Waypoint REIT delivered stable first-half earnings with a 4.7% rise in net tangible assets per security and increased its FY25 distributable earnings guidance, supported by ongoing asset sales and Viva Energy’s OTR conversions.
- 1H25 distributable earnings per security steady at 8.31 cents
- Net tangible assets per security rose 4.7% to $2.89
- Completed $34.5 million in non-core asset sales at a slight discount
- Pro forma gearing maintained at conservative 32.5% with $138 million liquidity
- FY25 distributable earnings per security guidance increased to 16.64 cents
Stable Earnings and Asset Growth
Waypoint REIT (ASX, WPR) reported a steady financial performance for the first half of 2025, with distributable earnings per security (DEPS) holding firm at 8.31 cents, a marginal increase from the prior corresponding period. The REIT’s net tangible assets (NTA) per security rose by 4.7% to $2.89, reflecting valuation gains and portfolio growth. The overall portfolio value increased to approximately $2.89 billion, underpinned by a high occupancy rate of 99.9% and a weighted average lease expiry (WALE) of 6.6 years, demonstrating the stability of its rental income streams.
Strategic Asset Sales and Capital Management
During 1H25, Waypoint completed the sale of five non-core assets for $34.5 million, representing a modest 1% discount to book value. These transactions are part of a broader strategy to streamline the portfolio and focus on high-quality metropolitan and highway locations. The REIT also progressed a $50 million on-market security buyback, with approximately 66% completed, which has contributed to accretive earnings per security.
Capital management remains conservative, with pro forma gearing at 32.5%, comfortably within the target range of 30-40%, and liquidity standing at around $138 million. The REIT has extended key debt facilities, maintaining a weighted average debt maturity profile that supports financial flexibility. Interest rate hedging covers 89% of drawn debt, mitigating exposure to rising rates.
Partnership with Viva Energy and OTR Conversions
Waypoint’s partnership with Viva Energy Australia (VEA) continues to be a cornerstone of its growth strategy. Viva Energy has opened 15 OTR convenience store conversions year-to-date, with plans for 45 conversions in FY25. These conversions aim to modernize and expand the retail footprint, enhancing customer appeal and revenue potential. To date, Viva Energy has funded all conversions internally, with no requests for landlord funding received, although Waypoint remains open to partnering on larger-scale projects subject to returns.
Market Conditions and Outlook
Market conditions show signs of improving confidence, with transaction volumes stable and weighted average yields tightening slightly, particularly in key metropolitan markets such as Sydney and Melbourne. Waypoint’s portfolio benefits from its irreplaceable network of fuel and convenience sites, many located in high-value land zones along Australia’s eastern seaboard.
Reflecting these factors, Waypoint has raised its FY25 distributable earnings per security guidance to 16.64 cents, a 1% increase over the prior forecast. Quarterly distributions for the second half of 2025 are set to rise to 4.20 cents per security, maintaining a 100% payout ratio. The REIT’s management emphasizes ongoing selective asset sales, cautious capital deployment, and monitoring of market dynamics to sustain income stability and growth.
Bottom Line?
Waypoint REIT’s disciplined approach to capital and portfolio management positions it well to navigate evolving market conditions and capitalize on growth opportunities ahead.
Questions in the middle?
- Will Viva Energy seek landlord funding for larger OTR conversions in FY26 and beyond?
- How will shifts in fuel consumption and electric vehicle adoption impact Waypoint’s long-term rental income?
- What are the prospects for further yield compression or expansion in key metropolitan markets?