Key Highlights

• BWP Group, formerly BWP Trust, completed the internalisation of its management from Wesfarmers in August 2025.

• The group reported a weighted average Lease expiry of 7.3 years at 30 June 2026, which it linked to the internalisation and a completed Bunnings lease reset and extension.

• - Funds From Operations (FFO) of $140.9 million, up 4.5%, or 19.29 cents per security, up 2.1%.

• - Statutory profit after tax attributable to securityholders of $408.4 million, up 53.8% from $265.6 million.

What does BWP Group (ASX:BWP)'s first full year under internal management tell investors about a landlord whose largest tenant is Bunnings? The answer, based on results for the year to 30 June 2026, is that the group delivered higher Earnings and distributions while using fresh Equity and bond funding to reshape its Balance Sheet and portfolio, though the outlook still depends on funding costs and execution.

The central development: internalisation and a reset

BWP Group, formerly BWP Trust, completed the internalisation of its management from Wesfarmers in August 2025. Securityholders now own a Business that employs its own team rather than paying an external manager.

Why does that matter? Governance and cost structure are central to how a property group is judged. The company has also said the first year involves board renewal and transition, which is a risk as well as an opportunity.

What BWP owns and how it earns

BWP is an Australian real estate Investment group. Its income comes mainly from rent on large-format retail properties, historically Bunnings Warehouse sites leased to Wesfarmers Group, alongside other national large-format retail tenants. Rent is typically underpinned by long leases with periodic reviews.

The group reported a weighted average lease expiry of 7.3 years at 30 June 2026, which it linked to the internalisation and a completed Bunnings lease reset and extension. A long lease profile gives income visibility, but it also concentrates exposure to one tenant group.

FY26 results in numbers

For the year ended 30 June 2026, BWP reported:

• Revenue of $209.3 million, up 3.0%.

• Funds from operations (FFO) of $140.9 million, up 4.5%, or 19.29 cents per security, up 2.1%.

• Statutory profit after tax attributable to securityholders of $408.4 million, up 53.8% from $265.6 million.

• Profit before Fair Value movements of $137.3 million, up 5.9%.

The gap between statutory and Underlying Profit is explained by non-cash fair value gains of $271.1 million on investment properties and derivatives. FFO per security grew more slowly than total FFO because the number of securities rose after the May 2026 entitlement offer.

Like-for-like rental growth was 3.0%, and leases negotiated during the year achieved average increases of 23.6%, according to the company.

The equity raising also explains why per-security growth lagged total growth. More securities share the same income base until acquisitions, rental growth and lower interest costs flow through. Management lists those items as the main FFO drivers for FY27, partly offset by income lost from sold properties.

Distributions and guidance

Total distributions for FY26 were 19.41 cents per security, up 4.1%. That comprised an interim distribution of 9.58 cents and a final distribution of 9.83 cents, paid on 27 August 2026.

For FY27, management has guided to a distribution of 20.00 cents per security, around 3.0% higher. It expects that to represent roughly 104% of FFO, within a stated target range of 90% to 110%.

That detail deserves attention. A payout above 100% of FFO means part of the distribution is being supported by something other than recurring operating earnings, and the company notes that FY27 distributions are partly supported by profits on property sales. Guidance is also explicitly subject to no major disruption to the Australian economy or material change in market conditions. It is guidance, not a commitment, and actual outcomes may differ materially from it.

Balance sheet and portfolio changes

The portfolio value rose by $257.0 million over the year, which the company attributed to improved rental income and a firmer weighted average Capitalisation rate, now 5.25%. Net tangible Assets were $4.11 per security, up 3.3% from $3.98.

On funding, BWP issued a $300 million medium-term bond in October 2025 and completed a $228 million accelerated non-renounceable entitlement offer in May 2026.

On the asset side, BWP bought HomeCentre Morayfield in Queensland for $48.0 million at a 5.75% capitalisation rate and agreed to buy Sunbury Lifestyle Centre in Victoria for $25.2 million at 6.0%, in August 2026. It sold assets at Morley and Port Kennedy in Western Australia and Chadstone Homeplus in Victoria. Repurposing work continues at Fountain Gate and Broadmeadows in Victoria and Noarlunga in South Australia.

Sector conditions and competitive position

Large-format retail property, which covers bulky-goods centres and warehouse-style stores, has benefited from encouraging Demand for well-located sites with limited new supply. BWP says it expects demand for Bunnings Warehouse properties to remain stable in the near term, citing the resilience of the Bunnings covenant.

Competition comes from other listed and unlisted owners of large-format retail, including diversified retail landlords. A weakness is that its scale is modest compared with the largest diversified property groups, so single assets and tenant decisions can matter more.

Risks and what to watch

The company itself flags several uncertainties:

• Evolving tenant requirements, including the need to repurpose or redevelop older sites.

• Capital Expenditure and rental downtime during repurposing projects.

• Lost income from divested properties.

• A Payout Ratio above 100% of FFO.

• Macroeconomic disruption affecting guidance.