This article is from the Australian Property Journal archive
BWP Trust, which is readying a takeover of Newmark Property REIT to create a $3.5 billion large format retail portfolio, recorded a $57.46 million first-half profit and increases in rental income from its Bunnings Warehouses.
BWP, landlord of 75 Bunnings Warehouses, posted net profit in line with the prior corresponding period. Total income for the period was $82.3 million, an increase of 4.7%. The $3.7 million increase in rental income was due to annual rent increases and the rent contribution from properties acquired during the half.
Acquisitions included the Southport Showrooms on the Gold Coast for $10 million and the Broadmeadows Homemaker Centre in Victoria for $20 million, both of which adjoin trust-owned Bunnings Warehouses.
The trust also offloaded a newly-vacated former Bunnings Warehouse in Wollongong for $40 million, and another ex-Bunnings site in Western Australia’s Albany for $7 million.
Following revaluations, BWP’s weighted average capitalisation rate for the portfolio at the end of December was 5.53%, having sat at 5.38% at the end of June and 5.05% to close out calendar 2022.
The value of its portfolio increased by $36.1 million to $2.97 billion during the half-year following property acquisitions of $32 million and further capital expenditure of $8.4 million, after adjusting for the straight-lining of rent, capitalised interest, and less unrealised losses of $4.2 million.
Like-for-like rental growth was 4.8% for the 12 months to the end of December. Rental growth over the half of 4.5% per annum was recorded for 53 of the Trust’s leases which were subject to annual fixed or CPI reviews during the period. The rental growth achieved included weighted average increases in annual rent of 5.8% for the 26 CPI reviews and 3.0 per cent for the 27 fixed reviews. Five completed market rent reviews averaged an increase of 4.2%.
The portfolio had a weighted average lease expiry of 3.6 years, with 97.4% leased.
“In delivering the trust’s strategic agenda of portfolio optimisation, profitable growth and portfolio renewal, the trust’s primary focus for the balance of the 2023/24 financial year remains on 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, completing market rent reviews, and the continued rollout of energy efficiency improvements at its properties,” BWP Trust said.
Interim distribution of $9.02c per unit was in line with the prior corresponding period.
$3.5b merger
Newmark Property REIT (NPR) yesterday formally urged shareholders to accept BWP’s off-market takeover proposal, following the parties entering into a bid implementation deed in recent weeks. The merger proposal is for an all-scrip transaction, with NPR securityholders to receive 0.4 BWP units for every 1.0 NPR security held.
Based on BWP’s closing price of $3.47 on 23rd January, the merger ratio represents an implied price of $1.39 per NPR security and for NPR represents a total equity value of $246.8 million and a total enterprise value of $517.4 million. The merger proposal is conditional upon a number of matters set out in the BID, including a minimum acceptance of 50.1R of all NPR securities and other customary conditions.
The distribution reinvestment plan was suspended for the half-year as a result of the merger proposal.
