Following the capital raising undertaken during the year, the Trust has the financial flexibility to manage debt funding should credit markets remain tight or worsen in the short term. The extension of $180 million in bank facilities until 2012 has also significantly reduced refinancing risks for the Trust. While borrowings under debt facilities have reduced as a result of the equity raising, the effects of higher bank fees and margins following refinancing and the high level of hedged debt is expected to increase the Trust’s effective interest rate.

The additional debt capacity from paying down borrowings provides ample capacity to take advantage of appropriate growth opportunities. Bunnings Warehouses will continue to be the primary focus for growth, through improvements to existing properties and selective acquisitions.

There is an active market for Bunnings Warehouses currently, with sellers motivated by requirements to manage capital and buyers seeing value at current yields in a low interest environment. Private investors have acquired nine Bunnings Warehouses offered for sale by Bunnings Group Limited and third party owners in the open market during the six months to 30 June 2009.

The current market conditions and the Trust’s balance sheet strength may provide a unique opportunity for the Trust to acquire premium assets to enhance the portfolio. Although Bunnings Warehouses are the most likely target for acquisitions, other assets that meet the Trust’s investment criteria and complement the existing portfolio will be considered.

There are market rent reviews of 10 of the Trust’s Bunnings Warehouses in the 2009/10 financial year. The results of these will depend on a number of factors including specific characteristics of the individual properties and the relativity of current rentals of comparable Bunnings Warehouses. While the market rent reviews completed for 2008/09 generally showed strong increases, these results are not necessarily an indication of the likely outcome of upcoming rent reviews.