This article is from the Australian Property Journal archive
THE acquisition of Newmark Property REIT and active management of its portfolio has seen Bunnings Warehouse and showrooms landlord BWP Trust post a 22.2% jump in first-half income.
BWP Trust completed its takeover of Newmark Property REIT (NPR) in March last year, on its way to creating a $3.6 billion large format retail portfolio.
It removed former Hawthorn AFL star Christopher Langford, Mark Allan, Andrew Erikson and Melinda Snowden as directors of NPR’s manager, and appointed Fiona Harris and Mark Scatena as directors.
Total income for the half was $100.6 million. The $18.1 million increase in rental income on the prior corresponding period (pcp) was largely due to the acquisition of NPR, together with annual rent increases, BWP Trust said.
Rental income increased by 3.34% across calendar 2024, albeit slower than the 4.8% in 2023.
BWP Trust also posted a surge in first half net profit, coming in at $157.1 million, which included $96.4 million of property revaluation gains. That compares with the pcp’s interim profit of $53.2 million, which included losses of $4.2 million in fair value movements.
Interim FY25 net profit excluding fair value movements was $66.1 million, showing a 15% increase.
Following revaluations, the group’s weighted average capitalisation rate for the portfolio was 5.43%, down from 5.53% in the pcp.
“For the balance of the 2025 financial year BWP will continue to focus on optimising the portfolio whilst remaining active in assessing opportunities to grow the portfolio that create value,” said managing director Mark Scatena.
“This activity will focus on reinvesting in the core retail portfolio to support tenant optimisation plans, acquiring accretively to grow the core portfolio and partnering with tenants to potentially, over time, participate in adjacent parts of the retail value chain.”
The portfolio has 98.7% occupancy with a weighted average lease expiry term of 4.4 years, up from 3.6 years. In December, the group entered into a new 10+5+5+5-year lease with Bunnings at Scoresby in Melbourne following $1.4 million car park works .
It also agreed to an early surrender of the existing Bunnings lease at Northland, also in Melbourne, and entered into a new 3+5-year lease with an “emerging retailer”. At Fountain Gate, the group has agreed to a 5.5-month lease extension with Bunnings post its lease expiry in January to allow time for planning approval for the redevelopment of the property for large format retail.
Scatena said that in renewing the portfolio, the group will look to recycle actively by potentially divesting non‐core assets, including the completion of the divestment of its Port Kennedy asset, and reinvesting in growth initiatives to complement its core portfolio.
“Maintaining a strong and flexible balance sheet will be a key focus, including the potential refinancing of medium-term bond maturities and the broadening of debt providers (type and geography),” he said.
Weighted average duration of its facilities is 2.3 years and the group’s gearing ratio was 21.4%, at the lower end of the boards preferred range of 20% to 30%.
BWP Trust offered a distribution guidance of 9.46c per unit for the second half of FY25.
