Waypoint REIT Holds Steady Earnings Amid Surging Property Values in 1H25

Solid Earnings Performance Despite Market Headwinds

Waypoint REIT, Australia's largest listed real estate investment trust focused exclusively on fuel and convenience retail properties, has reported a stable financial performance for the half-year ended 30 June 2025. Distributable earnings, a key measure of cash profit for investors, held steady at $55.6 million, matching the prior corresponding period. This stability was achieved despite a marginal increase in operating expenses and higher net interest costs.

Notably, distributable earnings per security edged up 0.4% to 8.31 cents, aided by a reduction in the number of securities on issue following an on-market buyback of 12.6 million units. This buyback, costing $32.9 million, reflects management’s commitment to enhancing shareholder value amid a competitive market environment.

Robust Property Valuations Drive Statutory Profit Growth

While distributable earnings remained flat, statutory net profit after tax surged 46.9% to $137.1 million. This jump was primarily driven by a strong $96.8 million net gain on investment property valuations, up from $35.7 million in the prior period. The portfolio, comprising 400 assets valued at nearly $2.9 billion, benefited from a slight compression in the weighted average capitalisation rate to 5.66%, reflecting sustained investor appetite for quality fuel and convenience retail assets.

Portfolio occupancy remains exceptionally high at 99.9%, with a weighted average lease expiry of 6.6 years, underscoring the stability of rental income streams. The majority of leases are with Viva Energy Australia Pty Limited, which accounts for over 94% of rental income, highlighting a significant tenant concentration risk that the REIT continues to monitor closely.

Conservative Capital Management and Debt Facility Extensions

Waypoint REIT’s capital management remains prudent, with gearing at 32.7%, comfortably within the targeted 30-40% range. During the period, the REIT extended the term of a $50 million bilateral bank debt facility to March 2028 and also extended a $150 million syndicated bank term loan facility to May 2028, pushing out debt maturities and reducing refinancing risk.

Interest rate risk is well managed, with 89% of drawn debt hedged through interest rate swaps and cross-currency derivatives, providing protection against market volatility. The weighted average debt maturity stands at 3.7 years, supporting financial flexibility.

Outlook and Risks Ahead

Looking forward, Waypoint REIT expects to deliver distributable earnings per security growth of approximately 1% for the full year 2025, reaching 16.64 cents. This guidance assumes stable market conditions and no material disruptions. Key risks include tenant concentration with Viva Energy, potential fluctuations in market rents, environmental liabilities related to fuel retail properties, and refinancing risks amid changing economic conditions.

Management continues to actively manage the portfolio, including the disposal of non-core assets and maintaining a high occupancy rate, to mitigate these risks and sustain long-term returns for securityholders.