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Bunnings Property Trust Half Yearly Results to Dec 2017


Bunnings Warehouse Property Trust announced the financial results for the 2018 half year.

Key financial and operational highlights included:

  • Income of $76.9 million for the six months – up 1.6 per cent on the previous corresponding period

  • Distributable profit of $56.4 million for the six months – up 1.7 per cent on the previous corresponding period

  • Interim distribution of 8.78 cents per unit – up 1.7 per cent on the previous corresponding period

  • Market rent reviews on four sites were completed during the six months – at a weighted average 4.1 per cent increase in annual rent

  • Like‐for‐like rental growth of 2.4 per cent for the 12 months to 31 December 2017

  • Cost of debt of 4.7 per cent per annum as at 31 December 2017

  • Weighted Average Lease Expiry of 4.8 years at 31 December 2017

  • Net Tangible Assets of $2.82 per unit at 31 December 2017 – up 8.5 per cent on the previous corresponding period

  • Gearing (debt/total assets) 19.8 per cent at 31 December 2017

Revaluations

During the half-year, the Trust’s entire investment property portfolio was revalued. Property revaluations were performed by independent valuers for 12 properties during the period. The remaining 67 properties were subject to directors’ revaluations. Following the revaluations, the Trust’s weighted average capitalisation rate for the portfolio at 31 December 2017 was 6.50 per cent (30 June 2017: 6.59 per cent; December 2016: 6.77 per cent).

The value of the Trust’s portfolio increased by $31.7 million to $2,326.3 million during the half-year following: capital expenditure of $0.7 million; realised gain on disposal of investment properties of $2.5 million; a net revaluation gain of $44.4 million at 31 December 2017; less net proceeds from the sale of the Dandenong property of $15.9 million.

Outlook

Rent reviews are expected to contribute incrementally to property income for the half-year to 30 June 2018. There are 41 leases to be reviewed to the CPI or by a fixed percentage increase during the second half of 2017/18. There are also five market rent reviews of Bunnings Warehouses to be completed by the end of this financial year.

The responsible entity will continue to work with Bunnings to upgrade and improve the core portfolio of properties leased to Bunnings.

The responsible entity will continue to look to acquire quality investment properties that are value accretive for the Trust. As part of ongoing active portfolio management, the responsible entity will also continue to assess potential divestments where properties have reached optimum value. For any properties vacated, or to be vacated by Bunnings, there are a number of possibilities for their future use. All are considered. Most often, the focus is on re-leasing the existing building as is, or it may involve reconfiguring the building before leasing it. In some cases, the focus might be directed at re-zoning certain properties for their highest and best use. Alternatively, if properties are considered to have reached their valuation potential for the Trust’s purposes, they may be sold.

For the second half of the financial year the Trust expects to maintain distribution growth at 1.7 per cent.

Investor Presentation Document

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