BWP TRUST ANNUAL REPORT 2015
13
DEVELOPMENTS AND EXPANSIONS
COMPLETION OF DEVELOPMENT OF BUNNINGS
WAREHOUSE MANLYWEST, QUEENSLAND
In September 2014, construction of the Trust’s Bunnings
Warehouse at Manly West, Queensland, was completed at
a cost of $21.3 million. The Trust purchased the Manly West
development site for $7.2 million (including acquisition costs) in
September 2013. The net annual rental income of the property is
approximately $2.1 million.
The parties entered into a new 12 year lease of the Bunnings
Warehouse with five, six-year options, exercisable by Bunnings.
The rent will increase by a fixed three per cent per annum. At the
end of the initial term and the exercise of each option by Bunnings,
the rents are subject to a market rent review. Market rent reviews are
subject to a 10 per cent cap, meaning the rent cannot increase more
than 10 per cent above the preceding year’s rent, and a 10 per cent
collar, meaning that the rent cannot fall more than 10 per cent below
the preceding year’s rent.
COMPLETION OF DEVELOPMENT OF BUNNINGS
WAREHOUSEWEST IPSWICH, QUEENSLAND
In September 2014, construction of the Trust’s Bunnings
Warehouse at West Ipswich, Queensland, was completed at
a cost of $17.9 million. The Trust purchased the West Ipswich
development site for $13.1 million (including acquisition costs) in
September 2013. The net annual rental income of the property is
approximately $2.3 million.
The parties entered into a new 12 year lease of the Bunnings
Warehouse with five, six-year options, exercisable by Bunnings.
The rent will increase by a fixed three per cent per annum. At the
end of the initial term and the exercise of each option by Bunnings,
the rents are subject to a market rent review. Market rent reviews
are subject to a 10 per cent cap, meaning the rent cannot increase
more than 10 per cent above the preceding year’s rent, and a 10
per cent collar, meaning that the rent cannot fall more than 10
per cent below the preceding year’s rent.
COMPLETION OF DEVELOPMENT OF BUNNINGS
WAREHOUSE BRENDALE, QUEENSLAND
In December 2014, construction of the Trust’s Bunnings
Warehouse at Brendale, Queensland, was completed at a cost of
$19.2 million. The Trust purchased the Brendale development site
for $8.1 million (including acquisition costs) in June 2014. The net
annual rental income of the property is approximately $1.9 million.
The parties entered into a new 12 year lease of the Bunnings
Warehouse with five, six-year options, exercisable by Bunnings.
The rent will increase by a fixed three per cent per annum. At
the end of the initial term and the exercise of each option by
Bunnings, the rents are subject to a market rent review. Market
rent reviews are subject to a 10 per cent cap, meaning the rent
cannot increase more than 10 per cent above the preceding
year’s rent, and a 10 per cent collar, meaning that the rent cannot
fall more than 10 per cent below the preceding year’s rent.
COMPLETION OF DEVELOPMENT OF BUNNINGS
WAREHOUSE MARIBYRNONG, VICTORIA
In February 2015, the Trust paid Bunnings a development fee of
$32.0 million, to finalise the purchase of the Bunnings Warehouse
at Maribyrnong, Victoria. The Trust had purchased the Maribyrnong
development site in June 2001 for $7.1 million. As part of the
acquisition of the site, Bunnings was required to undertake
remediation of contamination associated with the property, to the
satisfaction of all relevant authorities, which has been achieved.
The commencing annual rental income of the property is $2.54
million, with Bunnings leasing the property for an initial fixed term
of 12 years and a further five optional terms of six years each,
at Bunnings’ election. Under the lease, the rent increases by a
fixed three per cent per annum. At the end of the initial term and
at the exercise of each option by Bunnings the rent is subject to a
market rent review, having regard to the rents paid at comparable
properties. The market rent reviews for the property are subject to
a 10 per cent ‘cap and collar’, meaning that the rent cannot rise or
fall by more than 10 per cent of the preceding year’s rent.
COMPLETION OF EXPANSION OF BUNNINGSWAREHOUSE
MINCHINBURY, NEWSOUTHWALES
In April 2015, an $8.6 million expansion of the Trust’s Minchinbury
Bunnings Warehouse was completed by Bunnings for the Trust. The
expansion, including the acquisition of land adjoining the Bunnings
Warehouse in September 2012 for $4.26 million (including
acquisition costs), extended the total retail area by 4,821 square
metres. The annual rental increased by approximately $0.94 million
to $2.71 million.
Following completion of the expansion, the parties entered into a new
12 year lease of the BunningsWarehouse with four, six-year options,
exercisable by Bunnings. The rent will be reviewed annually to CPI
and is subject to a market rent review at the exercise of each option.
At the exercise of the first option, at the commencement of year 13,
the revised rent can be no lower than the rent in the immediately
preceding year, but may not increase by more than 10 per cent of the
preceding year’s rent. Thereafter, market rent reviews are subject to a
10 per cent cap and collar, meaning that the rent cannot rise or fall by
more than 10 per cent of the preceding year’s rent.
COMPLETION OF SHOWROOMS HARRISDALE,
WESTERN AUSTRALIA
During the year, the Trust incurred a further $0.7 million in
development works to complete the additional showrooms at the
Harrisdale property. The showrooms comprising 2,346 square
metres are fully leased to three customers.
FLOOD DAMAGE BUNNINGSWAREHOUSE MAITLAND,
NEWSOUTHWALES
In April 2015, the Maitland BunningsWarehouse store incurred flood
damagewhich resulted in the closure of the store at that time. During
the flood, the flowof water exceeded the capacity of stormwater pipes
underneath the store, and undermined a large area under the floor
of the building. In July 2015, works were completed to ensure part
