Waypoint Reit Ltd. · ASX:WPR
Waypoint Reit — FY2022 Earnings Presentation
41 slides from Waypoint Reit's earnings presentation, Feb 27, 2023
Slide 1: FY22 Results Presentation
FY22 Results Presentation 27 February 2023 Hadyn Stephens – Managing Director and CEO Aditya Asawa – Chief Financial Officer
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer This presentation has been prepared by Waypoint REIT (“WPR” or Industry data and third party market data exchange rates, competition in the markets in which WPR operates “Waypoint REIT”) which is a stapled entity comprising shares in This presentation contains statist
Slide 3: WPR Investment Proposition
WPR Investment Proposition Secure rental income with embedded growth, underpinned by long-term leases to top-tier tenants ESSENTIAL ECONOMIC INFRASTRUCTURE ASX-LISTED MAJOR TENANT • Roadside retail properties catering for F&C • WPR’s major tenant (Viva Energy) supplies approximately operators focuse
Slide 4: Contents
Contents 1. FY22 Highlights 5 2. Financial Results 9 3. Market and Portfolio 13 4. Capital Management 18 5. Outlook and Guidance 21 6. Additional Information 23 7. Glossary 38 4
Slide 5: FY22 Highlights
FY22 Highlights Hadyn Stephens Managing Director and CEO 5
Slide 6: FY22 Highlights
FY22 Highlights Guidance exceeded, portfolio quality improved and $129m buy-back program completed Financial Performance Property Portfolio Capital Management Other Outperformed DEPS guidance Enhanced F&C portfolio Low gearing maintained ESG goals achieved DEPS of 16.48c1 (+4.25% on FY21) 402 proper
Slide 7: Historical Returns
Historical Returns WPR continues to deliver strong growth in Distributable EPS and NTA per security Distributable EPS1 NTA per security 5-year CAGR: 4.21% 5-year CAGR: 7.29% +4.25% +2.37% +18.53% +4.30% 16.48c $3.02 $2.95 +4.25% 15.81c +3.69% 15.15c +8.67% +4.20% $2.49 +4.57% 14.54c +3.44% 14.02c $2
Slide 8: Return on Equity
Return on Equity Active capital management has underpinned a significant improvement in ROE ROE / Gearing1 $284m of assets sold since Dec-20 9.0% 40.0% 71 assets / ~15% of portfolio by number 38.0% Enhanced overall portfolio quality 8.5% 8.3% 36.0% 8.0% 7.9% 33.6% $302.7m of capital returned to 34.0
Slide 9: Financial Results
Financial Results Aditya Asawa Chief Financial Officer 9
Slide 10: Financial Performance
Financial Performance 4.25% DEPS growth1: security buyback offsetting impact of asset sales and higher interest costs FY22 FY21 Change Change $m $m $m % Commentary 1 Rental income 157.6 163.2 (5.6) (3.4) 1 Like for like rental growth of 3.1% ($4.5m) offset by lower income due to asset sales ($9.6m)
Slide 11: Distributable EPS Growth Components
Distributable EPS Growth Components Dilution from asset sales offset by impact of buyback and rental growth from retained portfolio Impact of asset sales 3.1% like-for-like rental growth (Delivering part year or no contribution in FY22) Higher average debt balance during FY22 Primarily lower coupon
Slide 12: Balance Sheet
Balance Sheet Gearing at lower end of target range and increase in NTA per security Dec-22 Dec-21 Change Change $m $m $m % Commentary Cash and equivalents 14.0 19.0 (5.0) (26.3) 1 Reduction primarily due to asset sales ($159.1m) and net revaluation loss ($7.2m) offset by straight lining rent adjustm
Slide 13: Market and Portfolio Update
Market and Portfolio Update Hadyn Stephens Managing Director and CEO 13
Slide 14: Investment Market Update
Investment Market Update Sharp fall in transaction volumes, particularly in 2H22 • 2022 transaction volumes were down ~40% on 2021, with the average transaction yield increasing by 22bp • 2H22 transaction volumes were particularly soft (down 73% in 1H22 and 79% on 2H21), with the average transaction
Slide 15: Valuations
Valuations Highway sites proved most resilient to cap rate expansion in 2H22 Cap Rate Change (by Type) # of Gross Value ($m)1 WACR (%) Properties -12bp @ Dec-22 Jun-222 Dec-22 Variance Jun-222 Dec-22 Change Capital Cities 28bp 16bp Capital Cities 92 677.9 649.7 (28.2) 4.66% 4.97% +0.31 -7bp Other Me
Slide 16: Non-Core Asset Sales
Non-Core Asset Sales Disposal program concentrated on Regional sites has delivered a more resilient investment portfolio 20211 2022 Total Impact on WPR Portfolio2 Sales Sales Sales Properties sold 40 31 71 (15%) Number of sites owned Gross sale proceeds $137.1m $146.8m $283.9m +8% Average fuel volum
Slide 17: Halfway Creek (NSW) Redevelopment
Halfway Creek (NSW) Redevelopment HOA executed for $3.6m redevelopment Brisbane • Heads of Agreement executed with VEA for the redevelopment of the Highway site at Halfway Creek (~50km north of Coffs Harbour on the A1 between Brisbane and Sydney) • The Halfway Creek site includes a Shell Coles Expre
Slide 18: Capital Management
Capital Management Aditya Asawa Chief Financial Officer 18
Slide 19: Overview
Overview Strong balance sheet position with gearing at lower end of target range and headroom to covenants Dec-22 Dec-21 Change Commentary Facility limit ($m) 1,048.6 1,048.6 - 1 Gearing at lower end of target range (30-40%) • Waypoint has used the proceeds from non-core asset sales to return $302.8
Slide 20: Debt and Hedging Summary
Debt and Hedging Summary No debt maturing until FY25 and high proportion of FY23-24 debt hedged • FY22 initiatives: – Extended the expiry of the $275.0m RCF from April 2024 to April 2025 (50%) and April 2026 (50%) – Purchased $80.0m of interest rate caps maturing in August 2025 for $3.0m upfront (to
Slide 21: Outlook and Guidance
Outlook and Guidance Hadyn Stephens Managing Director and CEO 21
Slide 22: Outlook and Guidance
Outlook and Guidance Cautious approach in current environment, focus on potential redevelopments in existing portfolio Macroeconomic uncertainty warrants continued cautious approach in FY23 Potential for further cap rate expansion given movement in risk free rates, offset by the defensive nature
Slide 23: Additional Information
Additional Information 23
Slide 24: Reconciliation to Statutory Profit
Reconciliation to Statutory Profit Reduction in Statutory Profit driven by revaluation loss in FY22 FY22 FY21 Change $m $m $m Commentary Distributable earnings 116.1 122.6 (6.5) 1 Net revaluation loss of $7.2m this period, comprising a $128.8m gain in 1H22 and a $136.0m loss in 2H22. The portfolio c
Slide 25: ESG Update
ESG Update FY22 targets achieved FY22 HIGHLIGHTS SUSTAINABILITY ROADMAP • Achieved our carbon neutral target of offsetting Scope 1, Scope 2 and direct Scope 3 emissions under our ACTIONS COMPLETE TO DATE operational control through the purchase of carbon offsets from an accredited provider1 • Establ
Slide 26: Portfolio Snapshot
Portfolio Snapshot High quality portfolio with 91% weighting to metropolitan and highway locations Avg. Book Avg. Avg. Popn Value WACR Value Site (500m/ WALE Category Description # (Dec-22) (Dec-22) (Dec-22) Area 3km) (Dec-22) Capital Cities Capitals of the 8 271 $2,041.2m 4.93% $7.5m 3,530m2 2,054
Slide 27: Portfolio Snapshot (cont.)
Portfolio Snapshot (cont.) 91% weighting to metropolitan and highway locations, 83% weighting to Eastern Seaboard Location by Book Value Regional 44% 36% 9% Sydney 10% Highway 21% 11% 20% 21% 54% 15% Other Northern Territory (1%)* Metro 4 properties 11% $20.2m book value Queensland (20%)* Western Au
Slide 28: Lease Expiry Profile
Lease Expiry Profile1 Portfolio WALE of 9.0 years with a staggered expiry profile WALE 9.0 years 25.1% 19.2% 13.8% 7.7% 8.5% 6.6% 5.6% 6.5% 1.0% 2 3 0.7% 0.2% 0.4% 0.7% 3.8% 0.1% 0.1% Vacant FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 FY37 FY38 FY39 - 1 - 1 26 30 34 32 29 4
Slide 29: Long-Term Diversification Strategy
Long-Term Diversification Strategy Disciplined strategy to broaden avenues for growth, mitigate long-term risks and improve ESG profile Portfolio Strategy Execution Considerations IPO portfolio • Sale & leaseback of 425 F&C sites (100% VEA) • Range of asset classes to be considered Asset selection (
Slide 30: Transaction Data: 2019-2022
Transaction Data: 2019-2022 Transaction yields can vary significantly based on market, site strength, covenant and lease terms 10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 5.81% 5.81% 5.79% 5.62% 5.37% 5.16% 5.02% 5.28% 0.00% Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 De
Slide 31: Viva Energy Australia – FY22 Result
Viva Energy Australia – FY22 Result1 Record earnings and dividends through period of significant disruption of energy markets • Group Highlights: $m FY22 FY21 Change – 122% increase in EBITDA (RC) to $1.1 billion, with strong cash generation from Retail, Fuels and Marketing, supported by a very stro
Slide 32: Coles Express – HY23 Result
Coles Express – HY23 Result Strong result underpinned by recovering fuel volumes and foot traffic post-lockdowns • Strong HY23 result vs. HY22 (fuel volumes and foot traffic impacted by $m HY23 HY22 Change COVID-19 lockdowns) Key P&L items: • Average weekly fuel volumes up 11.0% to 58.4mL C-store sa
Slide 33: Retail Fuel Prices and Margins
Retail Fuel Prices and Margins Retail Fuel Prices have increased sharply, with industry margins sitting above 10-year average • Average retail fuel prices in 2022 were 35% higher than the previous year (despite temporary 50% excise relief from March to September 2022) • Average 2022 retail margin (1
Slide 34: IPO Portfolio vs. Bonds and Deposit Rates
IPO Portfolio vs. Bonds and Deposit Rates Higher interest rates expected to put pressure on cap rates despite defensive nature of the asset class • By the end of 2022, the yield spread to 10-year government bonds (~160bp) and 12-month term deposit rates (~230bp) had closed to tightest level since IP
Slide 35: EV Sales and Market Share (New Car Market)
EV Sales and Market Share (New Car Market) Share of new car sales increased to ~4% in 2022, with ~10% market share in ACT EV Sales and % of Total New Car Sales (2011 to 2022)1,2 New EV Market Share by State/Territory (2022)2 45,000 5% 12.0% 39,353 40,000 10.0% 9.7% 4% 35,000 30,000 8.0% 3% 25,000 20
Slide 36: EV Forecasts - CSIRO
EV Forecasts - CSIRO Short-term projections (to 2030) have increased, long-term (2050) projections largely unchanged • The CSIRO published an updated report for the Australian Energy Market Operator in November Cost 2022 regarding EV projections EV Share of Sales: Parity 2030 2035 2040 2045 2050 • S
Slide 37: EV Forecasts – CSIRO (cont.)
EV Forecasts – CSIRO (cont.) Key assumptions across a range of political, behavioural, economic and infrastructure drivers Progressive Change Exploring Alternatives Step Change Hydrogen Export Decarbonisation target 43% emissions reduction by 2030, net 43%+ remissions reduction by 2030, 43%+ remissi
Slide 38: Glossary
Wayezint REIT
Slide 39: Glossary
Glossary Alliance Arrangement between Coles Express and VEA in respect of the operation of a national network of retail fuel and convenience sites AMTN Australian Medium-Term Notes ASX Australian Securities Exchange BBSW Bank Bill Swap Rate bp Basis points BEV Battery electric vehicle BL Billion lit
Slide 40: Glossary
Glossary EBITDA Earnings before interest, tax, depreciation and amortisation EPS Earnings per security ESG Environmental, Social and Governance EV General term for electric vehicles, including Petrol Hybrid Electric Vehicles, Battery Electric Vehicles and Fuel Cell Electric Vehicles F&C Fuel and Con
Slide 41: Glossary
Glossary NTA Net tangible assets PHEV Plug-in hybrid battery electric vehicle VEA reports its performance on a “replacement cost” (RC) basis. RC is a non-IFRS measure under which the cost of goods sold is calculated on the basis of theoretical new RC purchases of inventory instead of historical cost