BWP Trust

For FY26, BWP reported FFO of $140.9 million, up 4.5% on FY25. The management expense ratio fell to 0.34% from 0.66% in FY25, while borrowing costs increased and average borrowings were $940.7 million, up 17.6%. Portfolio value rose $257 million to $3,961.8 million, NTA increased 3.3% to $4.11 per security, and the weighted average capitalization rate compressed to 5.25%. Gearing ended at 18.5% versus 21.6% a year earlier. For FY27, BWP guided to distributions of $0.200 per security, around 3% growth, capital expenditure of $55 million to $65 million, and said FY27 FFO should benefit from rental growth, leasing spreads, repurposing contributions, acquisitions, and lower interest expense, partly offset by lost income from divestments.

Mark Scatena framed FY26 as a reset year that strengthened income security, reduced costs and reset the balance sheet for future growth. He highlighted the internalization transaction, the Bunnings lease reset, ongoing repurposing, and active capital deployment as central to the strategy. His tone was constructive and confident, while also stressing that the company is still working through a transition period and expects more benefits to flow through over time.

David Hawkins pointed to the main financial drivers: average borrowings of $940.7 million, borrowing costs of $42.7 million, a weighted average cost of debt of 4.6% in FY26, and gearing at 18.5%. He said the hedging book was 59.3% covered at a weighted average rate of 4.01% and that available debt capacity is about $450 million. For FY27, he said cost of debt is likely to be between 5.0% and 5.3% based on a current swap rate of 4.8%, and noted the weighted average management expense ratio is likely to settle around 36 basis points going forward.

Analysts focused on whether FY27 FFO can keep pace with the 3% distribution increase, with management saying lost income from divestments, especially Chadstone, is a headwind and that unit FFO growth is expected in FY28. Questions also centered on whether the 23.6% LFR leasing spreads were repeatable; management said they were strong but site-specific, though they expect performance well above CPI because of a broader step-up in market rents. On capital allocation, management said the next wave of spending will be concentrated in repurposing, Bunnings expansions and selected LFR acquisitions, while hedging is reviewed at every board meeting and may increasingly use MTNs.