08/08/2013 - 12:08

Bunnings launches $312m sale and lease-back deal

08/08/2013 - 12:08


Save articles for future reference.

Hardware giant Bunnings has sold a suite of its warehouse properties and a bulky goods centre to the listed BWP Trust for more than $312 million, under a sale and lease-back arrangement.

The portfolio comprises 10 Bunnings Warehouse stores and a Bunnings Warehouse-anchored bulky goods centre, for which BWP Trust will pay just over $312 million, plus acquisition costs of $12.4 million.

Bunnings will lease the properties back from BWP.

The warehouse properties are located in Queensland, Victoria, New South Wales and Western Australia, while the bulky good centre is located in Prestons, around 40 kilometres south of Sydney’s CBD.

Bunnings’ parent company Wesfarmers said BWP Trust would also launch a $200 million entitlement issue to fund the acquisitions, priced at $2.30 per share.

The balance of the $344.3 million funding requirements will come from BWP’s existing debt facilities and future debt funding, the trust said.

Wesfarmers is also the major shareholder in BWP, which already owns 74 Bunnings properties.

The diversified conglomerate said it intended to take up its entire entitlement under the share offer, amounting to around $49 million.

Bunnings also said it was involved in talks with other parties for a separate sale and leaseback agreement potentially worth more than the latest BWP Trust deal.

Managing director John Gillam said the transaction was consistent to Bunning’s strategy to release capital on lease terms that provide flexibility.

“Effective recycling of property capital is of heightened importance given the depth of our new store pipeline and the rate at which we will convert sites into trading locations across the next 36 months,” Mr Gillam said.

“To that end, in addition to this transaction with BWP we are in advanced discussions with other parties on a separate sale and leaseback transaction for a separate portfolio of freehold properties which will likely have a headline value that is slightly larger than this transaction.”

BWP also announced its full-year results today, with revenue up 7.9 per cent to $109.2 million for the year ended June 30, producing a net profit of $110.6 million.

The previous financial year’s net profit was $69.9 million, BWP said.

BWP also said it had revised the value of its warehouses at Minchinbury and Rockingham upwards by $19.9 million.

Wesfarmers shares were 61 cents higher at $41.00 at 1319 AEST.


Subscription Options