BWP TRUST ANNUAL REPORT 2015 - page 17

BWP TRUST ANNUAL REPORT 2015 15
Market rent reviews results summary
Property location Customer Passing rent ($ pa) Market review ($ pa) Variance (%) Effective date
Balcatta, WA1 Bunnings 1,841,264 2,170,000 17.9 24-Sep-13
Altona, VIC1 Bunnings 1,089,650 1,122,339 3.0 24-Sep-13
Burleigh, QLD1 Bunnings 1,479,587 1,648,000 11.4 22-Oct-13
Underwood, QLD1 Bunnings 1,369,988 1,527,500 11.5 22-Oct-13
Southport, QLD1 Bunnings 1,457,667 1,648,000 13.1 10-Nov-13
Port Macquarie, NSW1 Bunnings 876,852 960,000 9.5 17-Nov-13
Tuggeranong, ACT1 Bunnings 1,527,708 1,725,000 12.9 1-Dec-13
Epping, VIC1 Bunnings 1,181,865 1,235,000 4.5 12-Mar-14
Cannon Hill, QLD1 Bunnings 2,044,814 2,382,864 16.5 1-Apr-14
Lismore, NSW1 Bunnings 890,979 935,000 4.9 20-Apr-14
Bayswater, VIC1 Bunnings 1,656,983 1,820,000 9.8 21-Apr-14
Browns Plains, QLD1 Bunnings 1,520,912 1,668,340 9.7 7-May-14
Thornleigh, NSW Bunnings 1,320,622 1,320,622 0.0 6-Sep-14
Hoxton Park, NSW Bunnings 2,358,746 2,323,000 (1.5) 3-Oct-14
Maitland, NSW Bunnings 1,287,329 1,350,000 4.9 18-Oct-14
Albany, WA Bunnings 824,016 848,000 2.9 1-Nov-14
Bibra Lake, WA Bunnings 1,647,203 1,647,203 0.0 1-Nov-14
Gladstone, QLD Pets West Online 114,252 154,275 35.0 16-Dec-14
Gladstone, QLD2 Betta Electrical 203,851 227,150 11.4 14-Mar-15
Coburg, VIC Café 58,493 58,493 0.0 1-Apr-15
Weighted Average 8.2
1 Themarket rent reviewwas due during the year ended 30June 2014, but the outcome of the negotion/determinationwas only completed during the year ended 30June 2015
2 The parties have agreed a new year lease for a term of 10 years in conjunction with negotiating the market rent review
LIKE-FOR-LIKE RENTAL GROWTH
Excluding rental income from properties acquired or upgraded during
or since the previous corresponding period, rental income increased
by approximately 2.6 per cent for the 12months to 30June 2015
(compared to 4.0 per cent for the 12months to 30June 2014, which
was previously disclosed as a 2.5 per cent increase, but has nowbeen
updated following the finalisation of the 12market rent reviews related
to that period).
The five unresolved market reviews at 30 June 2015 are not
included in the calculation of like-for-like rental growth for the year.
OCCUPANCY
As at 30 June 2015, the portfolio was 100 per cent leased,
with a weighted average lease expiry (“WALE”) of 6.6 years.
It is the nature of the Bunnings business model that its property
requirements for some locations change over time as is the case
for seven properties in the property investment portfolio. These
properties are highlighted in the Portfolio rental summary that
follows. In all cases, Bunnings has or is in the process of re-locating
to a new nearby site in the same demographic area. In all cases, the
properties remained leased to Bunnings for a minimum period to
February 2018, and for one property until September 2021. For any
BunningsWarehouse or standalone industrial site vacancies, the
Trust gives full consideration to re-leasing the property, reinvesting
in it to enhance rental outcomes, or divesting it, to provide the best
overall outcome for the Trust. In relation to the Altona property, the
Trust has entered into an option agreement, exercisable by 31 July
2016, with the adjoining owner Folkestone, for Folkestone to acquire
the Altona property. The existing lease on the property to Bunnings
remains in place until the option is exercised, or failing the exercise of
the option until September 2018.
PROPERTY REVALUATIONS
The entire Trust portfolio was revalued at 31 December 2014 and
again at 30 June 2015, including 23 property revaluations performed
by independent valuers (12 at 31 December 2014 and 11 at 30 June
2015). Properties not independently revalued at each balance
date are subject to internal valuations, with an independent valuer
reviewing the methodology adopted. Factors that may affect the
valuation of properties from time to time include: the supply of and
competition for investment properties; leasing market conditions; the
quality and condition of the particular property, including the duration
of the lease; and the level of rent paid at the property compared with
the broader market.
The value of the Trust’s portfolio increased by $162.3 million to
$1,981.3 million during the year following: acquisitions of $18.3
million, developments and capital expenditure of $106.3 million,
less net proceeds from divestments of $70.8 million, and a net
revaluation gain of $108.5 million during the year.
The net revaluation gain was due to growth in rental income and
an average decrease in capitalisation rates across the portfolio
during the year. The Trust’s weighted average capitalisation rate for
the portfolio at 30 June 2015 was 7.33 per cent (December 2014:
7.41 per cent; June 2014: 7.59 per cent).