- Distributable EPS: $0.0828 for the six months to June 30.
- Net Interest Expense: Higher, offset by rental growth and lower operating costs.
- Investment Portfolio Value: Increased by 1.4% during the period.
- Weighted Average Cap Rate: Increased by 6 basis points to 5.74%.
- NTA per Security: Increased by $0.06 or 2.1% to $2.79.
- Gearing: Decreased from 32.8% to 32.6%.
- Debt Refinanced: $600 million during the half.
- Weighted Average Debt Maturity: 4.5 years.
- Weighted Average Hedge Maturity: 3.3 years.
- Like-for-Like Rental Growth: 3.1%.
- Operating Expenses: Down due to lower property-related costs and disciplined expense management.
- Distributable Earnings: $55.6 million or $0.0828 per security.
- Distributions for First Half: $0.0824 per security.
- Statutory Profits: $93.3 million, driven by valuation movements on the investment portfolio.
- Property Portfolio Value: Increased to $2.8 billion.
- Weighted Average Cost of Debt: Increased to 4.3%.
- Hedging: 92% hedged to the end of calendar year 2024.
- Fuel and Convenience Transactions: 20% increase in number and 33% increase in total dollar value transacted in the first half.
- Average Yield on Assets Sold: About 50 basis points higher than last year.
- Non-Core Asset Sales: One small, unmanned asset in regional Queensland sold at a 3.6% discount to the December book value.
- FY24 Distributable EPS Guidance: Revised to $0.1648.
Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Waypoint REIT Ltd (ASX:WPR, Financial) delivered distributable EPS of $0.0828 for the six months to June 30, in line with the first six months of last year.
- The value of Waypoint's investment portfolio increased by 1.4% during the period, leading to a 2.1% increase in NTA per security to $2.79.
- Gearing decreased slightly from 32.8% in December to 32.6%, remaining at the lower end of the target range.
- Waypoint REIT Ltd (ASX:WPR) refinanced $600 million of debt and implemented additional hedging, extending the weighted average debt maturity to 4.5 years.
- Distributable earnings for the half were $55.6 million, positioning the company well to deliver its full-year guidance.
Negative Points
- Higher net interest expense is expected to impact second-half results, leading to lower performance compared to the first half.
- Progress on discussions with VEA regarding funding OTR conversions has been slower than anticipated.
- The cost of debt is expected to continue increasing over the coming financial periods due to higher rates on hedge debt and new swaps.
- Non-core asset sales progress was limited in the first half, with only one small asset sold at a 3.6% discount to the December book value.
- The major capital works provision in the master lease is not being triggered by the current rebranding and refurbishment works, limiting potential uplift in market rent.
Q & A Highlights
Waypoint REIT Ltd (ASX:WPR) Earnings Call Highlights
Q: Can you comment on the funding discussions with Viva Energy?
A: We haven't had detailed discussions with Viva Energy this half. We initially thought we might be able to sit down for detailed discussions, but it hasn't eventuated. We are unlikely to have these discussions for the rest of the year. - Hadyn Stephens, CEO
Q: Regarding the seven sites for which Viva Energy has sought approval, will there be a market rent review after major capital works?
A: The type of work being done on these sites does not qualify as major capital works, so the major capital works provision to the lease is unlikely to be triggered. - Hadyn Stephens, CEO
Q: Do you think we are at the bottom of the softening cycle for valuations?
A: Based on discussions with our valuer and current market trends, my personal view is that we are near, if not at, the bottom of the cycle. However, this can change quickly. - Hadyn Stephens, CEO
Q: Can you provide insights into the direct market and the dynamics affecting divestments?
A: Syndicators are the primary buyers we are dealing with, and there has been increased interest towards the end of the half. The private investor market is also picking up, as evidenced by a 100% clearance rate at the recent Burgess Rawson auction. - Hadyn Stephens, CEO
Q: Are syndicators engaging with you on multiple sites at a time?
A: Typically, syndicators are engaging with us on multiple sites, usually two to four assets at a time. - Hadyn Stephens, CEO
Q: What are the characteristics of the assets you have put on the market?
A: The assets we are looking to sell are non-core to us but attractive to other buyers, particularly due to their higher yield compared to our portfolio cap rate. - Hadyn Stephens, CEO
Q: Have you looked at any non-convenience retail assets for acquisition in the past six months?
A: No, we haven't looked at any non-convenience retail assets in the last 12 months. Our focus remains on our tenant's strategy and potential future discussions around capital allocation. - Hadyn Stephens, CEO
Q: What is the outlook for the rest of the year regarding asset sales and portfolio management?
A: We will continue to progress non-core asset sales, with eight assets currently being marketed. We aim to align disposals with funding larger-scale OTR conversions and improving the overall quality of our portfolio. - Hadyn Stephens, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
