Waypoint (WPR) H2 2023 earnings summary

Executive summary

• FY23 distributable EPS was 16.48 cents, in line with guidance and unchanged YoY; five-year DEPS CAGR was 3.3%.

• Portfolio comprised 402 properties valued at $2.77bn, with 8.1-year WALE and 99.9% occupancy; FY23 valuation decline reflected 27bp WACR expansion in 2H23.

• FY24 DEPS guidance is 16.32–16.48 cents, with the range dependent on non-core asset sales and no redevelopment spend assumed.

Financial highlights

• Rental income was $157.5m, down 0.1% YoY; like-for-like rental growth of 3.4% largely offset the impact of FY22 asset disposals.

• Operating EBIT was $147.6m, up 0.1% YoY; operating expenses fell 2.9% to $9.9m, while net interest expense rose 17.9% to $36.9m.

• Distributable earnings were $110.7m, down 4.7% YoY; statutory result was a $79.1m loss versus $133.8m profit, primarily due to property revaluation losses.

• Non-property expenses fell 6% YoY; MER remained 30bp, unchanged from FY22.

Outlook and guidance

• FY24 DEPS guidance is 16.32–16.48 cents; the upper end assumes no asset sales, while the lower end assumes disposal of non-core assets with Dec-23 book value of ~$80m.

• Guidance assumes sale proceeds repay debt, no acquisitions or redevelopment expenditure, no further buybacks or capital returns, 90-day BBSW of 4.2%, and no material market changes.

• No redevelopment-related expenditure is included in FY24 guidance; further information on Viva Energy Australia’s network plans was expected after the targeted 1H24 OTR transaction completion, subject to FIRB approval.

• FY24 cost of debt is expected to rise to 4.5% from 4.0% in FY23, reflecting higher hedged and floating rates and refinancing impacts.