

6 February 2019

The Bunnings Warehouse Property Trust results for the 6 months to December 2018 showed some solid gains however Net Profits declined as a result of lower valuation gains. The Trust achieved a Net Profit of $78.9M for the 6 months compared to $103.3M for the 6 months to December 2017 with the drop almost entirely attribute to a $26.8M drop in valuation gains. Nonetheless, distributable income rose 1.7% to $57.4M providing a distribution per unit of $8.93 compared to $8.78 for the previous year. Only 11 independent valuations (12% of BWP portfolio value) were completed in the period with an average cap rate 6.79%. The cap rates for these assets sharpened by 1Bps. The group adopted 66 internal valuations, at an average cap rate 6.34% (most unchanged). The weighted average cap rate for the portfolio sharpened by 10Bps to 6.4% bringing total assets to $2,375.3m. The trust divested 6 assets in the 6 months and is re-purposing 6 assets for alternative Large Format Retail uses which will likely be sold in years to come. According to BWP, demand for Bunnings Warehouse properties should remain stable with the Trust well positioned in the event of any change in the macro economic environment with low gearing, sustainable cashflow and good access to funding. The Trust will complete 10 market rent reviews in the next 6 months which will continue to add to the rental growth for the portfolio. For the second half of the financial year the Trust expects to maintain distribution growth at 1.7 per cent. Capital profits will be utilised to support distributions if required during this period. BWP Trading Chart vs ASX200 AREIT Blue – BWP, Purple ASX200 AREIT Source: #BunningsPropertyTrust