Waypoint REIT Ltd (ASX:WPR) (H1 2026) Earnings Call Highlights: DEPS Up 3. ...

Negative Points

• Transaction volumes in the fuel and convenience asset market were down 20-30% versus prior periods, with activity impacted by interest rate uncertainty and Middle East conflict.

• Weighted average cap rate expanded by 10 basis points to 5.71%, with Melbourne assets seeing a 21 basis point softening due to negative sentiment on the Victorian economy.

• The OTR conversion program slowed significantly, with only five new stores opened or converted in the first half versus 35 in full year 2025, and a more moderate rollout is expected near term.

• Viva Energy exited or will exit two Brisbane sites (Brendale and Slacks Creek), requiring re-leasing or redevelopment efforts.

• Second-half earnings are expected to face drags from higher hedge rates, floating debt costs, the loss of income from the Nowra disposal, and normalized property expenses.

• The company has limited appetite for a buyback due to slow progress on non-core asset sales and the need to maintain liquidity and credit rating parameters.

• The introduction of unattended self-service formats (like U-GO) on nine sites raises uncertainty regarding valuation and market rent implications, with limited market evidence available.

Q & A Highlights

Q: Based on your guidance, second half earnings are going slightly backwards despite more income from FY 2026 renewals and high hedging. What is the drag in the second half? Is it higher base rates, disposals, or something else? A: Aditya Asawa (CFO) explained that the increase from lease renewals is not material as it only affects 4% of income for part of the half. The drag comes from a higher average hedge rate in the second half (3.1% vs. 2.9% in H1), higher expected floating debt costs, the loss of income from the Nowra disposal (which contributed five months of income to H1), and an expected normalization of property expenses, which were unusually low at AUD 0.3 million in H1 versus the five-year average of AUD 1.3 million.

Q: With the OTR rollout slower than expected, liquidity around AUD 100 million, and trading at an 18% discount to NTA, what is the appetite for a buyback, and what is the minimum level of liquidity you like to maintain? A: Aditya Asawa (CFO) stated that the current liquidity position is about average historically, and they do not see significant surplus liquidity. While they have not shied away from buybacks in the past, they have generally been linked to non-core asset sales, which have been slow. In the absence of significant progress on asset sales, there is less appetite for a buyback given the current trading levels and outlook.

Q: You mentioned Melbourne assets had the biggest cap rate expansion over the last six months. Can you provide more color on what you are seeing in the Melbourne market? A: Hadyn Stephens (CEO) noted there is generally negative sentiment around the Victorian economy, which is flowing through to a lack of transactions. When assets do trade, there is movement out in terms of yields. He also highlighted that the new valuer (CBRE) has a slightly different approach to Melbourne, particularly for some outer areas, which contributed to the 22 basis point cap rate softening.

Q: With the increase in unattended self-service sites (like Ampol's U-GO), would any of your sites be converted to this format, and does that impact your valuation? A: Hadyn Stephens (CEO) confirmed they have been given heads-up on nine of their sites for conversion to the unattended self-service format. They are still working through the implications, including consent rights, and are trying to understand the valuation sideboth what it might mean for market rent applied on valuations and how these assets might trade, given there is limited market evidence for this relatively new format.

Q: Regarding the FY 2027 lease expiries, what are your expectations on renewals given you likely understand how those sites are performing? A: Hadyn Stephens (CEO) said the performance of the FY 2027 cohort is broadly similar to the FY 2026 expiries. He avoided giving a retention probability as they need to go through the process with Viva Energy. He noted that some sites they thought were at risk of leaving in 2026 stayed, while others like Slacks Creek left unexpectedly. He remains encouraged by the level of appetite from other operators (including Ampol and Chevron) for both leasing and buying sites, which provides a fallback option.

Q: The OTR family has been selling sites. Have you looked at these, and why are they selling? Are they worried about the market? A: Hadyn Stephens (CEO) said he does not know their rationale for selling, which could be a reallocation of resources. While they look at all assets that fit their criteria, it remains difficult to find anything that meets their cost of capital, which is what restricts them from buying at the moment.

Q: On the AUD 250 million refinancing, if the FY 2028 expiries were part of that batch, what type of margin saving would you have expected? A: Aditya Asawa (CFO) explained that the AUD 200 million AMTN maturing in September 2028 is a fixed-rate instrument with a very favorable all-in cost of 2.4%, making it hard to compare. For context, the six-year AMTN issued had an equivalent margin of 156 basis points, which is in the range of where five-year bank debt is around 150 basis points and six-year around 160 basis points.

Q: With the uptick in electric vehicles, how attractive are EV charging bays for highway and roadside assets, both from a leasing and resale perspective? A: Hadyn Stephens (CEO) said highway sites are obvious targets for EV chargers, but as landlord, they lease the entire site to tenants, so it is a tenant-led initiative. The economics are likely marginal in the first few years given usage, but they will become more profitable longer term. From a resale perspective, having EV charging helps future-proof assets, which is a positive for buyers. He noted Viva has six sites with Evie Networks chargers in place, but did not have an exact number for the total across the network.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .