Waypoint Reit Ltd. · ASX:WPR
Waypoint Reit — HY23 Earnings Presentation
38 slides from Waypoint Reit's earnings presentation, Aug 28, 2023
Slide 1: HY23 Results Presentation
HY23 Results Presentation 28 August 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 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) • COVID-19 reinforced the ‘essential services’ nature of • Australia’s largest owned and operated F&C netw
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 # (Jun-23) (Jun-23) (Jun-23) Area 3km) (Jun-23) Key Portfolio Statistics Capital Cities Capitals of the 8 271 $2,021.5m 5
Slide 5: Agenda
Agenda 1. HY23 Highlights 6 2. Financial Results and Capital Management 8 3. Market Update, Valuations and Leasing 13 4. Key Priorities and Outlook 19 5. Additional Information 21 6. Glossary 34 5
Slide 6: HY23 Highlights
g Director HY23 Highlights Hadyn Stephens Managing Director and CEO 6
Slide 7: HY23 Highlights
HY23 Highlights Performance in line with guidance, gearing maintained at lower end of range, strong hedging position Financial Performance Property Portfolio Capital Management Other Distributable EPS: 8.28cps1 $2.9bn portfolio Gearing: 31.1% ESG -3.7% on 1H22 402 properties Lower end of 30-40% targ
Slide 8: Financial Results and Capital Management
Financial Results and Capital Management Aditya Asawa Chief Financial Officer 8
Slide 9: Financial Performance
Financial Performance 1H23 DEPS consistent with FY23 guidance 1H23 1H22 Change Change $m $m $m % Commentary 1 Rental income 77.9 80.2 (2.3) (2.9) 1 Reduction due to asset sales ($4.8m) partially offset by like for like rent growth (3.2%) 2 M&A expenses (5.0) (4.7) (0.3) 6.4 2 Increase in M&A expense
Slide 10: Balance Sheet
Balance Sheet Gearing at lower end of target range Jun-23 Dec-22 Change Change $m $m $m % Commentary Cash and equivalents 13.6 14.0 (0.4) (2.9) 1 Reduction primarily due to net revaluation loss ($31.1m) partially offset by straight lining rent adjustment ($3.8m) and capital expenditure ($0.1m) 1 Inv
Slide 11: Capital Management
Capital Management Prudent capital management position with headroom to covenants Jun-23 Dec-22 Change Commentary Facility limit ($m) 1,048.6 1,048.6 - 1 Gearing at lower end of target range (30-40%) Covenant gearing is 32.8%. Significant cap rate headroom4 exists as follows: Drawn debt ($m)1 928.6
Slide 12: Debt and Hedging Profile
Debt and Hedging Profile No debt maturing until FY25 and a high proportion of FY23-24 debt is hedged • WPR remains largely insulated from volatility in floating rates for the next 18 months – Hedging for 2H23 remains high at 93% – Hedging for FY24 increased to 93% (from 81% at 31 Dec 22) via entry i
Slide 13: Market Update, Valuations and Leasing
g Director Market Update, Valuations and Leasing Hadyn Hadyn Stephens Stephens Managing Director and Chief Executive Managing Director and CEO Officer 13
Slide 14: Investment Market Update
Investment Market Update Transaction volumes remain subdued, strong skew towards metro sites in NSW and VIC • 21 transactions were completed in 1H23, in line with 2H22 but down significantly on historical levels • Metro sites accounted for ~80% of transactions by number and ~90% of transactions by v
Slide 15: Metro / Regional Trends (2019-23)
Metro / Regional Trends (2019-23) Regional yields and volumes have experienced the most 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% 38 $196m 5.57% C
Slide 16: Valuations
Valuations1 12bp increase in portfolio WACR partly offset by rent increases; Highway sites proving most resilient Gross Value ($m)1 WACR (%) Cap Rate Expansion # of Properties @ 30-Jun-23 Dec-22 Jun-23 Variance Dec-22 Jun-23 Change Capital Cities 28bp 12bp +40bp Capital Cities 52 379.7 366.9 (12.8)
Slide 17: Valuations (cont.)
Valuations (cont.) NSW and VIC have seen greatest cap rate expansion over 12 months (high metro weightings, tightest cap rates) NSW VIC QLD WA SA ACT TAS NT Portfolio 5% 2% 2% 1% % of WPR portfolio value 31% 10% 20% 29% Cap rate change 2H22 +40 bp +23 bp +20 bp +17 bp -2 bp +43 bp +24 bp -45 bp +27
Slide 18: Leasing Update
Leasing Update VEA’s 5-year option at Fawkner exercised; +2.1% weighted average reversion on F&C lease extensions since IPO • VEA’s 5-year option at Fawkner (VIC) exercised (2.4% discount to passing rent); Subway’s 5-year option at Fawkner also exercised (at passing rent) • Two further leases at Faw
Slide 19: Key Priorities and Outlook
g Director Key Priorities and Outlook Hadyn Stephens Managing Director and CEO 19
Slide 20: Key Priorities and Outlook
Key Priorities and Outlook Guidance reaffirmed; potential site redevelopment funding remains a capital allocation priority • Provisional ACCC findings on VEA/OTR transaction expected 21 September 2023 (final decision or Statement of Issues) Portfolio • VEA has proposed the divestiture of their opera
Slide 21: Additional Information
Additional Information 21
Slide 22: Reconciliation of Distributable Earnings to Statutory Profit
Reconciliation of Distributable Earnings to Statutory Profit Reduction in Statutory Profit driven by revaluation loss in 1H23 1H23 1H22 Change $m $m $m Commentary Distributable earnings 55.6 61.4 (5.8) 1 Net revaluation loss of $31.1m this period. The portfolio cap rate expanded 12bp over 1H23 to 5.
Slide 23: Lease Expiry Profile
Lease Expiry Profile1 Portfolio WALE of 8.6 years with a staggered expiry profile WALE 8.6 years 25.1% 19.2% 13.8% 7.7% 8.5% 6.6% 5.9% 6.5% 2 0.7% 0.9% 0.1% 0.2% 0.1% 0.6% 3.8% 0.3% 3 Vacant FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 FY37 FY38 FY39 1 26 30 35 32 29 40 60 6
Slide 24: Viva Energy Australia – HY23 Result
Viva Energy Australia – HY23 Result1 Continued strong sales and earnings performance from non-refining businesses • Group Highlights: HY23 HY22 Change – EBITDA and NPAT down 41% and 51% respectively, with strong performances Convenience & Mobility fuel volumes BL 2.27 2.19 +3.7% from C&M and C&I off
Slide 25: Viva Energy Australia – OTR Overview
Viva Energy Australia – 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
Slide 26: Retail Fuel Volumes
Retail Fuel Volumes Total fuel volumes have increased by ~1% p.a. over the last 10 years, underpinned by ~59% increase in diesel • Total fuel sales to retailers have increased by ~13% over the last 10 years (~9% decline in petrol volumes, ~59% increase in diesel volumes) • Diesel now comprises ~46%
Slide 27: Retail Fuel Prices and Margins
Retail Fuel Prices and Margins Indicative industry margins increased ~10% in 1H23 vs. 2023, with diesel margins particularly strong • Average fuel price fell by 6.0cpl (-3.1%), with average diesel price down 11.0cpl (-5.3%) and average petrol price down 1.0cpl (-0.5%) • Retailers enjoyed strong mark
Slide 28: Australian New Vehicle Market
Australian New Vehicle Market BEV/PHEV share of new car sales increased from 3.8% in 2022 to 8.4% in 1H23 BEV/PHEV Sales and Market Share1 EV Market Share by Brand (1H23) 50,000 10% 46,624 45,000 9% 39,353 40,000 8% Other 32% 35,000 7% 30,000 6% Tesla 55% 25,000 5% BYD 13% 20,665 20,000 4% 15,000 3%
Slide 29: 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 Cost November 2022 regarding EV projections EV Share of Sales: Parity 2030 2035 2040 2045 2050 • S
Slide 30: National Convenience Store Sales (2022 and 1H23)
National Convenience Store Sales (2022 and 1H23) 7.4% sales growth in 2022, with tobacco, packaged beverages and foodservice accounting for 72% of total sales 2022 1H23 Sales Share Growth Growth Category $bn % % % Tobacco 3,498 34.7 (3.0) (13.7) Packaged beverages 2,546 25.2 16.5 11.5 Foodservice 1,
Slide 31: Category Channel Sales and Gross Profit (2022)
Category Channel Sales and Gross Profit (2022) Higher margins on F&B (particularly vs. tobacco) drive greater share of Shop gross profit Share of Sales Share of Gross Profit Gross Margin 46.8% 35.2% Non-F&B Food & Beverage vs. Non-F&B $1.0bn 29% $4.7bn 47% 22.1% Non-Food & Beverage: F&B $5.4bn 53% F
Slide 32: Historical Industry Shop Sales Growth (2018-22)
Historical Industry Shop Sales Growth (2018-22) Significant growth in F&B sales has offset flat sales in non-F&B categories and underpinned 5-year CAGR of 3.8% Shop Sales Growth by Category Share of Sales 5-yr CAGR 20.0% (2022) (2017-22) 16.7% Food & Beverage 53% 7.7% 15.0% Non-F&B 47% 0.1% 2018 201
Slide 33: IPO Portfolio vs. Bonds and Deposit Rates
IPO Portfolio vs. Bonds and Deposit Rates Spread between IPO Portfolio WACR and benchmark rates has closed further and remains historically low 6.00% 5.00% 4.00% 6-mth Jun-23 Jun-23 chg. Spread 3.00% WACR (IPO assets) 5.31% +13bp - 10-yr Govt Bond 3.92% +35bp 1.39% 12-mth term deposits 3.35% +50bp 1
Slide 34: Glossary
* “REIT Glossary
Slide 35: 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. bp Basis points BL Billi
Slide 36: 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&B Food and Beverage F&C Fuel and Convenience FY Financial year Gearing Net debt (exclu
Slide 37: Glossary
Glossary NPAT Net Profit After Tax NTA Net tangible assets OTR OTR Group (“On the Run”) PHEV Plug-in hybrid battery electric vehicle; includes both a traditional ICE and a battery, which needs to be charged RCF Revolving Credit Facility S&P Standard & Poor's Financial Services LLC TCFD Task Force on
Slide 38: Wayezint
aa a Wayezint REIT