The Trust has a strong balance sheet to fund growth through appropriate property acquisitions and improvements to existing properties. 

The responsible entity will continue to actively pursue new assets that fit the Trust's investment criteria.  Quality Bunnings Warehouses will continue to be the main focus for acquisitions.  Other assets will be considered, selectively, that provide similar characteristics to Bunnings Warehouse properties by having a large area with warehouse style improvements, being well located and with a quality tenant under a longer-term lease.  Availability of appropriate properties will be the main challenge for the Trust in acquiring new assets in the short-term, as prime properties seem to be tightly held in the current environment.

We will also pursue value enhancing improvements to existing assets.  There is one upgrade in progress, due for completion by 31 December 2010, expanding the Bunnings Warehouse at Broadmeadows, Victoria, which will provide an eight per cent return on the estimated $5.4 million capital outlay.  Other upgrades may be negotiated with tenants based on the needs of their businesses.

Income growth will also be derived from scheduled rent reviews.  There are four market rent reviews due in the year ending 30 June 2011; two in Victoria and two in Western Australia and these are likely to be subject to determination by independent valuers, based on current rentals of comparable properties, particularly other Bunnings Warehouses.  The balance of the properties in the portfolio will be reviewed to the Consumer Price Index ("CPI") or by a fixed percentage increase.  The average CPI increase for the portfolio during the year ended 30 June 2010 was approximately 1.6 per cent, providing potential for improved CPI increases in the year ending 30 June 2011. 

Finance costs will continue to constrain earnings in the short to medium term, with the effect of increased fees and margins from a facility extended in January 2010 and the repricing of another facility due at the end of March 2011 offsetting the benefits of reducing facility limits by $50 million in April 2010.  The Trust's relatively high level of interest rate hedging means that increases in interest rates are not expected to adversely affect borrowing costs.