Bunnings Warehouse Property Trust Ltd
(ASX:BWP) has extended the lease terms on 35 of its 53 warehouses.
The Bunnings trust, which is part of the Wesfarmers group, says that under the new lease deal the lease terms on the properties will increase by an average of six years.
This will result in a higher weighted average lease expiry for the entire Bunnings portfolio – from 5.9 years before the lease deal to 9.6 years after the deal.
The anticipated net increase in the value of the portfolio is about $13.9 million.
Bunnings revealed a year ago that Bunnings Group, its main tenant, requested additional options to extend its leases at 15 of the trust’s Bunnings Warehouses and that the proposal was being considered.
Bunnings property portfolio manager Grant Gernhoefer says that while extending the leases will not improve the trust’s earnings in the short term, it will secure a further six years’ committed rental income from the 34 properties.
There had been some concern that the weak residential market of the past two years would see some leases lapse and the consequent closure of stores.
But the improvement in housing construction has seen more stores open than close for the trust.
Bunnings booked a loss of $11.69 million for fiscal 2009.
