Waypoint Reit Ltd. · ASX:WPR
Waypoint Reit — FY2023 Earnings Presentation
41 slides from Waypoint Reit's earnings presentation, Feb 26, 2024
Slide 1: FY23 Results Presentation
FY23 Results Presentation 26 February 2024 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 the inherent regulatory risks in the business of WPR such forward looking “Waypoint REIT”) which is a stapled entity comprising shares in Waypoint This presentatio
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 (VIVA ENERGY) • ~8,000 F&C outlets in Australia, providing an ‘essential • Australia’s largest owned and operated F&C ne
Slide 4: 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-23) (Dec-23) (Dec-23) Area 3km) (Dec-23) Key Portfolio Statistics Capital Cities Capitals of the 8 271 $1,921.6m 5
Slide 5: Agenda
Agenda 1. FY23 Highlights 6 2. Financial Results and Capital Management 8 3. Market Update and Valuations 14 4. VEA Update 18 5. Key Priorities and Outlook 21 5. Additional Information 23 6. Glossary 37 5
Slide 6: FY23 Highlights
g Director FY23 Highlights Hadyn Stephens Managing Director and CEO 6
Slide 7: FY23 Highlights
FY23 Highlights Solid performance in a challenging macroeconomic environment Financial Performance Property Portfolio Capital Management Other Distributable EPS: 16.48 cents Value: $2.77bn Gearing: 32.8% Credit Rating Performance in line with guidance 402 properties Lower end of 30-40% target range
Slide 8: Financial Results and Capital Management
Financial Results and Capital Management Aditya Asawa Chief Financial Officer 8
Slide 9: Financial Performance
Financial Performance FY23 DEPS in line with FY23 guidance FY23 FY22 Change Change $m $m $m % Commentary 1 Rental income 157.5 157.6 (0.1) (0.1) 1 Reduction due to impact of asset disposals in FY22 ($5.2m) substantially offset by like for like rental growth of 3.4% 2 Operating expenses (9.9) (10.2)
Slide 10: Balance Sheet
Balance Sheet Gearing remains at lower end of target range despite valuation declines Dec-23 Dec-22 Change Change $m $m $m % Commentary Cash and equivalents 13.3 14.0 (0.7) (5.0) 1 Reduction primarily due to net revaluation loss ($184.5m) partially offset by straight lining rent adjustment ($5.9m) a
Slide 11: Capital Management
Capital Management Prudent debt and hedging profile with headroom to covenants Dec-23 Dec-22 Change Commentary Facility limit ($m) 1,048.6 1,048.6 - 1 Gearing at the lower end of the target range (30-40%) Covenant gearing is 34.6%. Significant cap rate headroom4 exists as follows: Drawn debt ($m)1 9
Slide 12: Hedging Profile
Hedging Profile WPR remains largely insulated from volatility in floating rates for FY24, with 93% of debt hedged • Active management of the interest rate hedge book continued during FY23, including: – Entry into $110.0m of hedges commencing Jan 2024 and expiring Dec 2024 – Zero cost restructure of
Slide 13: Debt Profile
Debt Profile Diversified funding sources, no debt expiring until FY25, refinancing process underway • Refinancing initiatives: – A $100.0m bank bilateral facility (FY25 expiry) was extended in Jan 2024 for 5 years (to Jan 2029) – Plans are being progressed to further enhance the debt maturity profil
Slide 14: Market Update and Valuations
g Director Market Update and Valuations Hadyn Stephens Hadyn Stephens Managing Director and Chief Executive Officer Managing Director and CEO 14
Slide 15: Transaction Market Update
Transaction Market Update Metro assets dominated market activity in 2023 • Metro: 1H23 2H23 FY23 Metro – Accounted for ~80% of transactions by number and ~90% of transactions by value in 2023 Transactions (#) 22 17 39 – Activity sustained in 2H23, tighter average yield observed Value ($m) 156 157 31
Slide 16: Valuations
Valuations1 27bp cap rate expansion in 2H23; movement has been relatively consistent across asset type since June 2022 Gross Value ($m)1 WACR (%) Cap rate expansion since June 2022 # of Properties @ 31 Dec-23 Jun-23 Dec-23 Variance2 Jun-23 Dec-23 Change2 Capital Cities 28bp 12bp 26bp +66bp Capital C
Slide 17: Valuations (cont.)
Valuations (cont.) NSW and VIC have seen greatest cap rate expansion over 18 months (high metro weightings, tightest cap rates) NSW VIC QLD WA SA ACT TAS NT Portfolio 5% 2% 2% 1% 31% 10% % of WPR portfolio value: 20% 29% Cap rate change: 2H22 +40 bp +23 bp +20 bp +17 bp (2 bp) +43 bp +24 bp (45 bp)
Slide 18: VEA Update
g Director VEA Update Hadyn Stephens Managing Director and CEO 18
Slide 19: Viva Energy Australia – FY23 Result
Viva Energy Australia – FY23 Result1 Group result impacted by Geelong refinery shutdown; strong C&M fuel margin growth on modest volume growth • Group Highlights: FY23 FY22 Change – Group EBITDA down ~34%, driven primarily by E&I (Geelong refinery shutdown) C&M fuel volumes ML 4,556 4,515 +0.9% – Ne
Slide 20: VEA brand transition / network transformation
VEA brand transition / network transformation ~80% of stores to be converted to OTR over a five-year period; only ~30% of stores require major works Preliminary brand transition schedule1: WPR comments / observations: Brand Dec-23 Dec-24 Dec-25 Dec-26 Dec-27 Dec-28 • VEA disclosures relate to the en
Slide 21: Key Priorities and Outlook
g Director Key Priorities and Outlook Hadyn Stephens Managing Director and CEO 21
Slide 22: Key Priorities and Outlook
Key Priorities and Outlook FY24 DEPS guidance range of 16.32 cps – 16.48 cps, dependent on level of non-core asset sales achieved • Further information on VEA’s network redevelopment plans expected post-completion of the OTR transaction (targeting 1H24, subject to FIRB approval) Redevelopments • Con
Slide 23: Additional Information
Additional Information 23
Slide 24: OTR Overview
OTR Overview1 Leading independent convenience retailer providing VEA with enhanced earnings diversification • OTR Group: – Leading independent convenience retailer generating more than $3 billion in annual revenue and employing approximately 6,500 people Home brands Licensed brands – Operates the OT
Slide 25: Reconciliation of Distributable Earnings to Statutory Profit
Reconciliation of Distributable Earnings to Statutory Profit Reduction in statutory profit driven by revaluation loss in FY23 FY23 FY22 Change $m $m $m Commentary Distributable earnings 110.7 116.1 (5.4) 1 Net revaluation loss this period reflects 39bp of cap rate expansion in FY23 1 Net gain / (los
Slide 26: Distributable EPS Growth Components
Distributable EPS Growth Components Rental growth and FY22 security buyback offset dilution from asset sales 3.4% like-for-like Impact of FY22 rental growth asset sales Higher average cost of debt in FY23 Primarily due to lower insurance Impact of FY22 on- costs market buyback (reduction in weighted
Slide 27: Historical Returns
Historical Returns WPR has delivered solid growth in Distributable EPS and NTA per security over the past 5 years Distributable EPS1 NTA per security 5-year CAGR: 3.29% 5-year CAGR: 4.41% +4.25% Flat +2.37% 16.48c 16.48c +18.53% +4.30% $3.02 $2.95 (9.60%) +4.25% 15.81c $2.73 +3.69% 15.15c +8.67% +4.
Slide 28: Lease Expiry Profile
Lease Expiry Profile1 Portfolio WALE of 8.1 years with a staggered expiry profile WALE 8.1 years 25.0% 19.2% 13.8% 7.7% 8.6% 6.6% 6.0% 6.5% 2 0.7% 1.0% 0.1% 0.1% 0.7% 3.8% 0.2% 3 Vacant FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 FY37 FY38 FY39 1 26 30 35 32 29 40 60 68 69 2 3 1
Slide 29: Retail Fuel Volumes
Retail Fuel Volumes Total fuel volumes have increased by ~1% p.a. over the last 10 years, underpinned by ~ 54% increase in diesel • Total fuel sales to retailers have increased by ~12% over the last 10 years (~10% decline in petrol volumes, ~54% increase in diesel volumes) • Diesel now comprises ~46
Slide 30: Retail Fuel Prices and Margins
Retail Fuel Prices and Margins Average retail prices steady, indicative industry margins increased ~11% in 2023 vs. 2022 • Average fuel price was flat compared to 2022, with average diesel price down 5.5cpl (-2.6%) and average petrol price up 5.6cpl (+3.0%) • Retailers enjoyed strong market conditio
Slide 31: Australian Road Vehicle Fleet and New Car Sales
Australian Road Vehicle Fleet and New Car Sales Record new car sales in 2023; BEV/PHEV market share of 8.1%, but petrol/diesel still dominate fleet share Australian fleet by type (Jan-23)1 Australian fleet by power source (Jan-23)1 New vehicle sales by power source (2023)2 Trucks 3.3% Other 5.6% Lig
Slide 32: EV Forecasts – CSIRO
EV Forecasts – CSIRO EV share of new car sales takes time to translate into meaningful fleet share • The CSIRO published an updated report for the Australian Energy Market Operator in November 2022 Cost regarding EV projections EV Share of Sales: Parity 2025 2030 2035 2040 2045 2050 • Since the prev
Slide 33: 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 34: IPO Portfolio vs. Bonds and Deposit Rates
IPO Portfolio vs. Bonds and Deposit Rates Spread to benchmark rates largely unchanged since June 2023; term deposit rates stabilised in 2H23 6.00% 5.00% 4.00% 6-mth Dec-23 Dec-23 chg. spread 3.00% WACR (IPO assets) 5.58% +27bp - 10-yr Govt Bond 4.19% +27bp 1.39% Term deposits (all terms) 3.60% +20bp
Slide 35: F&C Transaction Data (2019-23)
F&C Transaction Data (2019-23) Metro volumes and yields have been more resilient, relative to Regional softening since ‘market peak’ in CY21 Metro Transactions Regional Transactions Total # $ Yield # $ Yield # $ Yield 1H19 16 $110m 5.78% 2 $10m 5.65% 18 $120m 5.77% 2H19 31 $167m 5.47% 7 $28m 6.21% 3
Slide 36: ESG Update
ESG Update FY23 targets achieved FY23 HIGHLIGHTS GHG EMISSIONS (t-CO2-e)1,2 • No health and safety incidents 80 69 • Zero employee turnover 64 • Carbon Footprint: 60 - Reduction in Scope 2 emissions achieved through adoption of carbon neutral electricity supply 40 - Scope 3 emissions from air travel
Slide 37: Glossary
* “REIT Glossary
Slide 38: Glossary
Glossary AACS Australian Association of Convenience Stores AIP Australian Institute of Petroleum AMTN Australian Medium-Term Notes ASX Australian Securities Exchange BBSW Bank Bill Swap Rate BEV Battery electric vehicle. Powered by battery, with no secondary source of power BITRE Bureau of Infrastru
Slide 39: Glossary
Glossary ESG Environmental, Social and Governance EV General term for electric vehicles, typically including Petrol Hybrid Electric Vehicles, Battery Electric Vehicles and (sometimes) Fuel Cell Electric Vehicles F&C Fuel and Convenience FCAI Federal Chamber of Automotive Industries FCEV Fuel cell el
Slide 40: Glossary
Glossary Triple net lease, where the tenant is responsible for all outgoings relating to the property being leased in addition to the rent fee applied under the lease. This includes all repairs NNN and maintenance (including structural repairs and maintenance), rates, taxes, insurance and other dire
Slide 41: Wayezint
aa a Wayezint REIT