This article is from the Australian Property Journal archive
BUNNINGS stores owner BWP Trust (ASX: BWP) has recorded a 1% growth in distributable profit of $57.9 million in the first half year.
The trust’s net profit was $135.6 million, including $78.5 million of valuation gains, compared to $78.9 million in the previous corresponding period, which included gains of $20.1 million.
Total income for the period was $76.2 million, a decrease of 3.5% over on the pcp, due largely due to the rent foregone from divestments and the redevelopment of sites vacated by Bunnings.
An interim distribution of 9.02 cents per ordinary unit has been declared, reflecting a 1.0% increase on the pcp.
Excluding rental income from properties acquired, upgraded or vacated and re-leased, rental income increased by approximately 2.2% for the 12 months to 31 December 2019, compared to 2.3% for the 12 months to 31 December 2018 which was previously disclosed as a 2.5% increase, but has now been updated following the finalisation of the three market rent reviews related to that period.
During the half-year, the trust’s entire investment property portfolio was revalued, the weighted average capitalisation rate at 31 December 2019 was 6.08% compared to 6.30% at 30 June 2019 and 6.40% at 31 December 2018.
The portfolio valued increased by $102.2 million to $2,460.4 million during the half-year following capital expenditure of $22.1 million and revaluation gains of $78.5 million, after adjusting for the straight-lining of rent of $1.6 million, at 31 December 2019.
Managing director Michael Wedgwood said 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,”
Meanwhile he said the trust 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 after reconfiguring it. In some cases, the focus might be directed at rezoning 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,” he added.
The trust is forecasting distribution for FY20 to be 1% higher than FY19.
