Introduction

As at June 2008 the Trust's portfolio comprised 51 established Bunnings Warehouse properties, two Bunnings Warehouse development sites, two Bunnings distribution centres, three industrial properties leased to J Blackwood and Son Limited ("Blackwoods") a subsidiary of Wesfarmers Limited, and two multi-tenanted properties, Blackburn and Geraldton.

The Trust owns properties in all mainland Australian states, with a geographic diversification as follows:

Bunnings Warehouse properties owned by the Trust are on long term leases to Bunnings Group Limited. Leases typically have an effective term of 10 to 15 years, followed by five year option periods exercisable by the tenant. Rent is programmed to escalate on an annual basis in line with CPI, and every five years the rents are to be reviewed to market.

Properties owned by the Trust and leased to Bunnings Group Limited typically have:

• a site area of three hectares;
• a Bunnings Warehouse of 7,500 square metres (indicative gross lettable area);
• high visibility and easy access from major arterial roads;
• ample parking;
• a surrounding population with suitable socio-economic characteristics; and
• other complementary outlets nearby.

The Trust has developed two showrooms on surplus land which is part of the Bunnings Warehouse property at Bayswater, Victoria. These showrooms are leased as retail outlets, one Clark Rubber and one Autobarn, both with an initial seven year term with two five year options exercisable by the tenant.

The three Blackwoods properties have initial seven year terms with two five year options exercisable by Blackwoods. Two of the properties allow Blackwoods to exit after three years, but Blackwoods must provide 12 months notice in order to exit early.

The Trust owns two development sites in Victoria. Construction is expected to be completed on the Hawthorn Bunnings Warehouse in late 2008 with construction yet to commence at Maribyrnong.

The Trust acquired a 15 year old showroom warehouse adjoining the Geraldton Bunnings Warehouse in September 2007.  It has been converted into two separate tenancies, one of which is leased for eight years to Boating Camping Fishing, a subsidiary of the ASX listed Super Cheap Auto Group. 

The Trust acquired a multi-tenanted industrial property in Blackburn, Victoria in January 2008. The major tenants, Sleepmaster Pty Ltd and Gainsborough Industries Limited occupy 95% of the property under leases with a weighted average period to lease expiry of four years. Both tenants have five year options following expiry of the leases in 2012.

As at 30 June 2008, the weighted average period to lease expiry of the Trust's portfolio was 6.9 years.

Investment properties are carried at fair value. Fair value for individual properties is determined by a full independent valuation completed at least every three years by an independent valuer who holds a relevant professional qualification and has recent experience in the location and category of the investment property. During the six months to 31 December 2007, six property revaluations were performed by independent valuers.

Properties that have not been independently valued as at a balance date are carried at fair value by way of Directors' valuation. The methodology and assumptions of the Directors' valuations are subject to an independent verification process by an independent valuer.

Further information regarding investment properties is available in the Notes to the Financial Statement in the latest Annual Report.