Even Bunnings’ landlord can’t outrun rising rates

Commercial property might be on the nose with global markets, but one listed property trust had long been considered a top defensive stock in the minds of local investors: BWP Trust, which is landlord to 61 Bunnings stores around the country.BWP has been a steady and strong performer for a long time,The property valuations of Bunnings landlord BWP have fallen in the second half of the 2023 financial year.But much of BWP’s life has been spent in an environment of falling interest rates.

Higher rates are also flowing through to financing costs, which jumped 21.3 per cent in the 2023 financial year to $16.7 million. BWP’s weighted average cost of debt for the financial year was 3.6 per cent, but by June 30 it was 4 per cent. Outgoing managing director Michael Wedgwood agreed with one analyst’s summary that debt costs would rise to about 4.3 per cent in 2024.

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