BWP Trust (BWP) Investor Update summary

Transaction Overview

• The transaction involves internalising management, resetting and extending 62 Bunnings leases, and committing $56m for store expansions and $30m for network upgrades, all designed to optimise the portfolio and support growth.

• Internalisation requires a $142.6m payment to Wesfarmers, funded by $100m cash and new securities, increasing Wesfarmers' stake to 23.5%.

• Lease reset extends portfolio WALE from 4.4 to 8 years and Bunnings WALE from 4.6 to 9.5 years, with market rent reviews and option periods.

• Investors will receive one BWP Property Group share per trust unit, stapled to form a new security trading on ASX.

• The Independent Expert and board unanimously recommend the transaction as fair and reasonable for unitholders.

Financial Impact and Benefits

• The transaction is forecast to be immediately accretive to distributions, with a 2% increase in FY26 and 2.3% on a full-year basis.

• FY26 distribution per security is forecast at 19.41 cents, a 4.1% increase over FY25.

• Annual management cost savings of $5m–$5.1m are expected from internalisation, net of ongoing internal costs.

• Pro forma gearing will rise to 23%, and NTA per security will reduce to $3.79.

• Lease reset is expected to deliver a $49.9m uplift in property valuations, with an 8bps cap rate compression.

Lease and Capital Expenditure Details

• Lease reset covers all ongoing Bunnings leases except three sites to be vacated, with extensions of five to ten years and four to eight renewal options.

• Most Bunnings leases have a 10% cap and collar on market rent reviews; 17 more leases will now include this.

• $56m store expansion capex covers five sites, rentalised at five-year swap rate plus 200bps, with new 10-year lease terms upon completion.

• $30m network upgrade capex is jointly funded and not rentalised, targeting upgrades to ageing assets within five years.

• Capital expenditure commitments are subject to development and board approvals and completion of legal documentation.