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The Trust is structured for long term property ownership and to be able to withstand
the impact of major risk factors outside its control. BWP has an extensive and unique
portfolio of well-located Bunnings Warehouse properties which continues to generate
good income and capital growth.
Dear Unitholder
On behalf of the Board of directors of BWP Management Limited,
the responsible entity for BWP Trust, it is my pleasure to present the
Trust’s annual report for the financial year ended 30 June 2016.
The performance of the Trust during the year was positive in
terms of market returns and was in line with its core objective of
sustainable income and capital growth over time.
Increased rental income from the Trust’s property portfolio, and a
lower cost of debt, have resulted in distributions for the year ended
30 June 2016 increasing by 6.0 per cent to 16.79 cents per unit.
Total returns for the year (distributions and movement in unit price)
of 24.9 per cent were similar to the benchmark S&P/ASX 200
Property Accumulation Index of 24.6 per cent, but well ahead of
the ASX All Ordinaries Accumulation Index which grew by 2.0 per
cent over that period of time.
For the 2017 financial year, the Trust expects further rental
growth from its existing property portfolio after taking into account
expectations of low inflation in the future.
The current macro-economic environment continues to drive strong
demand for property assets, particularly assets with long lease
terms, and strong financial covenants. While this is positive for the
valuation of the Trust’s existing property portfolio, it is currently very
challenging creating value for the Trust from new store acquisitions.
The Trust remains financially disciplined in this regard and will only
invest in additional new properties where there is potential for good
rental growth and asset valuation upside over the medium term.
While these market conditions prevail, the Trust will focus on
store upgrades and the re-leasing/development of any properties
vacated by Bunnings. Store upgrades will enable Bunnings to
enhance its offer to customers and, in so doing, generate additional
rental income and increased lease tenure for the Trust.
I would like to acknowledge the retirement of John Austin from the
Board in December 2015. John had served as a director from 2004,
and as Chairman from 2007, and made a significant contribution
to the Board. During that time the Trust’s market capitalisation grew
from $500 million to $2.0 billion, and the number of properties
owned by the Trust increased considerably.
I would also like to express my appreciation to my fellow
directors and management for their efforts during the year and
thank our unitholders for their continued support of the Trust.
Erich Fraunschiel
Chairman
BWP Management Limited
LETTER FROM
THE CHAIRMAN
Overview
BWP Trust Annual Report 2016
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