Annual
Report
2022
Image: Liberty Greenvale (VIC)
Cover image: Shell Coles Express Coomera (QLD)
CONTENTS
Investment Proposition
0101 Investment Proposition
FY22 Highlights
0202 FY22 Highlights
Chair and Managing Director & CEO’s Report
0404 Chair and Managing Director & CEO’s Report
Board of Directors
0606 Board of Directors
Executive Leadership Team
0808 Executive Leadership Team
Portfolio Overview
1010 Portfolio Overview
Sustainability
1313 Sustainability
Financial Report
1515 Financial Report
Additional Information
8181 Additional Information
Disclosures
8383 Disclosures
Glossary
8484 Glossary
Corporate Directory
8686 Corporate Directory
Waypoint REIT is Australia’s largest
listed REIT owning solely fuel and
convenience retail properties; it has a
high-quality network across all Australian
states and mainland territories.
Waypoint REIT’s objective is to maximise
long-term returns from the portfolio
for the benefit of all securityholders.
About this report
This Annual Report is a summary of Waypoint REIT’s activities and financial
position as at 31 December 2022. In this report, references to ‘Waypoint REIT’,
‘Group’, ‘Company’, ‘we’, ‘us’ and ‘our’ refer to Waypoint REIT unless
otherwise stated.
Additional information
We produce a suite of reports to meet the needs and requirements
of our stakeholders.
The following documents are available at www.waypointreit.com.au
References in this report to a ‘year’, ‘2022’ and ‘FY22’ refer to the financial year
ended 31 December 2022 unless otherwise stated. All dollar figures are expressed
in Australian dollars (AUD) unless otherwise stated. More information, particularly
latest Company announcements, can be found on Waypoint REIT’s website.
Waypoint REIT is committed to reducing the environmental footprint associated
with the production of the Annual Report, and printed copies are only posted to
securityholders who have elected to receive a printed copy.
The following symbol is used in this report to cross-refer to more online
information on a topic:
References additional information available on Waypoint REIT website
• 2022 Corporate Governance Statement
• 2022 Sustainability Report
• 2022 Modern Slavery Statement (to be released prior to 30 June 2023)
Acknowledgement
In the spirit of reconciliation Waypoint REIT acknowledges the Traditional
Custodians of country throughout Australia and their connections to land,
sea and community. We pay our respect to their elders past and present and
extend that respect to all Aboriginal and Torres Strait Islander peoples today.
Waypoint REIT Limited – ACN 612 986 517
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INVESTMENT PROPOSITION
Secure rental income with embedded growth, underpinned
by long-term leases to top-tier tenants
Essential economic infrastructure
Predictable income and growth
• Roadside retail properties catering for fuel and
convenience operators focused on everyday needs
• Fuel and convenience tenants have continued to
operate throughout the COVID-19 pandemic
ASX-listed major tenant
• WPR’s major tenant (Viva Energy) supplies
approximately one-quarter of Australia’s downstream
petroleum market, and has sole rights to the Shell
brand (for retail fuels)
• Market capitalisation of ~$4.5 billion (February 2023)
• Viva Energy has agreed to acquire the Coles Express
business, creating Australia’s largest fuel and
convenience network under a single operator
Irreplicable network
• National footprint acquired/built over 100+ years
• Aligned with population density and concentrated
in metropolitan locations along Australia’s
eastern seaboard
• Underpinned by ~2 million square metres of land
• 99.9% occupancy, 9.0-year WALE, 90% NNN leases
• Strong organic rental growth underpinned by 3.0% WARR1
• Further growth potential via acquisitions, development
fund-throughs and reinvestment in the portfolio
Internal management structure
• Majority-independent Board of Directors
• One of the lowest MERs in the S&P/ASX REIT 200
• Eight employees (four are part-time)
Conservative capital structure
• Target gearing range of 30–40%
• Investment grade credit rating (Moody’s Baa1)2
• Diversified debt sources and tenor
1. Assumes long-term CPI of 3.0% for leases with CPI-linked rent reviews.
2. Credit rating must not be used, and WPR does not intend to authorise its use, in the support of, or in relation to, the marketing of its securities to retail
investors in Australia or internationally.
Waypoint REIT Limited – Annual Report 2022
01
FY22 HIGHLIGHTS
Strong DEPS growth
16.48cps1 (up 4.25% on FY21)
Strong balance sheet
30.7% gearing (low end of 30-40% target range)
Increased NTA
$3.02 per security (up 2.4% on FY21)
Active capital management
49.8m securities bought back (14% discount to NTA)
Low MER maintained
30bps (one of the lowest in the S&P/ASX200 REIT Index)
Strong portfolio metrics
9-year WALE and 99.9% occupancy
Strategic asset sales
31 assets sold for $146.8m (in line with book value)
1. Based on weighted average number of securities on issue during the period.
Image: Ampol Meadow Springs (WA)
02
Waypoint REIT Limited – Annual Report 2022 Distributable EPS2
5-year CAGR: 4.21%
+3.69%
c
4
5
.
4
1
+4.57%
c
2
0
.
4
1
c
1
4
.
3
1
+4.25%
c
8
4
.
6
1
+4.30%
c
1
8
.
5
1
+4.25%
c
5
1
.
5
1
FY17
FY18
FY19
FY20
FY21
FY22
NTA per security
5-year CAGR: 7.29%
+3.44%
+4.20%
2
1
.
2
$
0
2
.
2
$
9
2
.
2
$
+8.67%
9
4
.
2
$
+18.53%
+2.37%
5
9
.
2
$
2
0
.
3
$
Dec-17
Dec-18
Dec-19
Dec-20
Dec-21
Dec-22
2. Based on weighted average number of securities on issue during the reported period.
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03
Waypoint REIT Limited – Annual Report 2022
CHAIR AND MANAGING DIRECTOR & CEO’S REPORT
“Pleasingly, Distributable EPS (our key
measure of operating performance)
of 16.48 cents in 2022 represented
a 4.25% increase on 2021.”
Laurence Brindle
Chair
Hadyn Stephens
Managing Director & CEO
Dear Securityholder,
On behalf of the Board of Directors and management team,
we are pleased to present Waypoint REIT’s Annual Report for
the year ended 31 December 2022.
Financial performance
Pleasingly, Distributable EPS (our key measure of operating
performance) of 16.48 cents in 2022 represented a 4.25% increase
on 2021, with the impact of non-core asset sales being more
than offset by rental growth across the portfolio and the impact
of Waypoint REIT’s security buy-back programs, which reduced
the number of securities on issue during the year. Distributable
EPS growth of 4.25% outperformed guidance of 4.00% growth,
and Waypoint REIT has achieved compound annual growth in
Distributable EPS of 4.2% over the last five years.
Waypoint REIT’s statutory profit of $133.8 million in 2022
(2021: $443.6 million) was down with the key driver being a net
valuation decline on investment properties of $7.2 million in
2022 compared with a $305.0 million gain in 2021. Distributable
Earnings declined by $6.5 million to $116.1 million due primarily
to the impact of non-core asset sales during the year.
Waypoint REIT’s management expense ratio of 30 basis points
for 2022 remains one of the lowest in the S&P/ASX 200 REIT
Index.
Financial position
Total assets declined by 4.5% in 2022 to $3.0 billion, primarily
due to the impact of non-core asset sales. However, net tangible
assets per security increased by seven cents or 2.4%, due to the
impact of Waypoint’s buy-back programs, which were executed
at a discount to NTA per security.
Gearing as at 31 December was 30.7%, which remains near
the bottom of Waypoint REIT’s target gearing range of 30–40%.
Waypoint REIT is well positioned, with no debt facilities expiring
until 2025.
Property portfolio
Non-core asset sales remained a key focus for Waypoint REIT
in 2022, with strong market conditions in the first half providing
the opportunity to sell 31 non-core assets for $146.8 million
in line with book value. Waypoint REIT has now sold 71 sites
since the commencement of its non-core asset sale program in
December 2020, representing approximately 15% of the portfolio
by number and achieving an overall premium to book value of
approximately 5%. These non-core asset sales have allowed
Waypoint REIT to return a significant amount of capital to
securityholders over this period, and has also resulted in a more
resilient investment portfolio, with a marked improvement in key
operational metrics for our tenant and real estate fundamentals
across the retained portfolio.
As at 31 December 2022, Waypoint REIT owned 402 fuel and
convenience properties with an occupancy rate of 99.9% and
a weighted average lease expiry of 9.0 years.
During the year, 213 properties were independently valued,
representing over 50% of the portfolio by number, with the
outcomes of these independent valuations then being applied
across the remainder of Waypoint REIT’s portfolio that
were subject to Directors’ valuations. The weighted average
capitalisation rate (WACR) on the 402 properties owned by
Waypoint REIT at 31 December 2022 increased by 16 basis
points during the year from 5.12% to 5.28%, with 11 basis points
of WACR compression in the six months to June, and 27 basis
points of WACR expansion in the second half as higher interest
rates impacted market activity and valuations.
Capital management
Capital management was also a key focus for Waypoint REIT
in 2022, with approximately 49.8 million securities representing
approximately 7% of Waypoint’s equity base being bought back
during the year. The average purchase price of $2.60 per security
was a 14% discount to Waypoint REIT’s NTA per security of
$3.02 at 31 December 2022.
04
Waypoint REIT Limited – Annual Report 2022 O
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Image: Shell Coles Express Taylors Lakes (VIC)
“As at 31 December 2022, Waypoint REIT owned 402 fuel and convenience
properties with an occupancy rate of 99.9% and a weighted average lease expiry
of 9.0 years.”
Outlook
Waypoint REIT intends to maintain a cautious approach in 2023
given continued macroeconomic uncertainty. We remain very
focused on the ongoing improvement of our fuel and convenience
portfolio, and will continue to assess opportunities to acquire
new assets or divest non-core assets to achieve this goal.
We will also consider opportunities to reinvest in our core
portfolio alongside our major tenant, Viva Energy, as it looks
to optimise its network following completion of the acquisition
of the Coles Express business.
Thank you for your ongoing support of Waypoint REIT.
Laurence Brindle
Non-Executive Chair
Hadyn Stephens
Managing Director & CEO
Waypoint REIT has now returned $302.7 million to
securityholders via capital returns and buy-backs over the
course of 2021 and 2022, with contributed equity reducing
by approximately 19% since 31 December 2020. This has
been achieved primarily through the proceeds from non-core
asset sales, with gearing maintained at the bottom end of
Waypoint REIT’s 30–40% target gearing range. This disciplined
and active approach to capital management has also resulted
in significantly improved Return on Equity (ROE), with ROE
of 8.3% in 2022 representing an increase of approximately
15% compared with the 7.2% average ROE delivered over
the preceding five-year period.
Waypoint REIT was also active on the debt and interest rate
hedging front in 2022, with $275.0 million of debt refinanced
and as at 31 December 2022, interest rate exposure on 94% of
drawn debt was hedged over varying maturities. Waypoint REIT
has no debt maturing until 2025, with a weighted average debt
maturity of 4.4 years. Waypoint REIT’s Baa1 (stable) credit
rating from Moody’s remains unchanged.
Viva Energy/Coles Alliance
On 21 September 2022, Viva Energy entered into an agreement
to buy the Coles Express business from Coles Group. This will
effectively conclude the joint venture arrangements between
these companies under which approximately 90% of the fuel
and convenience sites in Waypoint REIT’s portfolio are managed.
The transaction is expected to complete in the first half of 2023,
and will create Australia’s largest fuel and convenience network
under a single operator; including approximately 700 sites, 364
of which are owned by Waypoint REIT.
Waypoint REIT Limited – Annual Report 2022
05
BOARD OF DIRECTORS
Laurence Brindle
Independent Non-Executive Chair,
and a Member of the Nomination and
Remuneration Committees
Laurence has extensive experience
in funds management, finance
and investment and is currently an
Independent Non-Executive Director
of Stockland Property Group.
Until 2009, Laurence was an executive
with Queensland Investment Corporation
(QIC). During his 21 years with QIC,
he served in various senior positions
including Head of Global Real Estate,
where he was responsible for QIC’s large
global investment portfolio. Laurence
was also a long-term member of QIC’s
Investment Strategy Committee.
Laurence provides advice to a number
of investment institutions on real estate
investment and funds management
matters. He is a former Chair of the
Shopping Centre Council of Australia
and National Storage REIT, and a former
Independent Non-Executive Director of
Westfield Retail Trust and Scentre Group.
Laurence holds a Bachelor of Engineering
(Honours) and a Bachelor of Commerce
from the University of Queensland, and a
Masters of Business Administration from
Bayes Business School, London, where he
graduated with distinction.
Georgina Lynch
Independent Non-Executive Director,
Chair of the Remuneration and
Nomination Committees and
Member of the Audit and Risk
Management Committee
Stephen Newton
Independent Non-Executive
Director, Chair of the Audit and
Risk Management Committee and
Member of the Remuneration and
Nomination Committees
Georgina is an experienced company
director who has over 30 years’ experience
in the financial services and property
industry. She is currently the Independent
Non-Executive Chair of Cbus Property,
an Independent Non-Executive Director
of Vicinity Centres and a Member of
their Audit and Risk and Compliance
Committees, and an Independent
Non-Executive Director of Evolve Housing.
Georgina has significant global experience
in corporate transactions, capital raisings,
initial public offerings, funds management,
corporate strategy and acquisitions and
divestments.
Georgina holds a Bachelor of Arts and
Bachelor of Laws.
Stephen has extensive industry
experience spanning in excess of 40 years
across real estate investment and funds
management, development and property
management, as well as in infrastructure
investment and management. Stephen
has been a Principal of Arcadia Funds
Management for more than 20 years.
Prior to that, Stephen held various
senior executive positions at Lend
Lease for over 22 years. Stephen is
currently an Independent Non-Executive
Director of Stockland Property Group,
BAI Communications Group (formerly
Broadcast Australia Group) and Sydney
Catholic Schools Limited.
Stephen is a member of both Chartered
Accountants Australia and New Zealand
and the Australian Institute of Company
Directors (AICD). He holds a Bachelor of
Arts (Economics and Accounting) degree
from Macquarie University and a Masters
of Commerce post-graduate degree from
the University of New South Wales.
06
Waypoint REIT Limited – Annual Report 2022
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Hadyn Stephens
Managing Director and
Chief Executive Officer
Hadyn has approximately 24 years’
experience in finance and commercial
real estate, principally in strategy and
transaction-related roles in the real estate
funds management space covering
direct capital transactions, corporate
transactions (M&A), debt and equity
(listed and unlisted). Hadyn’s previous
positions in real estate included senior
roles with AMP Capital, Centuria Capital,
LaSalle Investment Management, GPT
Group and Merrill Lynch.
Hadyn holds a Bachelor of Laws
and Bachelor of Commerce from the
University of Otago, New Zealand.
Susan MacDonald
Independent Non-Executive Director
and a Member of the Audit and Risk
Management and Remuneration
Committees
Susan has over 30 years’ domestic
and international experience in property
investment management, primarily
in the retail sector, including asset,
development and funds management.
Susan has extensive knowledge in people
management, organisational culture,
strategy development and stakeholder
engagement. Susan has held executive
positions with Mirvac, Lend Lease, AMP
Capital and Galileo Funds Management,
and is a former Joint Deputy Chair of
Shopping Centre Council of Australia
and a former Global Trustee of the Urban
Land Institute (ULI). Susan is currently
a Non-Executive Director and Member
of the Risk and HR and Remuneration
Committees of Queensland Investment
Corporation (QIC), an Independent
Non-Executive Director and Chair of
the Remuneration Committee of Cbus
Property, a Non-Executive Director and
Member of the Audit and Risk Committee
of Landcom and a Strategic Advisor to
the Board of Mainbrace Constructions.
Susan holds a Bachelor of Arts degree
from the University of New South Wales,
is a Graduate of the Australian Institute
of Company Directors (GAICD).
Our Board is committed to maintaining
and promoting a high standard of
corporate governance. Our corporate
governance platform is integral to
supporting our strategy, protecting the
interests of our securityholders and
maximising long-term total returns.
Corporate governance
Our Corporate Governance Statement outlines our approach to governance including the
structure and responsibilities of our Board and various committees. Please refer to the
corporate governance section of our website at
www.waypointreit.com.au/investors.
2022 Corporate Governance Statement
Waypoint REIT Limited – Annual Report 2022
07
EXECUTIVE LEADERSHIP TEAM
Hadyn Stephens
Managing Director and
Chief Executive Officer
Hadyn has approximately
24 years’ experience in finance
and commercial real estate,
principally in strategy and
transaction-related roles in the
real estate funds management
space covering direct capital
transactions, corporate
transactions (M&A), debt and
equity (listed and unlisted).
Hadyn’s previous positions
in real estate included senior
roles with AMP Capital,
Centuria Capital, LaSalle
Investment Management,
GPT Group and Merrill Lynch.
Hadyn holds a Bachelor
of Laws and Bachelor of
Commerce from the University
of Otago, New Zealand.
Aditya Asawa
Chief Financial Officer
Tina Mitas
Company Secretary
Aditya joined Waypoint REIT
in October 2022.
Aditya has 18 years’
experience in investment
banking, strategy and
corporate finance roles across
listed and unlisted real estate.
Aditya’s experience covers
corporate advisory, capital
markets and operational
finance in the commercial
real estate sector. Aditya
has worked at organisations
including Macquarie Capital,
Australand, Frasers Property,
AMP Capital and Dexus.
Aditya is a Certified Practising
Accountant (CPA) and holds
a Bachelor of Commerce –
Finance and Bachelor of Laws
from the University of NSW.
Tina has over 17 years’
experience in corporate
law including corporate
governance, compliance,
mergers and acquisitions,
private equity and information
technology.
Tina’s previous positions
include senior legal counsel
roles at Aconex Limited and
SMS Management Limited
and senior associate at
Herbert Smith Freehills.
Tina holds a Bachelor of
Laws (Hons) and Bachelor
of Commerce from the
University of Melbourne,
and a Graduate Diploma in
Applied Corporate Governance
from the Governance Institute
of Australia (GIA). Tina is
a Chartered Secretary and
Associate of the GIA, a
member of the Institute of
Chartered Secretaries and
Administrators (ICSA) and
the AICD.
Rodney Smith
General Manager Property
Rodney has over 20 years’
experience in property
management, network
planning and operations,
having worked across Retail
Fuel, Convenience and
Downstream businesses
for Shell and Viva Energy
Australia in Australia as
well as internationally.
Rodney’s previous positions
include Operations Manager
for Retail in Australia
and New Zealand, Retail
Network Planning Manager
in Shell’s Oceania region,
Global Operation Excellence
Manager for Shell Retail, and
Development Project Manager
at Waypoint REIT.
Rodney holds a Bachelor of
Commerce from the University
of Tasmania.
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Waypoint REIT Limited – Annual Report 2022
09
Image: Shell Coles Express Brandon Park (VIC)
PORTFOLIO OVERVIEW
Overview since IPO
As at 31 December 2022
Number of properties
Property portfolio value
Average value per property
IPO Aug
2016
425
2,105
5.0
no.
$m
$m
Total land area
‘000 sqm
1,903
WACR
NTA per security
%
$
5.87
2.00
FY16
425
2,105
5.0
1,903
5.87
2.02
FY17
438
2,281
5.2
FY18
454
2,496
5.5
FY19
469
2,652
5.7
FY20
470
2,898
6.2
FY21
433
3,091
7.1
1,960
2,108
2,198
2,213
2,092
5.80
2.12
5.81
2.20
5.78
2.29
5.62
2.49
5.16
2.95
FY22
402
2,948
7.3
1,962
5.28
3.02
Portfolio breakdown
The Waypoint REIT portfolio is classified in to four segments, with the breakdown of key details for each segment shown below:
Category
Description
Capital
Cities
Capitals of the 8 mainland
states and territories
Other
Metro
Urban areas with
populations ~100k+
Highway
Service centres along key
transport routes
Regional
Smaller regional cities and
towns (<100k population)
#
271
42
37
52
Book
Value
WACR
Average
value
Average
site area
Avg. Popn
(500m/3km)
WALE
$2,041.2m
(69%)
$318.6m
(11%)
$319.6m
(11%)
$268.1m
(9%)
4.93%
$7.5m 3,530m2
2,054/61,136
9.0 yrs
5.53%
$7.6m 4,074m2
1,403/32,391
9.5 yrs
6.31%
$8.6m 17,370m2
243/7,169
9.5 yrs
6.48%
$5.2m 3,686m2
574/10,542
8.3 yrs
Total
402 $2,947.6m
5.28%
$7.3m 4,881m2
1,628/46,621
9.0 yrs
Data as at 31 December 2022.
9.0 yrs WALE
(by income)
99.9% Occupancy
(by income)
3.0%1 WARR
(by income)
90%
NNN leases
96%
of total rental
income
1. Assumes 3.0% CPI for leases with CPI-linked rent reviews.
Image: Shell Coles Express Coomera (QLD)
10
Waypoint REIT Limited – Annual Report 2022 Geographic diversification
Northern
Territory
1%*
20%
36%
44%
4 properties
$20.2m book value
6.64% WACR
Western
Australia
9%*
12%
19%
69%
47 properties
$277.9m book value
6.29% WACR
South
Australia
5%*
27 properties
$147.9m book value
5.48% WACR
6%
10%
84%
Chart key (% by value):
4%
Capital Cities
Other Metro
Highway
Regional
* Denotes % of fuel and convenience
portfolio by value.
Tasmania
2%*
51%
45%
10 properties
$49.6m book value
5.93% WACR
10%
21%
15%
54%
Queensland
20%*
80 properties
$599.5m book value
5.77% WACR
15%
10%
New South
Wales
9%
66%
100%
3% 5%
11%
81%
32%*
118 properties
$928.5m book value
4.88% WACR
Australian
Capital
Territory
2%*
11 properties
$66.4m book value
6.04% WACR
Victoria
29%*
105 properties
$857.6m book value
4.90% WACR
Location by book value
Sydney 21%
Melbourne 23%
Regional 9%
Highway 11%
Other Metro 11%
Other Capital Cities 14%
Brisbane 11%
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Waypoint REIT Limited – Annual Report 2022
PORTFOLIO OVERVIEW CONTINUED
Lease expiry profile1
Waypoint REIT has a portfolio weighted average lease expiry of nine years. There were no renewals or new leases in 2022, with
only 12 leases due to expire before 2026, representing 1.2% of portfolio income. Only two of these leases are with fuel tenants.
Lease expiry profile
(weighted by income)
WALE
9.0
years
%
1
.
5
2
%
2
.
9
1
%
8
.
3
1
0.1%3 0.4% 0.1% 0.7%
%
6
.
6
%
6
.
5
%
8
.
3
%
7
.
7
%
5
.
6
%
5
.
8
0.7% 1.0%
0.2%2
Vacant
FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 FY37 FY38 FY39
1
1
26
32
34
33
30
41
61
68
69
2
3
1
2
3
2
5
2
1
1
Viva and
other fuel
operators
lease
expiry #
Non-fuel
operators
lease
expiry #
1. As at 31 December 2022.
2. Lease expiry shown in FY39 represents committed lease extensions at development site, with lease term extension contracted to commence upon
practical completion of the development.
3. Assumed income for vacant tenancies.
Asset Sales
Waypoint REIT completed the sale of 31 assets during 2022 for gross proceeds of $146.8m, approximately equivalent to book value.
Over 80% of the assets were located in regional towns or cities.
The assets sold had an average yield of 6.09% and a WALE of 8.7 years.
Waypoint REIT has now sold 71 assets since December 2020, representing approximately 15% of the portfolio (by number of assets),
at a 5% premium to book value. This non-core sale program has improved the overall quality of the retained portfolio.
12
Waypoint REIT Limited – Annual Report 2022 SUSTAINABILITY
Waypoint REIT Limited and the Responsible
Entity undertake a coordinated approach to
the corporate governance of Waypoint REIT.
Waypoint REIT applies the same corporate
governance framework to the wholly
owned subsidiaries of Waypoint REIT
and its employees.
Waypoint REIT publishes a separate
Sustainability Report at:
www.waypointreit.com.au
This report provides an overview
of Waypoint REIT’s approach to
sustainability (including environmental,
social and governance (ESG)) matters,
and a review of Waypoint REIT’s key
initiatives and achievements during
the 2022 financial year.
Our approach to sustainability is
overseen by the Waypoint REIT Board.
The ESG working group and Audit and
Risk Management Committee assist the
Board in its oversight of ESG matters.
We have identified the following four
focus areas aligned to six of the United
Nations’ 17 Sustainable Development
Goals (UN SDGs).
Focus area
Key matters
Impact
Stakeholders
UN SDGs
Ethical conduct
and transparency
Governance
Compliance
Direct
Employees
Communities
Risk management
Business partners
Our people
Securityholders
Direct
Employees
Securityholders
Diversity and
inclusion
Flexible working
Health and wellness
Remuneration
Climate change
and energy
Climate risks and
opportunities
Energy efficiency
Direct
Tenants
Direct/
Indirect
Employees
Securityholders
Safety and
environment
Personal and
process safety
Spill prevention
Direct/
Indirect
Indirect
Employees
Tenants
Contractors
Communities
Government
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Image: Shell Coles Express Alexandria (NSW)
Waypoint REIT Limited – Annual Report 2022
SUSTAINABILITY CONTINUED
2022 Highlights
• Maintained our carbon neutral target of offsetting Scope 1, Scope 2 and direct Scope 3 emissions under our operational
control through the purchase of carbon offsets administered by Tasman Environmental Markets Australia Pty Limited (TEM).1
• Enhanced the disclosures in this Sustainability Report in accordance with the Recommendations of the TCFD.
• Completed a first pass physical climate risk assessment and climate scenario analysis.
• No recordable health and safety incidents.2
• Improved gender diversity on the Board.
• Improved Sustainalytics and S&P CSA rating.3
• 100% compliance for employee training.
• Completed cyber maturity assessment.
2023 Priorities
Looking to the year ahead, Waypoint REIT intends to continue on our ESG journey and commits to:
• Maintaining our carbon neutral target of offsetting Scope 1, Scope 2 and direct Scope 3 emissions under our operational
control through the purchase of carbon offsets from an accredited provider.
• Enhance ESG disclosures.
• Continue to support tenants to enhance environmental outcomes.
Future State
• Refine scenario testing using results of FY22 Climate Risk Assessment.
• Climate change adaption planning.
1. Australian Carbon Credit Units purchased and surrendered through Tasman Environmental Markets Australia Pty Ltd (TEM) in March 2023.
Please refer to our Sustainability Report for further information.
www.waypointreit.com.au
2. With respect to facilities under Waypoint REIT’s operational control.
3. The ESG ratings disclosed for Waypoint REIT are the historical average ESG risk ratings per year.
14
Waypoint REIT Limited – Annual Report 2022 FINANCIAL REPORT
16 Directors’ Report
40 Auditor’s Independence Declaration
41 Consolidated Statements of Comprehensive Income
42 Consolidated Balance Sheets
43 Consolidated Statements of Changes in Equity
44 Consolidated Statements of Cash Flows
45 Notes to the Financial Statements
75 Directors’ Declaration
76
Independent Auditor’s Report
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Image: Shell Coles Express Alexandria (NSW)
15
Waypoint REIT Limited – Annual Report 2022
DIRECTORS’ REPORT
The Directors of Waypoint REIT Limited (Company) and VER Limited (Responsible Entity), the responsible entity of Waypoint REIT Trust
(Trust), present their report together with the financial statements of Waypoint REIT (Waypoint REIT) and the financial statements of
Waypoint REIT Trust Group (Trust Group) for the year ended 31 December 2022.
Waypoint REIT is a stapled group consisting of the Company and the Trust and their respective controlled entities. The financial
statements of Waypoint REIT comprise the Company, the Trust and their respective controlled entities. The financial statements of
the Trust Group comprise the Trust and its controlled entities. The portfolio of fuel and convenience retail properties are held by 100%
controlled entities of the Trust.
The Company owns all of the shares in VER Limited (the Responsible Entity).
Directors of Waypoint REIT Limited
The following persons were Directors of Waypoint REIT Limited during the year and up to the date of this report, unless otherwise noted:
Laurence Brindle
Independent Non-Executive Chair
Georgina Lynch
Independent Non-Executive Director
Susan MacDonald
Independent Non-Executive Director (appointed 1 May 2022)
Stephen Newton
Independent Non-Executive Director
Hadyn Stephens
Managing Director and Chief Executive Officer
Tina Mitas was appointed as Company Secretary on 15 May 2018 and continues in office at the date of this report.
Directors of VER Limited
The following persons were Directors of VER Limited during the year and up to the date of this report, unless otherwise noted:
Laurence Brindle
Independent Non-Executive Chair
Georgina Lynch
Independent Non-Executive Director
Susan MacDonald
Independent Non-Executive Director (appointed 1 May 2022)
Stephen Newton
Independent Non-Executive Director
Hadyn Stephens
Managing Director and Chief Executive Officer
Tina Mitas was appointed as Company Secretary on 15 May 2018 and continues in office at the date of this report.
Principal activities
During the period, the principal activity of Waypoint REIT was investment in fuel and convenience retail property.
Waypoint REIT is Australia’s largest listed REIT owning solely fuel and convenience retail properties with a high-quality portfolio
of properties across all Australian states and mainland territories. Waypoint REIT’s objective is to maximise the long-term income
and capital returns from its ownership of the portfolio for the benefit of all securityholders.
The majority of the properties in the portfolio are leased to Viva Energy Australia Pty Limited (Viva Energy – a wholly owned
subsidiary of Viva Energy Group Limited (Viva Energy Group)), with other tenants including other fuel and convenience retail operators
and non-fuel tenants.
Significant changes in state of affairs
On 28 February 2022, Waypoint REIT announced that it would be exploring opportunities to diversify its investment portfolio away from
purely fuel and convenience retail as a means by which to broaden avenues for growth, mitigate key risks (sector/tenant concentration)
and improve ESG metrics of its investment portfolio. No acquisitions were made during the year; however, Waypoint REIT may consider
future acquisition opportunities in line with this long-term strategy.
As part of enhancing its overall portfolio quality, Waypoint exchanged and settled 31 non-core assets in 2022 for $146.8 million, in line
with book value. A further four assets (exchanged in 2021) settled during the period for $13.2 million, in line with book value.
Capital management initiatives totalling $129.4 million (before transaction costs) were completed during the year, comprising the
on-market buy-back of 49.8 million stapled securities at an average price of $2.60 per security).
There were no other significant changes in the state of affairs of Waypoint REIT that occurred during the period.
16
Waypoint REIT Limited – Annual Report 2022 Distribution to securityholders
Distributions paid during the year were as follows:
Distributions paid in 2022
Final distribution for year ended 31 December 2021
– 4.21 cents per security paid on 28 February 2022
Interim distribution for the quarter ended 31 March 2022
– 4.11 cents per security paid on 13 May 2022
Interim distribution for the quarter ended 30 June 2022
– 4.51 cents per security paid on 31 August 2022
Interim distribution for the quarter ended 30 September 2022
– 3.95 cents per security paid on 15 November 2022
Distributions paid in 2021
Final distribution for year ended 31 December 2020
– 7.73 cents per security paid on 26 February 2021
Interim distribution for the half-year ended 30 June 2021
– 7.81 cents per security paid on 31 August 2021
Interim distribution for the quarter ended 30 September 2021*
– 3.95 cents per security paid on 15 November 2021
Total distributions paid
2022
$ million
2021
$ million
30.4
29.2
32.1
27.6
–
–
–
119.3
–
–
–
–
60.7
61.3
30.9
152.9
*
Distributions are paid on a quarterly basis commencing the quarter ended 30 September 2021. Prior to this time distributions were paid half-yearly.
The 2021 distribution payments above reflect the equivalent of five quarterly distributions.
A distribution of 4.03 cents per security ($27.1 million) is to be paid on 27 February 2023 for the quarter ended 31 December 2022.
Operating and financial review
Distributable Earnings decreased by $6.5 million from $122.6 million in 2021 to $116.1 million in 2022, primarily due to lower rental
income ($5.6 million) as a result of asset sales, higher net interest expense ($0.3 million) as a result of a higher average debt balance
during 2022 and higher management & administration expenses ($0.3 million).
Statutory net profit decreased by $309.8 million from $443.6 million in 2021 to $133.8 million in 2022, primarily driven by valuation
movements on investment property, with a net loss of $7.2 million in 2022 compared to a net gain of $305.0 million in 2021.
The management expense ratio (MER) in 2022 was 0.30% (2021: 0.28%) with the increase attributable to higher management
and administration expenses, primarily as a result of the resumption of business travel in 2022 and higher consultancy costs.
Distributable Earnings per security increased by 4.25% to 16.48 cents, with lower Distributable Earnings being offset by a lower weighted
average number of securities on issue following the repurchase of 49.8 million stapled securities via on-market buy-backs during the year.
Gearing was 30.7% as at 31 December 2022 (31 December 2021: 30.1%).
Net tangible assets per security as at 31 December 2022 of $3.02 represents an increase of 2.4% during the period (31 December 2021:
$2.95), primarily due to the combined impact of favourable movements in the mark to market of derivative instruments and the lower
number of securities as a result of the on-market security buy-backs, partially offset by the valuation declines on the investment
property portfolio.
17
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory DIRECTORS’ REPORT CONTINUED
Operating and financial review continued
Key financial metrics
Statutory net profit after tax
Distributable Earnings1
Distributable EPS
Management expense ratio2
Total assets
Gross borrowings
Net assets
NTA per security
Gearing3
Covenant Gearing4
Year ended
31 Dec 2022
Year ended
31 Dec 2021
$133.8 million
$443.6 million
$116.1 million
$122.6 million
16.48 cents
15.80 cents
0.30%
0.28%
31 Dec 2022
31 Dec 2021
$2,988.1 million
$3,128.2 million
$927.1 million
$955.6 million
$2,028.4 million
$2,128.3 million
$3.02
30.7%
32.5%
$2.95
30.1%
31.8%
1.
Distributable Earnings is a non-statutory measure of profit and is calculated as net profit adjusted to remove transaction costs, specific non-recurring
items and non-cash items, including straight-lining of rental income, the amortisation of debt establishment fees, any fair value adjustment to
investment properties and derivatives and long-term incentive expense.
2.
Management expense ratio is calculated as the ratio of management and administration expenses (excluding net property expenses) over average
total assets (excluding derivative financial assets).
3. Gearing is calculated as net debt (excluding foreign exchange and fair value hedge adjustments)/total assets excluding cash.
4.
Covenant Gearing is calculated as total liabilities/total assets but excluding any mark to market valuations of derivative assets/liabilities.
This is the measure used to determine compliance with Waypoint REIT’s gearing covenants.
Financial results
Rental income
Finance income
Total operating income
Management and administration expenses
Interest expense
Distributable Earnings
Net fair value gain/(loss) on investment properties
Net gain/(loss) on sale of investment properties
Straight-line rental income
Amortisation of borrowing costs
Net gain from derivative financial instruments
Long-term incentive expense
Non-recurring expenses
Statutory net profit after tax
18
Year ended
31 Dec 2022
$ million
Year ended
31 Dec 2021
$ million
157.6
0.4
158.0
(10.2)
(31.7)
116.1
(7.2)
(0.4)
10.6
(1.6)
16.8
(0.1)
(0.4)
163.2
0.1
163.3
(9.9)
(30.8)
122.6
305.0
1.0
15.1
(1.9)
1.8
–
–
133.8
443.6
Waypoint REIT Limited – Annual Report 2022 Investment property portfolio
Total value of investment properties
Total properties in portfolio
Portfolio occupancy
Weighted average capitalisation rate
Weighted average lease expiry
31 Dec 2022
31 Dec 2021
$2,947.6 million
$3,090.6 million
402
99.9%
5.28%
433
99.9%
5.16%1
9.0 years
10.0 years
During the year, 213 investment properties (representing approximately half of the portfolio by number) were independently valued,
including 71 at 30 June 2022 and 142 at 31 December 2022. Directors’ valuations were performed on the balance of the portfolio
at each balance date.
31 non-core assets were exchanged and settled during the period for $146.8 million, in line with book value. A further four assets
(exchanged in 2021) settled during the period for $13.2 million, in line with book value.
Capital management
As at 31 December 2022:
• Gearing was 30.7%2 with $927.1 million of drawn debt and $121.5 million of undrawn facilities.
• Weighted average debt maturity was 4.4 years, following the refinancing of $275.0 million of bank debt during the year.
• 94% of Waypoint REIT’s debt was hedged and the weighted average maturity of fixed rate debt and hedges was 3.4 years.
Capital management initiatives totalling $129.4 million (before transaction costs) were completed during the year, which comprised
the buy-back of 49.8 million stapled securities under on-market buy-back programs (average price of $2.60 per security).
Matters subsequent to the end of the financial period
No matter or circumstance has arisen since 31 December 2022 that has significantly affected, or may significantly affect:
• the operations of Waypoint REIT in future financial years;
• the results of those operations in future financial years; or
• the state of affairs of Waypoint REIT in future financial years.
2023 outlook
Although the macroeconomic outlook remains uncertain, Waypoint is well-positioned with a strong balance sheet, an improved
property portfolio as a result of non-core asset sales and a high level of interest rate hedging.
Waypoint REIT expects rental income from existing fuel and convenience retail tenancies to grow in line with contracted annual rental
increases, and currently expects to deliver Distributable Earnings per security of 16.48 cents in 2023, in line with 2022. This guidance
assumes no further capital management initiatives, acquisitions or divestments, although we will consider opportunities to do so if
in the best interests of securityholders. The guidance also assumes no material changes in the operating environment and average
floating interest rates are assumed to be 4.1% in 2023, which is in line with the forward curve as at 24 February 2023 for the three-
month bank bill swap rate.
1. The comparative capitalisation rate based on the 31 December 2022 portfolio of 402 properties was 5.12%.
2. Calculated as net debt (excluding foreign exchange and fair value hedge adjustments)/total assets minus cash. This differs from Covenant Gearing,
which is equal to 32.5%.
19
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory DIRECTORS’ REPORT CONTINUED
Material business risks
The material business risks that could adversely affect Waypoint REIT’s financial prospects include the following:
Tenant concentration risk, financial standing and sector concentration risk
96% of Waypoint REIT’s rental income is received from Viva Energy. If Viva Energy’s financial standing materially deteriorates and
impacts their ability to make rental payments, Waypoint REIT’s financial results, financial position and ability to service and/or obtain
financing may be adversely impacted. Furthermore, a material decline in the profitability of Viva Energy’s business due to the global
transition to a low carbon economy, the possible termination of Viva Energy’s right to use the Shell brand (current agreement expires
in 2029) or other factors (including international conflict) could affect the perceived stability of the rental income of Waypoint REIT and
may affect Waypoint REIT’s security price and/or ability to obtain financing on acceptable terms. A material decline in the profitability
of Viva Energy’s business could also lead to reduced capacity or ability for Viva Energy to pay market rents when renewal options are
exercised, which could result in lower rental receipts and/or a decline in the values of Waypoint REIT’s investment properties if Waypoint REIT
is unable to lease the property to an alternate tenant.
Collection risk
Waypoint REIT performs financial due diligence on potential new tenants and holds collateral in the form of security deposits or bank
guarantees where appropriate. Rent is due in advance on the first day of each billing period (typically monthly), with arrears monitored
and arrears notices issued on a regular basis (where required). Waypoint REIT applies the AASB 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss allowance for all trade and other financial assets. The loss allowances
for trade and other financial assets are based on assumptions about risk of default and expected loss rates. Waypoint REIT uses
judgement in making these assumptions, based on Waypoint REIT’s past history and existing market conditions as well as forward
looking estimates at the end of each reporting period.
During the mobility restrictions (lockdowns and other travel or movement restrictions) in 2020 and 2021, the fuel tenants in Waypoint REIT’s
portfolio continued to operate, providing essential services to the community. Waypoint REIT’s performance has not been materially
impacted by COVID-19 to date.
Re-leasing and vacancy risk
Waypoint REIT’s property portfolio is 99.9% occupied with a weighted average lease expiry of 9.0 years. Only 12 leases (representing
1.2% of annual rental income) expire before the end of 2025. The majority of the portfolio (355 of 419 contracted leases) is subject to
multiple 10-year options in favour of the tenant, with the rent from commencement of each option period to either be agreed between
the parties or set by independent market rent determination. However, there is a risk that tenants may not exercise their option, or that
the commencing rent will be lower than passing rent and/or market rent (if agreed between the parties).
Termination of the Alliance Agreement
On 21 September 2022, Viva Energy Group announced the acquisition of Coles Express (subject to customary closing conditions and
regulatory approvals), which will bring to a conclusion the Alliance Agreement between Viva Energy and Coles Express and result in
Viva Energy Group controlling both the fuel and convenience operations of each of the relevant sites across Waypoint REIT’s portfolio.
Although the leases between Waypoint REIT and Viva Energy will remain unchanged and Viva Energy Group will be entitled to 100% of
the fuel and convenience revenue and profits on the relevant sites, there is a risk that the convenience store operations will be affected
following the change of control of Coles Express due to the change in management or as a result of the acquisition integration.
Investment property value
The value of Waypoint REIT’s portfolio of investment properties may be adversely affected by a number of factors, including factors
outside the control of Waypoint REIT, including the supply and demand for fuel and convenience retail properties, general property market
conditions, physical climate change-related considerations, the availability and cost of credit including sector-specific environmental,
sustainability and governance considerations, the ability to attract and implement economically viable rental arrangements, Viva Energy’s
financial condition deteriorating, occupiers not extending the term of leases, and general economic factors such as the level of inflation
and interest rates, which may adversely impact capitalisation rates.
A key long-term consideration in the valuation of fuel and convenience properties is an increasing uptake of vehicles fuelled by
alternative energy sources due to factors including changes in consumer behaviour, pro-emission reduction policies, reduced supply
and/or higher pricing of fossil fuels.
20
Waypoint REIT Limited – Annual Report 2022 As changes in valuations are recorded on the statutory statements of comprehensive income, any decreases in value will have a negative
impact on the statutory statements of comprehensive income and balance sheets (including the net tangible assets per security)
and in turn the market price of Waypoint REIT’s securities may fall. Waypoint REIT’s financing facilities also contain gearing covenants,
and the headroom to these gearing covenants is affected by changes in the valuation of the portfolio.
The property portfolio is geographically diversified to mitigate the risk of localised valuation impacts and the majority of assets are located in
metropolitan areas which typically have higher underlying land values and alternative use potential. Active portfolio management, including
the disposal of assets with heightened vacancy or negative rental reversion risk, and Waypoint REIT’s long-term diversification strategy,
also, in part, can mitigate this risk.
Environmental and climate change risk
Waypoint REIT depends on its tenants to perform their obligations under various environmental arrangements in relation to properties
they lease. Waypoint REIT has an indemnity from Viva Energy in respect of certain liability for historical environmental contamination
across 355 assets acquired at the time of Waypoint REIT’s initial public offering. Waypoint REIT also carries out environmental due
diligence in relation to potential property acquisitions. If any property in the portfolio is contaminated by a fuel tenant or its invitee
during the term of the lease, the tenant under that lease must remediate it, at their cost to a standard consistent with operating the
site as a fuel and convenience property or similar commercial use. If the tenants were to fail to meet their obligations under these
arrangements (including due to their insolvency), Waypoint REIT may incur significant costs to rectify contamination on its properties
and also on other properties which may be consequently impacted.
Waypoint REIT is subject to a range of regulatory regimes (including environmental regulations) that cover the specific assets of
Waypoint REIT and how they are operated. These regulatory regimes are subject to ongoing review and change that may increase
the cost of compliance, reporting and maintenance of Waypoint REIT’s assets. There remains a risk that Waypoint REIT, as owner
of the properties in the portfolio, may face liability for breach by others of environmental laws and regulations.
Changes to existing regulatory regimes or the introduction of new regulatory regimes (including environmental or climate change
related regulation) may also increase the cost of compliance, reporting and maintenance of Waypoint REIT’s assets.
Extreme weather and other climate change-related events have the potential to damage Waypoint REIT’s assets and disrupt the tenants’
operations. Although 90.6% of Waypoint REIT’s portfolio by value is subject to Triple Net Leases where the tenant is responsible for
maintenance and insurance costs, such events may result in higher maintenance and insurance costs for Waypoint REIT’s assets
that are not subject to triple net leases. Such events may also affect the ability to re-lease Waypoint REIT’s investment properties in the
future and the rent levels for which they can be leased, thereby affecting future investment property valuations and rental cash flows.
Insurance premiums and/or deductibles may change, or insurance may not be able to be obtained at all.
The precise nature of these risks is uncertain as it depends on complex factors such as policy and regulatory change, technology
development, market forces, and the links between these factors and climatic conditions. The impacts of physical and transition risks
on the valuation of Waypoint REIT’s property portfolio are further considered under Investment property valuation risk above.
AFSL compliance risk
VER Limited, a subsidiary of Waypoint REIT Limited, holds an Australian Financial Services License (AFSL) and acts as the responsible
entity for Waypoint REIT Trust. The AFSL requires, among other matters, minimum levels of net tangible assets, liquid assets,
cash reserves and liquidity, which may restrict Waypoint REIT in paying distributions that would breach these requirements.
The Directors review and monitor VER Limited’s balance sheet quarterly and the adequacy and ongoing training of responsible managers
annually to ensure compliance with its AFSL requirements.
Personnel risk
Loss of key personnel could potentially have an adverse impact on the management and the financial performance of Waypoint REIT
and in turn may affect the returns to securityholders. To mitigate this risk, processes and procedures are standardised and automated
to the extent practicable, remuneration structures include components payable on a deferred basis, and employees are subject to
market-standard notice periods to ensure that Waypoint REIT has sufficient time in which to identify and hire replacement employees.
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Material business risks continued
Cyber security risk
Cyber-attacks are becoming increasingly sophisticated and a material data breach, ransom attack or data loss could have an adverse
financial or reputational impact. To help mitigate this risk, Waypoint REIT uses the services of third-party technology experts,
provides regular staff training and performs pre-implementation and annual reviews over key Software as a Service providers.
Debt agreement and refinancing risk
Waypoint REIT has outstanding debt facilities. General economic and business conditions as well as sector-specific environmental,
sustainability and governance considerations could impact Waypoint REIT’s ability to refinance its debt facilities when required. If the
covenants in these facilities are breached by Waypoint REIT, this may result in Waypoint REIT being subject to increased interest rate
margins and covenants restricting its ability to engage in certain types of activities or to pay distributions to securityholders. Debt may
not be able to be renewed or obtained at all.
If debt facilities are not available or are not available in adequate volume, Waypoint REIT may need to sell assets to repay debt.
There is no guarantee that there will be willing purchasers for Waypoint REIT’s assets or that purchasers will pay prices at or greater
than the book value of these investment properties. To help mitigate this risk, debt maturities are staggered, debt is held across a
diverse set of sources, lenders and geographies, and debt is typically refinanced at least 12 months in advance of maturity.
If a third-party entity gains control of Waypoint REIT, this would constitute a review event under certain of Waypoint REIT’s debt facility
agreements, and (subject to specified negotiation and notification periods) a repayment of some or all of Waypoint REIT’s debt facilities
may be required.
The Directors regularly monitor the debt facility covenants to ensure compliance and consider the refinancing options and timing
available to Waypoint REIT.
Cash flow and fair value interest rate risk
Waypoint REIT’s cash and cash equivalents, floating rate borrowings and derivative financial instruments expose it to a risk of change
in future cash flows or the fair value of derivative financial instruments due to changes in interest rates. Waypoint REIT uses interest
rate derivative financial instruments to partially hedge its economic exposure to changes in interest rates on variable rate borrowings.
By hedging against changes in interest rates, Waypoint REIT has reduced exposure to changes in interest rates on its outward cash
flows so long as the counterparties to those interest rate derivative financial instruments meet their obligations to Waypoint REIT.
Foreign exchange rate risk
A portion of Waypoint REIT’s debt is denominated in US dollars and as a result, Waypoint REIT is exposed to a risk of change in fair
value or future cash flows due to changes in foreign exchange rates. Waypoint REIT economically hedges 100% of its exposure to
changes in foreign exchange rates by using cross currency derivative financial instruments. By hedging against changes in foreign
exchange rates, Waypoint REIT eliminates its exposure to changes in foreign exchange rates on its outward cash flows so long as
the counterparties to those cross currency derivative financial instruments meet their obligations to Waypoint REIT.
Liquidity risk
Liquidity risk is the risk that Waypoint REIT may not be able to generate sufficient cash resources to settle its obligations in full as they
fall due or can only do so on terms that are materially disadvantageous. Waypoint REIT monitors its exposure to liquidity risk by setting
budgets and projecting cash flows to help ensure there is sufficient cash on hand as required or debt facility funding is available to meet
financial liabilities as they fall due.
Environmental regulation
As a landlord, the operations of Waypoint REIT are subject to a range of environmental laws and regulations under Commonwealth,
state and territory law. However, the lease attaching to the majority of sites requires the tenant to use reasonable endeavours to prevent
contamination at each site and indemnify Waypoint REIT for any contamination caused by their operations.
Waypoint REIT did not receive any environmental infringements or notices from environmental regulators in the year ended
31 December 2022.
22
Waypoint REIT Limited – Annual Report 2022 Information on Directors
Laurence Brindle
Independent Non-Executive Chair, and a Member of the Nomination and Remuneration Committees.
Laurence has extensive experience in funds management, finance and investment and is currently an Independent Non-Executive
Director of Stockland Property Group.
Until 2009, Laurence was an executive with Queensland Investment Corporation (QIC). During his 21 years with QIC, he served in
various senior positions including Head of Global Real Estate, where he was responsible for QIC’s large global investment portfolio.
Laurence was also a long-term member of QIC’s Investment Strategy Committee.
Laurence provides advice to a number of investment institutions on real estate investment and funds management matters. He is a
former Chair of the Shopping Centre Council of Australia and National Storage REIT, and a former Independent Non-Executive Director
of Westfield Retail Trust and Scentre Group.
Laurence holds a Bachelor of Engineering (Honours) and a Bachelor of Commerce from the University of Queensland, and a Masters
of Business Administration from Bayes Business School, London, where he graduated with distinction.
Georgina Lynch
Independent Non-Executive Director, Chair of the Remuneration and Nomination Committees and Member of the
Audit and Risk Management Committee.
Georgina is an experienced company director who has over 30 years’ experience in the financial services and property industry.
She is currently the Independent Non-Executive Chair of Cbus Property, an Independent Non-Executive Director of Vicinity Centres
and a member of their Audit and Risk and Compliance Committees, and an Independent Non-Executive Director of Evolve Housing.
Georgina has significant global experience in corporate transactions, capital raisings, initial public offerings (IPOs), funds management,
corporate strategy and acquisitions and divestments.
Georgina holds a Bachelor of Arts and Bachelor of Laws.
Susan MacDonald
Independent Non-Executive Director, and a Member of the Audit and Risk Management and Remuneration Committees.
Susan has over 30 years of domestic and international experience in property investment management, primarily in the retail sector,
including asset, development and funds management. Susan has extensive knowledge in people management, organisational culture,
strategy development and stakeholder engagement.
Susan has held executive positions with Mirvac, Lend Lease, AMP Capital and Galileo Funds Management, and is a former Joint Deputy
Chair of the Shopping Centre Council of Australia and a former Global Trustee of the Urban Land Institute (ULI).
Susan is currently a Non-Executive Director and Member of the Risk and HR and Remuneration Committees of Queensland Investment
Corporation (QIC), an Independent Non-Executive Director and Chair of the Remuneration Committee of Cbus Property, a Non-Executive
Director and Member of the Audit and Risk Committee of Landcom and a Strategic Advisor to the Board of Mainbrace Constructions.
Susan holds a Bachelor of Arts degree from the University of New South Wales, and is a Graduate of the Australian Institute of
Company Directors (GAICD).
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Information on Directors continued
Stephen Newton
Independent Non-Executive Director, Chair of the Audit and Risk Management Committee and Member of the Remuneration
and Nomination Committees.
Stephen has extensive industry experience spanning in excess of 40 years across real estate investment and funds management,
development and property management, as well as in infrastructure investment and management. Stephen has been a Principal
of Arcadia Funds Management for more than 20 years. Prior to that, Stephen held various senior executive positions at Lend Lease
for over 22 years.
Stephen is currently an Independent Non-Executive Director of Stockland Property Group, BAI Communications Group (formerly
Broadcast Australia Group) and Sydney Catholic Schools Limited.
Stephen is a member of both Chartered Accountants Australia and New Zealand and the Australian Institute of Company Directors
(AICD). He holds a Bachelor of Arts (Economics and Accounting) degree from Macquarie University and a Masters of Commerce
post-graduate degree from the University of New South Wales.
Hadyn Stephens
Managing Director and Chief Executive Officer.
Hadyn has approximately 24 years’ experience in finance and commercial real estate, principally in strategy and transaction-related
roles in the real estate funds management space covering direct capital transactions, corporate transactions (M&A), debt and equity
(listed and unlisted).
Hadyn’s previous positions in real estate included senior roles with AMP Capital, Centuria Capital, LaSalle Investment Management,
GPT Group and Merrill Lynch.
Hadyn holds a Bachelor of Laws and Bachelor of Commerce from the University of Otago, New Zealand.
Tina Mitas
Company Secretary.
Tina has over 17 years’ experience in corporate law including corporate governance, compliance, mergers and acquisitions, private equity
and information technology.
Tina’s previous positions include senior legal counsel roles at Aconex Limited and SMS Management Limited and senior associate
at Herbert Smith Freehills.
Tina holds a Bachelor of Laws (Hons) and Bachelor of Commerce from the University of Melbourne, and a Graduate Diploma in Applied
Corporate Governance from the Governance Institute of Australia (GIA). Tina is a Chartered Secretary and Associate of the GIA, a member
of the Institute of Chartered Secretaries and Administrators (ICSA) and the AICD.
Meetings of Directors
The numbers of meetings of the Directors and of each Board Committee held during the year ended 31 December 2022, and the numbers
of meetings attended by each Director, were:
Name
Laurence Brindle
Georgina Lynch
Stephen Newton
Susan MacDonald1
Hadyn Stephens
Waypoint REIT
Limited
VER Limited
Audit and Risk
Management
Committee
Remuneration
Committee
Nomination
Committee
A
13
14
14
10
14
B
14
14
14
10
14
A
13
14
14
10
14
B
14
14
14
10
14
A
82
8
8
4
8
B
8
8
8
4
8
A
4
4
4
2
4
B
4
4
4
2
4
A
2
2
2
12
2
B
2
2
2
1
2
1. Appointed a director on 1 May 2022.
2. Meeting attended by invitation.
A = Number of meetings attended.
B = Number of meetings held during the time the Director held office or was a Member of the Board Committee during the year.
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Waypoint REIT Limited – Annual Report 2022 Remuneration Report
This remuneration report (Remuneration Report) presents Waypoint REIT’s remuneration arrangements for Key Management
Personnel (KMP) for the year ended 31 December 2022. The report has been prepared and audited in accordance with the requirements
of the Corporations Act 2001 and Corporations Regulations 2001.
Letter from Chair of the Remuneration Committee
On behalf of the Remuneration Committee and the Board, I am pleased to present the Remuneration Report for the year ended
31 December 2022.
Waypoint REIT’s long-term remuneration objectives are to:
• reward strong performance;
• encourage executive retention;
• achieve the right balance between ‘fixed’ and ‘at risk’ pay; and
• achieve alignment between executive and securityholders’ interests.
Board and management
Waypoint REIT welcomed Susan MacDonald to the Board as a Non-Executive Director on 1 May 2022. Susan brings extensive experience
in the property sector, funds management and investment.
Aditya Asawa commenced as Chief Financial Officer (CFO) of Waypoint REIT on 5 October 2022, following the resignation of Kerri Leech.
The terms related to the remuneration of the current and former CFO are detailed in this report.
2022 Remuneration considerations
2022 presented unique challenges including a rapidly changing macroeconomic environment arising from inflationary pressures,
interest rate increases, staff shortages and wage pressures across the economy. In response, Waypoint REIT’s management team
has demonstrated strong performance in delivering growth, actively managing Waypoint REIT’s portfolio and capital structure,
and progressing Waypoint REIT’s strategy.
Waypoint REIT’s operations were again not materially impacted by COVID-19 this year as the vast majority of its income continues
to be generated from long-term leases with well-capitalised tenants that continued to provide essential services throughout the year.
The key achievements of Waypoint REIT’s team in 2022 include:
• Delivering 2022 Distributable Earnings Per Security of 16.48 cents per security, representing 4.25% growth on 2021 and outperforming
initial guidance of 16.44 cents per security (4.00% growth on 2021).
• Successfully executing the exchange and settlement of 31 non-core assets for $146.8 million. 71 assets have now been sold since
the commencement of the non-core disposal program in 2021 for approximately $290 million (representing a premium of
approximately 5% to book value). This program has significantly enhanced the quality and resilience of the portfolio.
• Completing capital management initiatives totalling $129.4 million (before transaction costs), which comprised the successful buy-back of
49.8 million stapled securities at an average price of $2.60 per security (or a 14% discount to 31 December 2022 NTA). This resulted
in surplus non-core asset sale proceeds being returned to investors and the optimisation of Waypoint REIT’s capital structure,
gearing and liquidity metrics.
• Extending $275.0 million of bank facilities, resulting in a weighted average debt maturity of 4.4 years at 31 December 2022 with
no debt maturities until 2025.
• Actively managing Waypoint REIT’s exposure to market interest rates by entering into new interest rate hedging instruments resulting
in 94.3% of Waypoint REIT’s drawn debt being hedged at 31 December 2022.
• Progressing Waypoint REIT’s ESG framework and Board-level reporting, including undertaking climate scenario analysis to better
understand potential climate transition pathways and the climate-related risks and opportunities for Waypoint REIT. This included a
current state assessment of the portfolio’s exposure to physical climate risk and scenario testing. We also achieved an improvement
in key sustainability rankings for Sustainalytics and S&P Corporate Sustainability Assessment (S&P CSA) surveys and maintained
our carbon neutral status with respect to Scope 1 and Scope 2 and direct Scope 3 emissions.
In recognition of the above achievements, the Board has awarded Executive KMP their maximum short-term incentive (STI) awards
for the year ended 31 December 2022.
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Remuneration Report continued
Future considerations
As outlined in the 2021 Remuneration Report, the Remuneration Committee has previously indicated an intention to make adjustments
to the structure of Executive KMP remuneration to better align it with market benchmarks and long-term securityholder returns.
The key adjustment required to Executive KMP remuneration is the balance between fixed and ‘at risk’ pay components, with the
Committee having foreshadowed an increase in LTI as a percentage of total remuneration over time until the Remuneration Committee
is satisfied the level of ’at risk’ pay is consistent with market practice.
To this end, the maximum LTI award was increased from one-third of the maximum STI for each Executive KMP in the 2021 financial
year to two-thirds of the maximum STI for the 2022 financial year.
To complete this realignment of Executive KMP remuneration, the Remuneration Committee intends to increase the maximum LTI for
each Executive KMP to 100% of the maximum STI for the 2023 financial year and beyond, which the Committee believes is consistent
with market practice and achieves the desired level of ‘at risk’ pay relative to each KMP’s overall remuneration package, whilst also
better aligning executive remuneration with long-term outcomes for securityholders.
On behalf of the Directors and the Remuneration Committee, I look forward to welcoming you and receiving your feedback at our
upcoming Annual General Meeting.
Georgina Lynch
Chair, Remuneration Committee
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Waypoint REIT Limited – Annual Report 2022 Report structure
This report is divided into the following sections:
(i) Key Management Personnel
(ii) FY22 Annual Remuneration Summary
(iii) Remuneration Governance
(iv)
Remuneration Policy for Executive KMP (defined as the Managing Director & Chief Executive Officer (MD & CEO)
and Other Reported Executives)
(v) Detailed Remuneration Outcomes
(vi) Executive KMP Equity Holdings
(vii) Other Information
(viii) Remuneration Policy for Non-Executive Independent Directors
(ix) Non-Executive Independent Director Fees and Other Information
(i) Key Management Personnel
This report discloses the remuneration arrangements and outcomes for the individuals listed below, being individuals who have been
determined as KMP as defined by AASB 124 Related Party Disclosures.
Name
Independent Non-Executive Directors
Laurence Brindle
Georgina Lynch
Stephen Newton
Susan MacDonald
Managing Director
Hadyn Stephens
Other Reported Executives
Aditya Asawa
Tina Mitas
Former Executives
Kerri Leech
Role
Chair
Director
Director
Director
KMP Period
Full Year
Full Year
Full Year
From appointment on 1 May 2022
Managing Director & Chief Executive Officer (MD & CEO) Full Year
Chief Financial Officer (CFO)
Appointed 5 October 2022
General Counsel & Company Secretary
Full Year
Former Chief Financial Officer
Resigned 31 August 2022
(ii) FY22 Annual remuneration summary
The only material change to the remuneration framework for Executive KMP in 2022 was to increase the LTI award to two-thirds of
the maximum STI (one-third in 2021). This change is consistent with the Remuneration Committee strategy of making adjustments
to the structure of Executive KMP remuneration including the balance between fixed and ‘at risk’ pay components in order to better
align Executive KMP with market benchmarks and long-term securityholder returns.
STI outcomes
In assessing Executive KMP delivery against their respective and collective KPIs, the Remuneration Committee has determined that
all members of Executive KMP have met or exceeded expectations in all KPI categories. Accordingly, all members of Executive KMP
have been awarded their maximum STI allocations.
LTI outcomes
No existing LTI plan was due to be tested against performance hurdles in FY22. Accordingly, no performance rights vested in FY22.
Part (v) below provides further detail on the remuneration outcomes in FY22.
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Remuneration Report continued
(iii) Remuneration governance
The Remuneration Committee oversees all remuneration-related matters, balancing both short-term and long-term strategic objectives,
corporate values and Waypoint REIT’s broader risk management framework. The Remuneration Committee reviews and provides
guidance and, as appropriate, endorses management recommendations on remuneration matters (including FAR, STI and LTI for
Executive KMP), Board and Committee fees and submits these for Board approval. The Remuneration Committee’s Charter, setting out
its detailed responsibilities, is reviewed annually.
To ensure that it is fully informed when making decisions, including on recent market trends and practices and other remuneration-
related matters, the Remuneration Committee may seek external remuneration advice from time to time. Remuneration consultants
are engaged directly by the Remuneration Committee as needed. A remuneration consultant was not engaged in FY22.
(iv) Remuneration policy for Executive KMP
Remuneration objectives
The Board recognises the key to Waypoint REIT’s ongoing success lies in retaining and attracting high-performing people. The remuneration
framework has been designed to link Waypoint REIT’s strategy of maximising long-term income, capital returns and performance with
the remuneration outcomes for Executive KMP and foster strong alignment between executive pay and securityholder returns.
Remuneration structure
Waypoint REIT aims to ensure that the split of fixed and variable remuneration for Executive KMP is consistent with its remuneration
objectives, appropriate for the size and nature of its business and provides fair and equitable outcomes for individuals.
The table below sets out Waypoint REIT’s Executive KMP remuneration arrangements:
What?
Why?
Comprises base salary, superannuation contributions
and other benefits.
Reviewed annually and independently benchmarked
on a periodic basis against comparable organisations.
Opportunity award based on a percentage of fixed
remuneration, subject to specific performance
and employment conditions (including a deferred
equity component).
Opportunity award based on a percentage of fixed
remuneration, in the form of performance rights
with a three-year performance period.
Fixed component set with reference to role, market,
experience and skill-set to attract and retain the
executives capable of leading and delivering the strategy.
‘At risk’ component designed to maximise performance
in key strategic areas set and measured through a
balanced scorecard approach, with KPIs aligned to the
key financial and non-financial value drivers of Waypoint
REIT’s business. Deferred equity component designed to
encourage retention and securityholder alignment.
‘At risk’ component designed to align executive performance
with securityholder interests, to attract and retain executives
and provide the opportunity to reward executives for
long-term performance.
Type
FAR
STI
LTI
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Waypoint REIT Limited – Annual Report 2022 STI details
Basis
Purpose
Performance
conditions
Performance
assessment
Each executive may be eligible for participation in an STI program, which may be amended, replaced or withdrawn
at any time at the Board’s absolute discretion.
STI awards are set with reference to a maximum STI opportunity level relative to the executive’s FAR, with the
actual STI award to be determined based on performance against KPIs determined by the Board.
To motivate and reward executives for increasing securityholder value by meeting or exceeding Waypoint REIT
and individual targets determined by the Board.
The value of the STI award for each Executive KMP is determined as follows:
Criteria
Financial
Award Scale Criteria
0 – 33.3%
Delivery of initial Distributable Earnings per security (DEPS) guidance.
Initial guidance must be met in order for any award under this criteria.
Financial –
outperformance
0 – 33.3%
Delivery of DEPS in excess of initial guidance. Sliding scale award determined
at the Board’s discretion based on level of outperformance achieved.
Individual KPIs
0 – 33.3%
Delivery of financial and non-financial performance criteria set out in KMP
balanced scorecards agreed at the start of the year.
The Board believes that having a mix of financial and non-financial KPIs will provide measurable performance
criteria strongly linked to year-on-year securityholder returns and encourage the achievement of individual goals
consistent with Waypoint REIT’s overall strategic objectives. The key FY22 KPIs are detailed in section (v).
The MD/CEO evaluates the performance of the other Executive KMP against their KPIs as set out in their
balanced scorecard and other applicable measures, including evidence of behaviour in line with Waypoint
REIT’s corporate values and risk management framework. This information is presented to the Remuneration
Committee which performs the same evaluation of the MD/CEO performance. The Remuneration Committee
then recommends the STI awards, if any, to the Board for approval.
Delivery
MD/CEO
50% of the STI entitlement is payable in securities subject to trade-lock with 25% vesting after one year
and 25% vesting after two years.
Other reported Executives
One-third of the STI entitlement is payable in securities subject to trade-lock with vesting after one year.
While under trade-lock, Executive KMP will be entitled to distributions and voting rights (subject to customary
voting restrictions).
Cessation of
employment
Board discretion
Executive KMP will generally not be entitled to be paid any outstanding or unvested STI award if they resign
or if their employment is terminated with cause.
STI entitlements are at the sole discretion of the Board. Waypoint REIT can amend, replace or withdraw any
incentive program in its absolute discretion.
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Remuneration Report continued
LTI details
Basis
Purpose
An LTI award will be delivered in the form of an annual grant of performance rights to Waypoint REIT stapled
securities under the Waypoint REIT Equity Incentive Plan. Performance rights will be allocated to eligible
executives (including all Executive KMP) on or around the date of the Annual General Meeting (e.g. FY22
performance rights were allocated in May 2022).
The LTI program is designed to align the interests of eligible executives with the interests of securityholders
by providing them with the opportunity to receive an equity interest in Waypoint REIT through the granting of
performance rights. Waypoint REIT uses performance rights because they create alignment between eligible
executives and securityholders, but do not provide eligible executives with the full benefits of security ownership
(such as distribution and voting rights) unless and until the performance rights vest.
Value determination The value of performance rights granted is determined by dividing the dollar value of an eligible executive’s
annual LTI opportunity (as determined by the Remuneration Committee) by the weighted average traded price
of Waypoint REIT’s stapled securities traded on the ASX during the 10 business days following the release of
the annual results, rounded up to the nearest whole number of performance rights.
Vesting period
The Performance Period commences on 1 January of the year performance rights are granted and concludes
on the third anniversary date (e.g. FY22 performance rights: 1 January 2022 to 31 December 2024).
Performance rights will vest on or around 1 March following the end of the Performance Period (e.g. the FY22
performance rights will vest on or around 1 March 2025).
Vesting conditions
Vesting of the performance rights will be subject to the achievement of two vesting conditions:
• 50% of the performance rights will be tested against a relative Total Securityholder Return (TSR) condition; and
• the remaining 50% of the performance rights will be tested against an average growth in DEPS condition.
See below for further details.
TSR condition
(50% weighting)
The TSR condition measures Waypoint REIT’s performance relative to a peer group over the Performance
Period (e.g. the FY22 comparator group of companies comprises the constituents of the S&P/ASX 300 A-REIT
index as at 1 January 2022). TSR measures the growth in Waypoint REIT’s security price together with the value
of distributions paid during the period, assuming that all those distributions are reinvested into new securities.
The vesting schedule applicable for the FY22 performance rights is:
Percentile ranking
Vesting level of performance rights subject to TSR condition
Equal to the 75th percentile or higher
100%
Between the 50th and 75th percentile
Straight-line pro rata vesting between 50% and 100%
Equal to the 50th percentile
Below the 50th percentile
50%
0%
DEPS condition
(50% weighting)
The DEPS condition measures the average annual growth in Waypoint REIT’s DEPS over the Performance Period.
The vesting schedule applicable for the FY22 performance rights is:
Average annual growth in DEPS
Vesting level of performance rights subject to the DEPS condition
Equal to 4.5% or higher
100%
Between 3.75% and 4.5%
Straight-line pro rata vesting between 50% and 100%
At 3.75%
Less than 3.75%
50%
0%
30
Waypoint REIT Limited – Annual Report 2022 Rationale for
conditions
The LTI performance conditions have been set by the Board to align with securityholder expectations and
Waypoint REIT’s strategy.
The TSR condition measures the overall returns that an entity has provided its securityholders, reflecting security
price movements and the theoretical reinvestment of distributions over a specified period. Relative TSR is the
most widely used LTI hurdle adopted in Australia. It ensures that value is only delivered to participants if the
investment return actually achieved for Waypoint REIT securityholders is sufficiently high relative to the returns
they could have received by investing in a portfolio of alternative S&P/ASX 300 A-REIT index securities over the
same period.
The DEPS condition aligns the LTI plan with commercial long-term performance which is within executives’
ability to influence and aligns with securityholder expectations. The performance hurdles have been set with
reference to:
• organic rental growth of WPR’s property portfolio (the majority of the portfolio is subject to fixed annual
rental reviews of 3.0%);
• the effect of gearing (target gearing: 30-40%); and
• WPR’s historical performance.
Prior to vesting, performance rights do not entitle eligible executives to any distributions or voting rights.
LTI awards will usually be forfeited if an executive resigns or is summarily dismissed prior to the vesting date
(see the ‘Cessation of employment’ section below for more detail). If the Board determines that an executive
is responsible for misconduct resulting in material non-compliance with financial reporting requirements
or for excessive risk taking, the executive will forfeit all unvested performance right entitlements.
Each performance right entitles eligible executives to one ordinary security in Waypoint REIT on vesting.
Securities allocated on vesting of performance rights carry the same distribution and voting rights as other
securities issued by Waypoint REIT. The Board retains discretion to make a cash equivalent payment in lieu
of an allocation of securities.
The Board has broad ‘claw-back’ powers to determine that performance rights lapse, any securities
allocated on vesting of performance rights are forfeited or clawed back, or that amounts are to be repaid,
in certain circumstances.
Where eligible executives’ employment with Waypoint REIT is terminated for cause or ceases due to resignation,
all unvested performance rights will lapse, unless the Board determines otherwise. In all other circumstances
(including due to genuine retirement, redundancy, death, permanent disability, or ill health, the expiry of a fixed
term contract or separation by mutual agreement), a pro rata portion of unvested performance rights will
remain on foot unless the Board determines otherwise.
Distributions
on unvested
LTI awards
Forfeiture
Delivery
Claw-back
provisions
Cessation of
employment
Change of control
Board discretion
Where there is a change of control event (including a takeover bid or any other transaction, event or state of
affairs that, in the Board’s opinion, is likely to result in a change in the control of Waypoint REIT), the Board may
determine the manner in which all unvested performance rights will be dealt with.
While the number of performance rights that vest will primarily be determined by testing against the vesting
conditions, the Board retains an overriding discretion to reduce or increase the vesting outcome where it
considers it appropriate in light of Waypoint REIT’s performance overall and any other relevant circumstances.
Restrictions
on dealing
Eligible executives must not sell, transfer, encumber, hedge or otherwise deal with performance rights, unless
the dealing is required by law.
31
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Remuneration Report continued
(v) Detailed remuneration outcomes
Performance indicators
The Remuneration Committee and Board aim to align Executive KMP remuneration with Waypoint REIT’s strategic and business
objectives and the creation of securityholder wealth. The table below shows statutory and non-statutory measures of Waypoint REIT’s
historical financial performance. Statutory measures are not necessarily consistent with the measures used in determining the variable
amounts of remuneration to be awarded to Executive KMP as noted above. Consequently, there may not always be a direct correlation
between the statutory key performance measures and the variable remuneration awarded.
Statutory profit ($’m)
Distributable earnings1 ($’m)
Basic earnings per security (cents)
DEPS1 (cents)
Distributions paid/payable (cents)
Capital return (cents)
Closing security price (31 December)
Net tangible assets per security2
Weighted average securities on issue (‘m)
1. DEPS is unaudited.
2018
167.1
101.7
21.34
14.02
14.02
–
$2.25
$2.20
725.7
2019
197.6
111.7
25.72
14.54
14.37
–
$2.66
$2.29
768.4
2020
279.9
118.5
35.79
15.15
15.14
–
$2.73
$2.49
782.0
2021
443.6
122.6
57.17
15.80
15.97
17.00
$2.83
$2.95
775.8
2022
133.8
116.1
19.00
16.48
16.60
–
$2.75
$3.02
704.4
2. Net tangible assets per security include the impact of the fair value movements.
FY22 STI annual assessment
The STI balanced scorecard contains three equally weighted elements that are assessed independently of each other. These elements
and the relevant criteria for FY22 are:
Element
Financial
Financial –
outperformance
Scale
Criteria
0 – 33.3%
0 – 33.3%
Achieve FY22 DEPS guidance as announced on 28 February 2022 (16.44 cents). Initial guidance
must be met in order for any award under this criteria.
Exceed the FY22 DEPS guidance as announced on 28 February 2022 (16.44 cents). Sliding scale
award determined at the Board’s discretion based on level of outperformance achieved.
Individual KPIs
0 – 33.3%
Individual financial and non-financial performance criteria set in conjunction with the Board
or MD/CEO (as applicable). Please refer to the table below.
The annual assessments for the MD/CEO and Other Reported Executives are similar but with different emphasis and KPIs applicable
to their individual roles, with adjustments made in respect to service periods for executives commencing in the current year. The KPI
Categories have been set with regard to Waypoint REIT’s strong risk management and corporate governance culture. KPIs for Executive
KMP in FY22 varied from person to person; however, the key KPIs driving the Remuneration Committee and Board’s decision to award
the FY22 STIs were as follows:
KPI categories
Corporate strategy
• Align strategy with investment objective of maximising
long-term income and capital returns for securityholders.
KPI performance
• Completed the review of Waypoint REIT’s investment property
portfolio resulting in the formulation of the non-core asset sale
program to improve overall portfolio quality and reduce future
income and capital risk.
• Long-term diversification strategy identified to broaden
Waypoint REIT’s avenues for growth and mitigate sector
and tenant concentration risk.
32
Waypoint REIT Limited – Annual Report 2022 KPI categories
Portfolio management
• Execute non-core asset sales strategy
• Deliver acquisitions in line with approved criteria
and return hurdles
• Proactively manage lease expiries
• Engage with tenants on site and portfolio
optimisation opportunities
Financial and capital management
KPI performance
• Successfully exchanged and settled 31 non-core assets for
$146.8 million (in line with book value). 71 assets have now
been sold since the commencement of the non-core disposal
program in 2021 for approximately $290 million (representing
a 5% premium to book value). This program has significantly
enhanced the quality and resilience of the portfolio.
• Diversify and optimise debt funding sources
• Completed capital management initiatives totalling $129.4 million
• Optimise Waypoint REIT’s debt maturity profile
• Manage Waypoint REIT’s exposure to market interest
rates through prudent interest rate hedging
• Manage liquidity to support the delivery of Waypoint
REIT’s strategy
• Optimise capital management in coordination with
portfolio management strategy
(before transaction costs) which comprised the successful
buy-back of 49.8 million stapled securities at an average price
of $2.60 per security (or a 14% discount to 31 December 2022
NTA). This resulted in surplus non-core asset sale proceeds
being returned to investors and the optimisation of Waypoint
REIT’s capital structure, gearing and liquidity metrics.
• Extended $275.0 million of bank debt, resulting in a weighted
average debt maturity of 4.4 years at 31 December 2022
with no debt maturities until 2025.
• Actively managed Waypoint REIT’s exposure to market interest
rates by entering into new interest rate hedging instruments
resulting in 94.3% of Waypoint REIT’s drawn debt being hedged
at 31 December 2022.
• Business funding, liquidity and gearing maintained within
approved parameters.
ESG
• Ongoing focus on people, culture and safety
• Low employee turnover; no employee injuries
• Maintain strong corporate governance
• Set carbon reduction strategy
• No reportable compliance breaches
• Net carbon neutral target achieved
• Adopt inaugural Modern Slavery Statement
• Two key sustainability rankings improved (S&P CSA
• Actively seek to improve ESG external ratings
• Identify and execute other initiatives to further ESG strategy
and Sustainalytics)
• Completed a current state assessment of the portfolio’s
exposure to physical climate risk and scenario testing
In assessing Executive KMP delivery against their respective and collective KPIs, the Remuneration Committee has determined that
all members of Executive KMP have met or exceeded expectations in all KPI categories as evidenced in the table above. Accordingly,
all members of Executive KMP have been awarded their maximum STI allocations. Refer to FY22 STI Outcomes section below for
further details.
FY22 STI outcomes
The following table sets out the awards made to each Executive KMP based on their performance during the year ended 31 December 2022.
$
Hadyn Stephens
Aditya Asawa
Tina Mitas2
Former executives
Kerri Leech4
FAR as per
contract1
563,750
420,000
281,362
Maximum
STI as per
contract
563,750
78,7503
140,681
% of maximum
possible
current award
earned
100%
100%
100%
Actual STI
awarded
563,750
78,750
140,681
410,000
307,500
–
–
1. FAR comprises salary and superannuation.
2. FAR and Maximum STI are based on a 0.9 Full-time Equivalent (FTE) basis consistent with Tina Mitas’ standard terms of employment. Tina Mitas’
Actual STI and % Maximum in the above table and the actual figures in the table below reflect a pro rata payment for additional days worked during
the financial year over and above her contractual obligation.
3. Maximum STI is pro-rated for the employee’s service period of three months during FY22.
4. Resigned 31 August 2022.
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Remuneration Report continued
(v) Detailed remuneration outcomes continued
FY22 Total remuneration (statutory basis)
All figures in the table below are in dollars, unless otherwise stated.
Table 1 of 2
Short-term benefits
Post-retirement benefits
Other long-term benefits
Salary
$
Other benefits
$
Superannuation
$
Termination
benefits
$
Annual leave1
$
Long service
leave1
$
Total fixed
$
Hadyn Stephens
2022
2021
Aditya Asawa
2022
2021
Tina Mitas
2022
2021
Sub-total
2022
2021
Former Executives
Kerri Leech
2022
2021
Total
2022
2021
Table 2 of 2
Hadyn Stephens
2022
2021
Aditya Asawa
2022
2021
Tina Mitas
2022
2021
Sub-total
2022
2021
Former Executives
Kerri Leech
2022
2021
Total
2022
2021
539,320
527,369
94,629
–
256,932
245,083
890,881
772,452
257,163
377,369
1,148,044
1,149,821
2,819
3,997
85,0004
–
1,407
2,467
89,226
6,464
2,784
2,000
92,010
8,464
24,430
22,631
6,323
–
24,430
23,026
55,183
45,657
18,107
22,631
73,290
68,288
–
–
–
–
–
–
–
–
38,569
–
38,569
–
9,117
14,253
5,802
–
2,566
4,075
17,485
18,328
(25,388)
19,896
(7,903)
38,224
14,109
14,351
2,366
–
6,979
8,058
589,795
582,601
194,120
–
292,314
282,709
23,454
22,409
1,076,229
865,310
(16,060)
10,451
275,175
432,347
7,394
32,860
1,351,404
1,297,657
Short-term
benefits
Current STI
(cash)
$
Other long-
term benefits
Deferred STI
(cash)
$
Share-based payments
Deferred STI2
(equity)
$
Deferred LTI3
(rights)
$
Total variable
$
Grand total
$
At risk element
(%)
281,875
275,000
52,500
–
93,788
93,333
428,163
368,333
–
200,000
428,163
568,333
–
–
–
–
–
–
–
–
–
–
–
–
217,060
103,419
11,992
–
44,354
20,741
273,406
124,160
(43,445)
44,444
229,961
168,604
21,495
23,922
20,531
–
5,792
5,296
47,818
29,218
(13,239)
13,239
34,579
42,457
520,430
402,341
85,023
–
143,934
119,370
749,387
521,711
(56,684)
257,683
692,703
779,394
1,110,225
984,942
279,143
–
436,248
402,079
1,825,616
1,387,021
218,491
690,030
2,044,107
2,077,051
47
41
30
–
33
30
N/A
37
1. Amounts disclosed represent the movement in the associated leave provisions.
2. Represents the accounting expense attributed to each Executive KMP in accordance with AASB 2 Share-based Payment. The face values of FY22
deferred STI awards anticipated to be granted to Hadyn Stephens, Aditya Asawa and Tina Mitas in March 2023 are $281,875, $26,250 and $46,894
respectively. Subject to ongoing service conditions being satisfied, the difference in value will be expensed over FY23 ($141,991) and FY24 ($62,803)
and FY25 ($8,233) accordingly.
3. Represents the accounting expense attributed to each Executive KMP in accordance with AASB 2 Share-based Payment. The face values of LTI awards
granted to Hadyn Stephens, Aditya Asawa and Tina Mitas were $375,833, $211,050 and $93,788 respectively.
4. Sign-on bonus paid in cash on commencement of employment in October 2022. This payment is repayable should the employee resign, or their
employment be terminated within 12 months of commencement.
34
Waypoint REIT Limited – Annual Report 2022 (vi) Executive KMP equity holdings
The table below outlines the movement in Executive KMP’s securityholdings during FY22.
Stapled securities
FY22
Hadyn Stephens
Aditya Asawa
Tina Mitas
Former Executives
Kerri Leech3
Balance
1 January
On-market
purchases
Issued as
compensation1
Vesting of
deferred STI1
Vesting of
performance
rights
Forfeited
Balance
31 December
39,092
–
7,881
7,036
–
–
–
–
101,527
–
17,5982
37,2882
–
–
–
–
–
–
–
–
–
–
–
140,619
–
25,479
(36,919)
7,405
1. Deferred portion of FY21 STI payable in securities subject to trade-lock restrictions acquired on-market in March 2022 and held in Waypoint REIT’s
Employee Share Trust until the end of the deferral period, which is 9 March 2023 (67,993 securities) and 9 March 2024 (50,763 securities). The securities
were granted on 8 March 2022 at a fair value of $2.70. Refer to section (v) above for further details.
2. Includes 369 securities granted on 24 February 2022 under the general employee offer at a fair value of $2.67.
3. Closing balance at date of resignation.
Performance rights
Waypoint REIT issued 287,806 performance rights in FY22, including 210,396 granted on 11 and 12 May 2022 and 77,410 granted
on 4 October 2022. All performance rights have a nil exercise price, vest on or around 1 March 2025 if vesting conditions are met
or otherwise expire on this date and are subject to DEPS and TSR conditions over the performance period of 1 January 2022 to
31 December 2024.
Accounting standards require the estimated valuation of the grants be recognised over the performance period. The minimum value
of the grant is nil if the vesting conditions are not met. The maximum value is based on the estimated fair value calculated at the time
of the grant and amortised in accordance with the accounting standard requirements.
FY22
Hadyn Stephens
Aditya Asawa
Tina Mitas
Former Executives
Kerri Leech
Opening
balance
#
77,115
–
16,856
Rights
granted
#
137,850
77,410
34,400
42,139
–
Rights
vested
#
Rights
forfeited
#
Closing
balance
#
214,965
77,410
51,256
Fair value to
be expensed in
future years1
$
63,723
44,493
16,274
–
–
–
(42,139)
–
–
–
–
–
–
1. The maximum value of the grants yet to vest is the fair value amount at the grant date yet to be reflected in Waypoint REIT’s Consolidated
Statement of Comprehensive Income.
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Remuneration Report continued
(vi) Executive KMP equity holdings continued
The table below details performance rights granted to executives as part of their remuneration in the previous and current reporting periods:
KMP
Grant
Grant date
Performance
period start date Vesting date
No. of
performance
rights
Fair value per
performance
rights
Hadyn Stephens
LTI FY21 tranche 1 (TSR)
13 May 2021
1 January 2021
1 March 2024
LTI FY21 tranche 2 (DEPS)
13 May 2021
1 January 2021
1 March 2024
LTI FY22 tranche 1 (TSR)
12 May 2022
1 January 2022
1 March 2025
LTI FY22 tranche 2 (DEPS)
12 May 2022
1 January 2022
1 March 2025
Aditya Asawa
LTI FY22 tranche 1 (TSR)
4 October 2022
1 January 2022
1 March 2025
LTI FY22 tranche 2 (DEPS)
4 October 2022
1 January 2022
1 March 2025
Tina Mitas
LTI FY21 tranche 1 (TSR)
9 April 2021
1 January 2021
1 March 2024
LTI FY21 tranche 2 (DEPS)
9 April 2021
1 January 2021
1 March 2024
LTI FY22 tranche 1 (TSR)
11 May 2022
1 January 2022
1 March 2025
LTI FY22 tranche 2 (DEPS)
11 May 2022
1 January 2022
1 March 2025
38,558
38,557
68,925
68,925
38,705
38,705
8,428
8,428
17,200
17,200
$0.90
$2.13
$1.08
$2.02
$1.68
$2.13
$0.92
$2.14
$1.14
$2.05
Performance rights are valued using the Black-Scholes-Merton methodology which discounts for distributions foregone. This is used
for allocation purposes for all rights and accounting purposes for non-market-based performance rights. The Monte Carlo method is
used for accounting purposes for market-based performance rights. The accounting value determined using a Monte Carlo simulation
valuation is in accordance with AASB 2 Share-based payment.
(vii) Other information
Employment contracts and termination entitlements
Notice periods applicable to termination of an Executive KMP varies as follows:
Termination by Executive KMP
Hadyn Stephens:
12 months
Termination by Waypoint REIT without cause
All Executive KMP:
12 months
Aditya Asawa:
Tina Mitas:
6 months
3 months
Waypoint REIT may terminate an Executive KMP’s service at any time without notice if serious misconduct has occurred.
Where termination with cause occurs, the Executive KMP is only entitled to remuneration up to the date of termination.
Other transactions with Executive KMP
There were no loans made, guaranteed or secured, directly or indirectly, by Waypoint REIT to Executive KMP or their related parties during
the year. There were no other transactions between Waypoint REIT and any Executive KMP or their related parties during the year.
(viii) Remuneration policy for Non-Executive Independent Directors
Objective
The Remuneration Committee is responsible for making recommendations to the Board on the remuneration arrangements for
the Independent Non-Executive Directors. The Board and the Remuneration Committee periodically assess, with the benefit
of independent advice as required, the appropriateness of the nature and amount of remuneration of Non-Executive Independent
Directors by reference to market rates with the overall objective of attracting and retaining Board members with an appropriate
combination of industry and specialist functional knowledge and experience.
36
Waypoint REIT Limited – Annual Report 2022 Remuneration structure
Under the Waypoint REIT Limited Constitution, the Board may decide the remuneration to which each Non-Executive Independent
Director is entitled for his or her services as a Director. However, the total amount provided to all Non-Executive Independent Directors
for their services as Directors must not exceed in aggregate in any financial year the amount fixed by Waypoint REIT. This amount
has been fixed at $750,000 per annum.
Annual fees payable, inclusive of superannuation, to Non-Executive Independent Directors during FY22 were as follows:
Role
Chair
Member
Audit and Risk
Management
Committee
Remuneration
Committee
Nomination
Committee3
$25,000
$12,500
$20,000
$10,000
$10,000
$5,000
Board
$220,0001
$107,0002
1. The Board Chair does not receive fees for membership on Board Committees. Fees increased $20,000 on 1 January 2021. Prior to this date,
Board Chair fees had remained unchanged since Waypoint REIT listed on the ASX in August 2016.
2. Fees increased $7,000 on 1 January 2021. Prior to this date, Board Member fees had remained unchanged since Waypoint REIT listed on the ASX
in August 2016.
3. Nomination Committee fees increased effective 1 January 2022 in light of expanded responsibilities (the increases were: Chair – $10,000
and Member – $5,000).
Additionally, Non-Executive Independent Directors are entitled to reimbursement of travel and other out of pocket expenses, which
totalled $91 in the year ended 31 December 2022 (2021: $265).
(ix) Non-Executive Independent Director fees and other information
Details of Non-Executive Independent Director fees and security interests are set out below.
Fees
Fees payable to each Non-Executive Independent Director of Waypoint REIT during the year are set out below:
2022
Super-
annuation
$
20,453
13,898
8,115
13,667
56,133
Base fee
$
199,547
135,602
78,218
133,333
546,700
Total
$
220,000
149,500
86,333
147,000
602,833
Base fee
$
200,457
127,108
–
129,386
456,951
2021
Super-
annuation
$
19,543
12,392
–
12,614
44,549
Total
$
220,000
139,500
–
142,000
501,500
Laurence Brindle
Georgina Lynch
Susan MacDonald1
Stephen Newton
Total
1. Appointed on 1 May 2022.
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Remuneration Report continued
(ix) Non-Executive Independent Director fees and other information continued
Interests in securities
The number of securities held during the year by each Non-Executive Independent Director of Waypoint REIT, including their personally
related parties, are set out below:
2022
Non-Executive Directors
Laurence Brindle
Georgina Lynch
Susan MacDonald
Stephen Newton
Balance
1 January
On-market
purchases
On-market
disposals
Other
Balance
31 December
93,820
46,910
–
23,455
–
–
–
–
–
–
–
–
–
–
–
–
93,820
46,910
–
23,455
Other transactions with Non-Executive Independent Directors
There were no loans made, guaranteed or secured, directly or indirectly, by Waypoint REIT to any Non-Executive Independent Director
or their related parties during the year. There were no other transactions between Waypoint REIT and any Non-Executive Independent
Director or their related parties during the year.
Insurance and indemnification of officers and auditors
The Company has paid premiums in respect of a contract insuring all Directors and officers of the Company and its related entities against
certain liabilities incurred in that capacity. The insurance policies cover former directors and officers of the Company. Disclosure of
the nature of the liability covered by the insurance and premiums paid is subject to confidentiality requirements under the contract
of insurance.
The Company and the Responsible Entity are party to Deeds of Indemnity with each of its directors (including Hadyn Stephens,
Managing Director & Chief Executive Officer), Aditya Asawa (Chief Financial Officer) and Tina Mitas (Company Secretary) providing these
persons with an indemnity on a full indemnity basis, to the fullest extent permitted by law, against all losses and liabilities incurred
in their respective role for the Company, the Responsible Entity and its related entities. The Deeds also require the Company to grant
the indemnified person with access to certain Company documents and insure the indemnified persons.
In addition, the Company’s and the Responsible Entity’s constitutions provide for the indemnity of officers of the Company/Responsible
Entity or its related bodies corporate from liability incurred by a person in that capacity.
No indemnity payment has been made under any of the documents referred to above during, or since the end of, the financial year.
Waypoint REIT has not during or since the end of the financial year indemnified or agreed to indemnify an auditor of Waypoint REIT
or of any related body corporate against a liability incurred in their capacity as an auditor.
Audit and non-audit services
Waypoint REIT may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise
and experience with Waypoint REIT are important.
Details of the amounts paid or payable to the auditor for audit and non-audit services provided in relation to the year ended
31 December 2022 are disclosed in Note 4.(d) to the consolidated financial statements.
The Directors have considered the position and, in accordance with advice received from Waypoint REIT’s Audit and Risk Management
Committee (ARMC), are satisfied that the provision of non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed by the ARMC to ensure they do not impact the impartiality and objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants.
38
Waypoint REIT Limited – Annual Report 2022 Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 40.
Rounding of amounts to the nearest million dollars
Waypoint REIT is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the “rounding off” of amounts in the
Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with that instrument to the nearest hundred
thousand dollars, or in certain cases, to the nearest dollar.
The report is made in accordance with a resolution of Directors.
Laurence Brindle
Chair
27 February 2023
39
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory AUDITOR’S INDEPENDENCE DECLARATION
Auditor’s Independence Declaration
As lead auditor for the audit of Waypoint REIT Limited and Waypoint REIT Trust for the year ended 31
December 2022, I declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Waypoint REIT Limited and the entities it controlled during the year
and Waypoint REIT Trust and the entities it controlled during the year.
JDP Wills
Partner
PricewaterhouseCoopers
Sydney
27 February 2023
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
40
Waypoint REIT Limited – Annual Report 2022
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the year ended 31 December 2022
Waypoint REIT
Trust Group
Notes
2022
$ million
2021
$ million
2022
$ million
2021
$ million
Rental income from investment properties
(incl. non-cash straight-line lease adjustment)
Finance income
Net gain/(loss) on sale of investment properties
Net fair value gain/(loss) on investment properties
Management and administration expenses
Finance expense
Net gain from derivative financial instruments
Net profit before income tax
Income tax expense
Net profit after tax
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss
Unrealised gains/(losses) on cash flow hedges
Total comprehensive income
Total comprehensive income for the year attributable
to Waypoint REIT securityholders, comprising:
– shareholders of Waypoint REIT Limited
– unitholders of Waypoint REIT Trust
(non-controlling interests)
Earnings per security
Basic earnings per security
Diluted earnings per security
3.(b)
2.(a)
2.(a)
3.(b)
3.(b)
1.(b)
1.(b)
168.2
0.4
(0.4)
(7.2)
(10.7)
(33.3)
16.8
133.8
–
133.8
178.3
0.1
1.0
305.0
(9.9)
(32.7)
1.8
443.6
–
443.6
168.2
0.2
(1.2)
(7.2)
(10.5)
(33.3)
16.8
133.0
–
133.0
11.7
145.5
27.8
471.4
11.7
144.7
0.8
1.0
–
144.7
145.5
cents
19.00
18.99
470.4
471.4
cents
57.17
57.16
144.7
144.7
cents
18.88
18.87
The above consolidated statements of comprehensive income should be read in conjunction with the accompanying notes.
178.3
0.1
0.2
305.0
(10.1)
(32.7)
1.8
442.6
–
442.6
27.8
470.4
–
470.4
470.4
cents
57.05
57.04
41
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory
CONSOLIDATED BALANCE SHEETS
At 31 December 2022
Waypoint REIT
Trust Group
Notes
31 Dec 2022
$ million
31 Dec 2021
$ million
31 Dec 2022
$ million
31 Dec 2021
$ million
ASSETS
Current assets
Cash and cash equivalents
Derivative financial instruments
Other current assets
Assets classified as held for sale
Total current assets
Non-current assets
Investment properties
Derivative financial instruments
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Rent received in advance
Interest payable
Distribution payable
Provisions and other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Derivative financial instruments
Provisions and other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Waypoint REIT Limited
Contributed equity
Retained profits
Reserves
Parent entity interest
Waypoint REIT Trust
Contributed equity
Retained profits
Reserves
Non-controlling interests
Total equity
1.(c)
3.(c)
2.(b)
2.(a)
3.(c)
1.(a)
3.(a)
3.(c)
3.(e)
3.(h)
14.0
2.8
1.9
18.7
–
18.7
19.0
0.7
3.3
23.0
33.9
56.9
0.7
2.8
7.2
10.7
–
10.7
2.7
0.7
13.9
17.3
33.9
51.2
2,947.6
3,069.0
2,947.6
3,069.0
21.2
0.6
2,969.4
2,988.1
1.5
0.8
3,071.3
3,128.2
21.2
–
2,968.8
2,979.5
3.7
2.8
6.2
27.1
1.3
41.1
884.5
33.3
0.8
918.6
959.7
3.4
2.4
5.9
30.4
1.9
44.0
929.5
25.5
0.9
955.9
999.9
5.7
2.8
6.2
27.1
–
41.8
884.5
33.3
–
917.8
959.6
2,028.4
2,128.3
2,019.9
1.5
–
3,070.5
3,121.7
7.3
2.4
5.9
30.4
–
46.0
929.5
25.5
–
955.0
1,001.0
2,120.7
–
–
–
–
1,453.5
672.9
(5.7)
2,120.7
2,120.7
7.1
0.8
0.6
8.5
3.(e)
1,324.1
3.(h)
689.8
6.0
2,019.9
2,028.4
7.6
–
–
7.6
1,453.5
672.9
(5.7)
2,120.7
2,128.3
–
–
–
–
1,324.1
689.8
6.0
2,019.9
2,019.9
The above consolidated balance sheets should be read in conjunction with the accompanying notes.
42
Waypoint REIT Limited – Annual Report 2022
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the year ended 31 December 2022
Waypoint REIT
Trust Group
Contri-
buted
equity
$ million
Retained
profits
$ million
Reserves
$ million
Notes
Non-
control-
ling
interests
$ million
Contri-
buted
equity
$ million
Retained
profits
$ million
TOTAL
$ million
Reserves
$ million
TOTAL
$ million
Balance at 1 January 2021
Profit for the period
Other comprehensive income:
Effective portion of changes in
fair value of cash flow hedges
3.(h)
Total comprehensive profit
for the period
Transactions with owners
in their capacity as owners
On-market buy-back,
including costs
Capital return and security
consolidation, including costs
Distributions paid
or provided for
3.(e)
1.(a)
Total transactions with owners
in their capacity as owners
Balance at 31 December 2021
Balance at 1 January 2022
Profit for the period
Other comprehensive income:
Effective portion of changes in
fair value of cash flow hedges
3.(h)
Total comprehensive profit
for the period
Transactions with owners
in their capacity as owners
On-market buy-back,
including costs
Security-based payments
Acquisition of
treasury securities
Distributions paid
or provided for
Total transactions with owners
in their capacity as owners
Balance at 31 December 2022
3.(f)
1.(a)
–
–
–
–
–
–
7.7
–
(1.0)
1.0
–
–
–
1.0
– 1,946.5
1,953.2
1,627.1
–
442.6
443.6
27.8
27.8
470.4
471.4
352.9
442.6
(33.5) 1,946.5
–
442.6
–
27.8
27.8
442.6
27.8
470.4
–
–
–
–
–
–
–
–
0.6
0.6
(0.1)
–
–
(0.1)
7.6
7.6
–
–
–
(0.5)
–
–
–
(0.5)
7.1
–
–
–
–
–
–
–
0.8
–
–
–
–
–
0.8
(41.4)
(41.5)
(41.4)
(132.2)
(132.2)
(132.2)
–
–
(122.6)
(122.6)
–
(122.6)
(296.2)
(296.3)
(173.6)
(122.6)
–
–
–
–
(41.4)
(132.2)
(122.6)
(296.2)
– 2,120.7
2,128.3
1,453.5
672.9
(5.7) 2,120.7
– 2,120.7
2,128.3
1,453.5
0.8
–
133.0
133.8
–
–
11.7
11.7
144.7
145.5
672.9
133.0
(5.7) 2,120.7
–
133.0
–
11.7
11.7
133.0
11.7
144.7
–
(129.0)
(129.5)
(129.0)
0.6
–
0.6
–
(0.4)
(0.4)
(0.4)
–
–
–
(116.1)
(116.1)
–
(116.1)
(245.5)
(245.4)
(129.4)
(116.1)
–
–
–
–
–
(129.0)
–
(0.4)
(116.1)
(245.5)
2,019.9
2,028.4
1,324.1
689.8
6.0
2,019.9
The above consolidated statements of changes in equity should be read in conjunction with accompanying notes.
43
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended 31 December 2022
Waypoint REIT
Trust Group
Notes
2022
$ million
2021
$ million
2022
$ million
2021
$ million
Cash flows from operating activities
Rental income from investment properties
(inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest paid
Net cash inflow from operating activities
1.(d)
Cash flows from investing activities
Acquisition and development expenditure
Net proceeds on sale of investment properties
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings (net of borrowing costs)
Repayments of borrowings
Payments in relation to derivatives
On-market buy-back of stapled securities (including costs)
Capital return and security consolidation (including costs)
Distributions paid to securityholders
1.(a)
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
1.(c)
175.0
(28.0)
147.0
0.4
(31.2)
116.2
(0.4)
160.0
159.6
196.0
(225.0)
(3.0)
(129.5)
–
(119.3)
(280.8)
(5.0)
19.0
14.0
181.2
(29.0)
152.2
0.1
(31.1)
121.2
(2.2)
129.8
127.6
686.6
(605.7)
–
(41.1)
(132.2)
(152.9)
(245.3)
3.5
15.5
19.0
175.0
(25.3)
149.7
0.2
(31.2)
118.7
(0.4)
160.0
159.6
196.0
(225.0)
(3.0)
(129.0)
–
(119.3)
(280.3)
(2.0)
2.7
0.7
181.2
(31.9)
149.3
–
(31.1)
118.2
(2.2)
129.8
127.6
686.6
(605.7)
–
(41.0)
(132.2)
(152.9)
(245.2)
0.6
2.1
2.7
The above consolidated statements of cash flows should be read in conjunction with accompanying notes.
44
Waypoint REIT Limited – Annual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
This general-purpose financial report contains the financial statements of Waypoint REIT and Waypoint REIT Trust Group (Trust Group)
for the year ended 31 December 2022. The financial statements of Waypoint REIT comprise the Company, the Trust and their respective
controlled entities. The financial statements of the Trust Group comprise the Trust and its controlled entities.
As permitted by Class Order 13/1050, issued by ASIC, this financial report is a combined financial report that presents the
financial statements and accompanying notes of both Waypoint REIT Limited and Waypoint REIT Trust at and for the year ended
31 December 2022.
Waypoint REIT is a stapled group consisting of the Company and the Trust and their wholly owned entities. The Trust indirectly
owns the investment property portfolio through its 100% ownership of the trusts, which own the investment properties and receive
rent under leases. The Company directly owns all of the shares in VER Limited (Responsible Entity). Each stapled security consists
of one share in the Company and one unit in the Trust.
Waypoint REIT is listed on the Australian Securities Exchange (ASX) and registered and domiciled in Australia.
The notes to these consolidated financial statements include additional information which is required to understand the operations,
performance and financial position of Waypoint REIT. The notes are set out as follows:
1. Performance and results – an overview of key metrics used by Waypoint REIT to measure financial performance.
1.(a) Distributions to securityholders
1.(b) Earnings per security
1.(c) Cash and cash equivalents
1.(d) Cash flow information
2. Property portfolio – an overview of Waypoint REIT’s investment property portfolio.
2.(a)
Investment properties
2.(b) Assets held for sale
2.(c) Sensitivities
2.(d) Commitments and contingencies
3. Capital management – an overview of Waypoint REIT’s capital management structure.
3.(a) Borrowings
3.(b) Net finance costs
3.(c) Derivative financial instruments
3.(d) Financial risk management
3.(e) Contributed equity
3.(f) Treasury securities
3.(g) Non-controlling interests
3.(h) Reserves
3.(i) Security-based benefits expense
4. Additional information – additional disclosures relating to Waypoint REIT’s financial statements.
4.(a) Related party information
4.(b) Parent entity financial information
4.(c)
Investments in subsidiaries
4.(d) Remuneration of auditors
4.(e) Subsequent events
4.(f) Summary of significant accounting policies
45
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory
1. Performance and results
Based on the reports reviewed to monitor the performance of Waypoint REIT and Trust Group, the Board of Waypoint REIT, in its capacity
as chief operating decision maker, determines that Waypoint REIT (and Trust Group) has one reportable segment in which it operates,
being fuel and convenience retail investment properties. Refer to the Consolidated Statements of Comprehensive Income for the
segment financial performance and the Consolidated Balance Sheets for the assets and liabilities.
Key financial metrics used to define the results and performance of Waypoint REIT, including Distributable Earnings, distributions,
earnings per stapled security and distributable earnings per stapled security are set out below.
Distributable Earnings is a non-statutory measure of profit and is calculated as statutory net profit adjusted to remove transaction costs,
specific non-recurring items and non-cash items, including straight-lining of rental income, the amortisation of debt establishment fees
and any fair value adjustment to investment properties and derivatives.
A reconciliation between Distributable Earnings and statutory profit is set out below:
Year ended
31 Dec 2022
$ million
Year ended
31 Dec 2021
$ million
157.6
0.4
158.0
(10.2)
(31.7)
116.1
(7.2)
(0.4)
10.6
(1.6)
16.8
(0.1)
(0.4)
163.2
0.1
163.3
(9.9)
(30.8)
122.6
305.0
1.0
15.1
(1.9)
1.8
–
–
133.8
443.6
Rental income
Finance income
Total operating income
Management and administration expenses
Interest expense
Distributable Earnings
Net fair value gain/(loss) on investment properties
Net gain/(loss) on sale of investment properties
Straight-line rental income
Amortisation of borrowing costs
Net gain from derivatives financial instruments
Long-term incentive expense
Non-recurring expenses
Statutory net profit
46
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 1.(a) Distributions to securityholders
Distributions paid in 2022
Final distribution for year ended 31 December 2021
– 4.21 cents per security paid on 28 February 2022
Interim distribution for the quarter ended 31 March 2022
– 4.11 cents per security paid on 13 May 2022
Interim distribution for the quarter ended 30 June 2022
– 4.51 cents per security paid on 31 August 2022
Interim distribution for the quarter ended 30 September 2022
– 3.95 cents per security paid on 15 November 2022
Distributions paid in 2021
Final distribution for year ended 31 December 2020
– 7.73 cents per security paid on 26 February 2021
Interim distribution for the half-year ended 30 June 2021
– 7.81 cents per security paid on 31 August 2021
Interim distribution for the quarter ended 30 September 2021*
– 3.95 cents per security paid on 15 November 2021
Total distributions paid
2022
$ million
2021
$ million
30.4
29.2
32.1
27.6
–
–
–
119.3
–
–
–
–
60.7
61.3
30.9
152.9
*
Distributions are paid on a quarterly basis commencing the quarter ended 30 September 2021. Prior to this time distributions were paid half-yearly.
The 2021 distribution payments above reflect the equivalent of five quarterly distributions.
A distribution of 4.03 cents per security ($27.1 million) is to be paid on 27 February 2023 for the quarter ended 31 December 2022.
The Company has franking credits available for subsequent reporting periods of $0.03 million based on a tax rate of 30%
(2021: $0.03 million). There was no dividend paid or payable from the Company during the year.
1.(b) Earnings per security
Basic earnings per security (cents) attributable to:
Shareholders of Waypoint REIT Limited
Unitholders of Waypoint REIT Trust (non-controlling interest)
Securityholders of Waypoint REIT
Diluted earnings per security (cents) attributable to:
Shareholders of Waypoint REIT Limited
Unitholders of Waypoint REIT Trust (non-controlling interest)
Securityholders of Waypoint REIT
Statutory net profit after tax ($ million)
Distributable earnings ($ million)
Distributable earnings per stapled security (cents)
based on basic weighted average number of securities
Weighted average number of securities used as the denominator
in calculating basic earnings per security
Adjustments for calculation of diluted earnings per stapled security
Waypoint REIT
Trust Group
2022
Cents
0.12
18.88
19.00
0.12
18.87
18.99
133.8
116.1
16.48
704.4
2021
Cents
0.12
57.05
57.17
0.12
57.04
57.16
443.6
122.6
15.80
775.8
2022
Cents
–
18.88
18.88
–
18.87
18.87
133.0
116.1
N/A
704.4
2021
Cents
–
57.05
57.05
–
57.04
57.04
442.6
122.6
N/A
775.8
– Performance rights*
0.2
0.1
0.2
0.1
Weighted average number of securities and potential securities
used as the denominator in calculating diluted earnings per security
704.6
775.9
704.6
775.9
*
Performance rights are unquoted securities and conversion to stapled securities and vesting to executives is subject to performance and/
or service conditions.
47
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory 1. Performance and results continued
1.(c) Cash and cash equivalents
Cash at bank*
Total cash and cash equivalents
Waypoint REIT
Trust Group
31 Dec 2022
$ million
31 Dec 2021
$ million
31 Dec 2022
$ million
31 Dec 2021
$ million
14.0
14.0
19.0
19.0
0.7
0.7
2.7
2.7
*
Includes $5.5 million held in bank accounts as restricted cash maintained to satisfy the regulatory requirements of the Responsible Entity’s Australian
Financial Services Licence (AFSL).
Accounting policy – Cash and cash equivalents
For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents include cash on hand,
deposits held at call with financial institutions, and other short-term, highly liquid investments with maturities of three months or
less from the date of acquisition that are readily convertible to known amounts of cash and which are subject to an insignificant risk
of changes in value.
1.(d) Cash flow information
(i) Reconciliation of net profit after income tax to net cash inflow from operating activities
Profit for the year
Amortisation of borrowing costs
Net revaluation (gain)/loss on investment properties
Straight-line adjustment on rental income
Net (gain)/loss on sale of investment properties
Net (gain) from derivative financial instruments
Change in operating assets and liabilities
(Increase)/decrease in other current assets
Decrease in other non-current assets
Increase/(decrease) in trade and other payables
Increase in rent received in advance
Increase/(decrease) in interest payable
Waypoint REIT
Trust Group
2022
$ million
133.8
1.6
7.2
(10.6)
0.4
(16.8)
0.5
0.2
(0.8)
0.4
0.3
2021
$ million
443.6
1.9
(305.0)
(15.1)
(1.0)
(1.8)
–
0.2
(1.1)
0.1
(0.6)
2022
$ million
133.0
1.6
7.2
(10.6)
1.2
(16.8)
5.8
–
(3.4)
0.4
0.3
Net cash inflow from operating activities
116.2
121.2
118.7
2021
$ million
442.6
1.9
(305.0)
(15.1)
(0.2)
(1.8)
(6.8)
–
3.1
0.1
(0.6)
118.2
(ii) Non-cash investing and financing activities
Loan establishment costs netted off against
borrowings drawn down
Total non-cash financing and investing activities
Waypoint REIT
Trust Group
2022
$ million
2021
$ million
2022
$ million
2021
$ million
0.4
0.4
2.4
2.4
0.4
0.4
2.4
2.4
48
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 2. Property portfolio
Waypoint REIT’s property portfolio comprises both investment properties (Note 2.(a)) and assets held for sale (Note 2.(b)):
# Properties
Waypoint REIT
Trust Group
31 Dec 2022
31 Dec 2021
31 Dec 2022
$ million
31 Dec 2021
$ million
31 Dec 2022
$ million
31 Dec 2021
$ million
Investment properties (Note 2.(a))
Assets held for sale
– uncontracted (Note 2.(b))
Sub-total*
Assets held for sale –
contracted (Note 2.(b))
Total
402
–
402
–
402
427
6
433
3
436
2,947.6
3,069.0
2,947.6
3,069.0
–
21.6
–
2,947.6
3,090.6
2,947.6
–
12.3
–
2,947.6
3,102.9
2,947.6
21.6
3,090.6
12.3
3,102.9
The key inputs and assumptions for valuation of investment properties are below:
Number of assets
Annual market rent per site
Weighted average capitalisation rate
Range of capitalisation rates
Range of lease terms remaining
2.(a) Investment properties
(i) Valuations and carrying amounts
31 Dec 2022
31 Dec 2021
402
433
$143,081 to $1,243,123
$82,400 to $1,206,915
5.28%
5.16%
3.75% to 8.50%
3.38% to 10.0%
0.7 to 13.9 years
1.7 to 14.9 years
Fuel and convenience retail properties – at fair value
Investment properties
Waypoint REIT
Trust Group
31 Dec 2022
$ million
31 Dec 2021
$ million
31 Dec 2022
$ million
31 Dec 2021
$ million
2,947.6
2,947.6
3,069.0
3,069.0
2,947.6
2,947.6
3,069.0
3,069.0
During the year, CBRE independently valued 213 investment properties (representing over one-half of the portfolio), including 71
at 30 June 2022 and 142 at 31 December 2022.
The Directors have reviewed the independent valuation outcomes and determined they are appropriate to adopt at 31 December 2022.
The key inputs into the valuation are based on market information for comparable properties and the individual lease profiles for
each investment property. The independent valuers have experience in valuing similar assets and have access to market evidence
to support their conclusions. Comparable sales are considered to be those in similar markets, of similar scale and condition and
with similar lease terms to the subject property.
Directors’ valuations have been performed on the balance of the portfolio, with reference to the capitalisation rates determined for the
corresponding independently valued properties and additional market evidence in the same geographic area with similar lease terms.
Investment properties have been classified as level 3 in the fair value hierarchy. There have been no transfers between the levels in the
fair value hierarchy during the period.
All investment properties are freehold, apart from all sites in the Australian Capital Territory that are subject to Crown leases.
49
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory 2. Property portfolio continued
2.(a) Investment properties continued
Accounting policy – Investment properties
All of Waypoint REIT’s properties are treated as investment properties for the purpose of financial reporting. Under Australian Accounting
Standards, investment property buildings and improvements are not depreciated over time. Instead, investment properties are initially
valued at cost, including transaction costs, and at the end of each accounting period the carrying values are restated at their fair value
at the time.
Key estimate – Valuation of investment properties
Changes in fair value are recognised as a non-cash gain or loss in the statutory net profit in the accounting period in which they arise.
As a result of this accounting policy, changes in the fair value of Waypoint REIT’s investment properties may have a significant impact
on its reported statutory net profit in any given period. The fair value of investment property is determined based on real estate valuation
techniques and the principles of AASB 13 Fair Value Measurement.
The fair value of the properties is reviewed by the Directors at each reporting date. The Directors’ assessment of fair value is periodically
assessed by engaging an independent valuer to assess the fair value of individual properties with at least one-sixth of the properties
within the portfolio being independently valued every six months. Valuations may occur more frequently if there is reason to believe
that the fair value of a property has materially changed from its carrying value (e.g. as a result of changes in market conditions,
leasing activity in relation to the property or capital expenditure). Each investment property is subject to independent valuation
at least once every three years.
The independent valuer is changed at least every three years unless the Board approves the use of a valuer for a fourth year due to
extenuating circumstances.
Valuations are primarily derived using a combination of the income capitalisation and the direct comparison methods and with
consideration for a number of factors that may include a direct comparison between the subject property and a range of comparable
sales, the present value of net future cash flow projections based on reliable estimates of future cash flows, existing lease contracts,
external evidence such as current market rents for similar properties and using capitalisation rates and discount rates that reflect
current market assessments of the uncertainty in the amount and timing of cash flows.
(ii) Movements during the period
At fair value
Opening balance (1 January)
Property acquisitions
Capital expenditure
Straight-line rental asset
Fair value adjustment to investment properties
Straight-lining of rental income
Transfer to assets held for sale
Disposal of investment properties
Closing balance (31 December)
Waypoint REIT
Trust Group
2022
$ million
3,069.0
–
0.2
10.6
4.4
(10.6)
(22.9)
(103.1)
2,947.6
2021
$ million
2,897.3
–
0.6
15.1
319.8
(15.1)
(146.9)
(1.8)
3,069.0
2022
$ million
3,069.0
–
0.2
10.6
4.4
(10.6)
(22.9)
(103.1)
2,947.6
2021
$ million
2,897.3
–
0.6
15.1
319.8
(15.1)
(146.9)
(1.8)
3,069.0
50
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 (iii) Amounts recognised in profit or loss for investment properties
Rental income
Other non-cash rental income (recognised on a straight-line basis)
Net direct operating expenses from property
Net revaluation of investment properties
Net gain/(loss) on sale of investment properties
(iv) Leasing arrangements
Waypoint REIT
Trust Group
2022
$ million
2021
$ million
2022
$ million
2021
$ million
157.6
10.6
(1.2)
(7.2)
(0.4)
163.2
15.1
(1.4)
305.0
1.0
157.6
10.6
(1.2)
(7.2)
(1.2)
163.2
15.1
(1.4)
305.0
0.2
The investment properties are leased to Viva Energy Australia Pty Limited (96% of rental income), other fuel operators and various
convenience store operators (3.6% of rental income) under predominantly long-term operating leases with rent payable in advance
monthly, quarterly or annually. Rental income for 93.9% of the investment properties is subject to fixed annual increases of 3.0%
or greater. The remainder of the leases largely have CPI-linked rent reviews. Where considered necessary to reduce credit risk,
Waypoint REIT may obtain bank guarantees or security deposits for the term of the lease.
Minimum undiscounted future payments to be received under non-cancellable operating leases of investment properties not recognised
in the financial statements are receivable as follows:
Within one year
Later than one year but not later than two years
Later than two years but not later than three years
Later than three years but not later than four years
Later than four years but not later than five years
Later than five years
Total
Accounting policy – Rental income
Waypoint REIT
Trust Group
31 Dec 2022
$ million
31 Dec 2021
$ million
31 Dec 2022
$ million
31 Dec 2021
$ million
157.2
161.5
165.2
167.3
163.1
808.3
1,622.6
161.2
165.7
170.2
174.2
176.1
1,009.7
1,857.1
157.2
161.5
165.2
167.3
163.1
808.3
1,622.6
161.2
165.7
170.2
174.2
176.1
1,009.7
1,857.1
Rental income from operating leases is recognised as income on a straight-line basis. Where a lease has a fixed annual increase,
the total rent receivable over the operating lease is recognised as revenue on a straight-line basis over the lease term. This results in
more income being recognised early in the lease term and less late in the lease term compared to the lease conditions (i.e. actual cash
received). The difference between the lease income recognised and the actual lease payment received is shown within the fair value
of the investment property on the consolidated balance sheet and reversed on disposal of an asset.
51
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory 2. Property portfolio continued
2.(b) Assets held for sale
Investment properties – contracted
Investment properties – uncontracted
Current assets held for sale
Waypoint REIT
Trust Group
31 Dec 2022
$ million
31 Dec 2021
$ million
31 Dec 2022
$ million
31 Dec 2021
$ million
–
–
–
12.3
21.6
33.9
–
–
–
12.3
21.6
33.9
During the year, Waypoint REIT sold seven assets which were classified as assets held for sale as at 31 December 2021 and reclassified
two assets from assets held for sale to investment properties. At balance date, no assets are classified as held for sale.
Movements during the period
At fair value
Opening balance
Capital expenditure
Fair value adjustment to investment properties
Net transfer from investment properties
Settlement of assets held for sale
Closing balance
Accounting policy – Assets held for sale
Waypoint REIT
Trust Group
2022
$ million
2021
$ million
2022
$ million
2021
$ million
33.9
0.2
(1.0)
22.9
(56.0)
–
14.3
0.9
0.2
146.9
(128.4)
33.9
33.9
0.2
(1.0)
22.9
(56.0)
–
14.3
0.9
0.2
146.9
(128.4)
33.9
Investment properties are classified as held for sale and measured at fair value if their carrying amounts will be recovered principally
through a sale transaction rather than through continuing use. This condition is met only when the sale is highly probable and the
asset is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected
to qualify for recognition as a completed sale within one year from the date of classification.
52
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 2.(c) Sensitivities
Waypoint REIT’s property portfolio is 99.9% occupied with a weighted average lease expiry of 9.0 years. Only 12 leases (representing
1.2% of annual rental income) expire before the end of 2025. Waypoint REIT’s investment properties are typically on long-term leases
with contracted annual rental income escalations and accordingly, they are generally valued on a capitalisation of income basis.
Waypoint REIT’s investment properties are therefore exposed to a risk of change in their fair values due to changes in market
capitalisation rates.
Sensitivity of fair value to movements in market capitalisation rates:
Decrease by 25 basis points
Increase by 25 basis points
2022
$ million
2021
$ million
141.7
(137.5)
151.4
(148.5)
The impacts on carrying values as shown above for the noted movement in capitalisation rates would impact the statutory net profit
but not impact Distributable Earnings (unless an interest margin increase on borrowings is triggered by the lower investment property
value causing the Covenant Gearing ratio to rise beyond 40%), as the unrealised movement in carrying value of investment properties
is excluded from the Distributable Earnings calculation.
In relation to Waypoint REIT’s facility agreements at 31 December 2022, the market capitalisation rate expansion required to trigger:
• higher margin pricing is 121 bps (applies to $415.0 million of facilities and is up to a 25 bps increase to the applicable margin);
• applicability of draw stop provisions is 204 bps (applies to all facilities); and
• a covenant breach (event of default) is 286 bps (applies to all facilities).
Waypoint REIT’s weighted average rent review of 3.0% also provides a buffer against approximately 16 bps per annum of potential
capitalisation rate expansion before gearing would be negatively impacted, holding all other variables constant.
2.(d) Commitments and contingencies
Capital expenditure commitments
Within one year
Waypoint REIT
Trust Group
31 Dec 2022
$ million
31 Dec 2021
$ million
31 Dec 2022
$ million
31 Dec 2021
$ million
–
–
0.2
0.2
–
–
0.2
0.2
There are no material outstanding contingent assets, liabilities or commitments as at 31 December 2022.
53
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory 3. Capital management
Waypoint REIT’s activities expose it to numerous external financial risks such as credit risk, liquidity risk and market risk. This section
explains how Waypoint REIT utilises its risk management framework to reduce volatility from these external factors.
3.(a) Borrowings
Non-current liabilities
Bank facilities
USPP Notes1
AMTN2
Institutional term loans
Gross unsecured borrowings
Unamortised borrowing costs
Net unsecured borrowings
Total undrawn facilities available
Waypoint REIT
Trust Group
31 Dec 2022
$ million
31 Dec 2021
$ million
31 Dec 2022
$ million
31 Dec 2021
$ million
438.5
212.0
199.3
40.0
889.8
(5.3)
884.5
121.5
467.0
229.6
199.1
40.0
935.7
(6.2)
929.5
93.0
438.5
212.0
199.3
40.0
889.8
(5.3)
884.5
121.5
467.0
229.6
199.1
40.0
935.7
(6.2)
929.5
93.0
1. Net of fair value hedge adjustment of $50.7 million (31 December 2021: $15.7 million).
2. Net of $0.7 million unamortised discount on the issue of these instruments (31 December 2021: $0.9 million unamortised discount).
USPP Notes
The USPP Notes are further detailed below:
7-year tranche
10-year tranche
12-year tranche
Total exposure
Fair value hedge adjustment
Total
Cross currency interest rate swaps
Accrued interest on swaps
Total cross currency interest rate swaps
Net USPP notes exposure
Maturities, interest rates and covenants
USD fixed
coupon
2.89%
3.18%
3.33%
Maturity
date
29 Oct 27
29 Oct 30
29 Oct 32
Notional
value of
cross
currency
swaps
$ million
108.9
76.8
62.9
248.6
AUD
equivalent
on issuance
date
$ million
Foreign
exchange
and fair
value
movement
$ million
Carrying
amount
31 Dec 2022
$ million
108.9
76.8
62.9
248.6
–
248.6
6.2
4.4
3.5
14.1
(50.7)
(36.6)
115.1
81.2
66.4
262.7
(50.7)
212.0
33.3
2.8
36.1
248.1
During the year, Waypoint REIT refinanced $275.0 million of its bank debt facilities through an extension of an existing syndicated facility.
Waypoint REIT’s weighted average debt maturity is 4.4 years (31 December 2021: 5.0 years).
54
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 The interest rate applying to the drawn amount of the bank and institutional term loan facilities is set on a periodic basis (i.e. one,
three or six months) at the prevailing market interest rate at the commencement of the period (Australian dollar, bank bill swap rate),
plus the applicable margin. For $415.0 million of these debt facilities, the interest margin has a rate increase/decrease applied if:
• Debt Covenant Gearing is higher than 40% – margin increases by up to 0.25%.
• Debt Covenant Gearing is lower than 30% – margin decreases by 0.10%.
The interest rate applying to the USPP notes is fixed in US dollars as noted above, with cross currency swaps in place for 100% of these
facilities to mitigate the foreign exchange risk and convert the US dollar interest rate exposure to a floating Australian dollar interest
rate exposure.
Facility agreement covenants and related restrictions include:
• interest cover ratio of not less than 2.0 times (actual at 31 December 2022: 5.0 times);
• gearing ratio of not more than 50% (actual at 31 December 2022: 32.5%); and
• a draw down cannot be completed or any indebtedness incurred if gearing is or will exceed 45% via the drawn down being completed.
Waypoint REIT was in compliance with its covenants throughout the period.
The fair values of bank and institutional term loan borrowings are not materially different from their carrying amounts due to their
short-term nature.
The fair value of the USPP notes and AMTN are $262.7 million and $158.8 million, respectively as at 31 December 2022 based
on discounted cash flows using the current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy.
Accounting policy – Borrowings
Borrowings are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method.
Under the effective interest rate method, any transaction fees, costs, discounts and premiums directly related to borrowings are
recognised in the profit and loss over the expected life of the borrowings. Borrowings are removed from the consolidated balance sheet
when the obligation specified in the contract is discharged, cancelled or expired.
Borrowings with maturities greater than 12 months after reporting date are classified as non-current liabilities.
3.(b) Net finance costs
Finance income
Finance income
Interest expense
Write-off of loan establishment costs due to refinancing
Finance expense
Designated hedge accounting relationship
Waypoint REIT
Trust Group
2022
$ million
2021
$ million
2022
$ million
2021
$ million
0.4
0.4
33.3
–
33.3
0.1
0.1
32.2
0.5
32.7
0.2
0.2
33.3
–
33.3
0.1
0.1
32.2
0.5
32.7
Gain/(loss) on fair value movements – fair value hedges
(1.4)
(0.4)
(1.4)
(0.4)
Derivatives not designated in hedge accounting
Gain/(loss) on fair value movements
Net gain/(loss) from derivative financial instruments
Accounting policy – Finance costs
18.2
16.8
2.2
1.8
18.2
16.8
2.2
1.8
Finance costs include interest expense on debt financing arrangements, settlements (including restructure and termination costs
unless significant in which case separate disclosure will apply) of interest rate derivative financial instruments and amortisation
of upfront borrowing costs incurred in connection with the arrangement of borrowings available to Waypoint REIT.
55
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory 3. Capital management continued
3.(c) Derivative financial instruments
Waypoint REIT has the following derivative financial instruments:
Current assets
Instruments in a designated cash flow hedge
Interest rate swaps
Instruments held at fair value through profit or loss
Interest rate swaps
Current assets
Non-current assets
Instruments in a designated cash flow hedge
Interest rate swaps
Instruments held at fair value through profit or loss
Interest rate swaps
Interest rate caps
Non-current assets
Total assets
Non-current liabilities
Instruments in a designated cash flow hedge
Interest rate swaps
Instruments in a designated fair value hedge
Cross currency swaps
Non-current liabilities
Total liabilities
Net total liability position
Waypoint REIT
Trust Group
31 Dec 2022
$ million
31 Dec 2021
$ million
31 Dec 2022
$ million
31 Dec 2021
$ million
1.8
1.0
2.8
1.8
16.1
3.3
21.2
24.0
–
33.3
33.3
33.3
9.3
0.7
–
0.7
–
1.5
–
1.5
2.2
7.1
18.4
25.5
25.5
23.3
1.8
1.0
2.8
1.8
16.1
3.3
21.2
24.0
–
33.3
33.3
33.3
9.3
0.7
0.7
–
1.5
–
1.5
2.2
7.1
18.4
25.5
25.5
23.3
Accounting policy – Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured
to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the
derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Waypoint REIT designates certain
derivatives as either:
• hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges);
• hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable forecast
transactions (cash flow hedges).
Where applicable, Waypoint REIT documents at the inception of the hedging transaction the relationship between hedging instruments
and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. Waypoint REIT
also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging
transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items.
56
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 (i) Fair value hedges
Cross currency swaps are used to hedge 100% of the currency risk on US dollar denominated debt. The portion of the cross currency
swap that equates to the fair value hedge having a $nil fair value at inception is designated as a fair value hedge and hedge accounting
is applied.
The gain or loss relating to interest payments on derivative financial instruments hedging fixed rate borrowings is recognised in profit or
loss within finance costs. Changes in the fair value of derivative hedging instruments and the hedged fixed rate borrowings attributable
to interest rate risk are recognised within ‘Net gains/(losses) from derivative financial instruments’. The gain or loss relating to the
ineffective portion is also recognised in profit or loss within ‘Net gains/(losses) from derivative financial instruments’.
(ii) Cash flow hedges
Interest rate derivative financial instruments are used to partially hedge interest rate risk on floating rate debt. Hedge accounting
applies to interest rate derivative financial instruments entered on or before 31 December 2019.
Cross currency swaps are also used to hedge 100% of the currency risk on US dollar denominated debt. The residual portion of the
cross currency swap is designated as a cash flow hedge and hedge accounting is applied.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in
other comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised
immediately in profit or loss within other income or other expense.
Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss. The gain
or loss relating to the effective portion of interest rate derivative financial instruments hedging variable rate borrowings is recognised
in profit or loss within finance costs.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting,
any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is
ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that
was reported in equity is immediately reclassified to profit or loss.
The following table shows balance sheet movements during the year relative to the gain/(loss) recorded in profit and loss for both
borrowings and derivatives:
Change in
borrowings
Net drawn/
(repaid)
Gain/(loss)
on fair value
of debt
Change in
derivatives
Upfront
paid
Cash flow
hedge
reserve
impact
Gain/(loss)
on fair
value of
derivatives
Net gain
in profit
and loss
(17.6)
(17.6)
(28.5)
0.2
(0.1)
(46.0)
–
–
(28.5)
–
–
(28.5)
17.6
17.6
–
(0.2)
0.1
17.5
(14.9)
(14.9)
–
–
28.9
14.0
–
–
–
–
(3.0)
(3.0)
1.4
1.4
–
–
10.3
11.7
(16.3)
(16.3)
–
–
15.6
(0.7)
1.3
1.3
–
(0.2)
15.7
16.8
$ million
USD
USPP
Foreign exposure
AUD
Bank facilities
AMTN
Interest rate swaps
Total
(iii) Derivatives that do not qualify for hedge accounting
Hedge accounting is not adopted for certain derivative instruments. Changes in the fair value of any such derivative instrument are
recognised immediately in profit or loss and are included in net gain/(loss) from derivative financial instruments.
Key estimate – Valuation of derivative financial instruments
Waypoint REIT’s financial instruments are over-the-counter derivatives for which there are no quoted market prices. Valuation techniques
(including, pricing models which estimate the present value of estimated future cash flows based on observable yield curves) are used
to determine fair values.
Models use observable data, to the extent practicable. However, areas such as credit risk (both own and counterparty), volatilities and
correlations require management to make estimates. Changes in assumptions about these factors could affect the reported fair value
of financial instruments.
57
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory 3. Capital management continued
3.(c) Derivative financial instruments continued
(i) Interest rate derivative financial instruments
At 31 December 2022, interest rate derivatives with a notional value of $849.6 million were in place. The relevant expiry dates are as follows:
Less than 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
5 to 6 years
6 to 7 years
7 to 8 years
8 to 9 years
Waypoint REIT
Trust Group
31 Dec 2022
$ million
31 Dec 2021
$ million
31 Dec 2022
$ million
31 Dec 2021
$ million
295.1
–
276.5
215.0
63.0
–
–
–
–
78.9
185.1
–
196.5
40.0
–
–
–
–
295.1
–
276.5
215.0
63.0
–
–
–
–
78.9
185.1
–
196.5
40.0
–
–
–
–
849.6
500.5
849.6
500.5
At 31 December 2022, 94.3% of drawn debt was hedged (through interest rate derivatives and the AMTN), and the weighted average
maturity of fixed rate debt and hedges was 3.4 years rate with a weighted average rate of 2.06% per annum.
(ii) Cross currency swaps
At 31 December 2022, cross currency swaps were in place to cover 100% of debt denominated in foreign currency and the weighted
average term was 7.0 years. Refer to Note 3.(a) for further details.
3.(d) Financial risk management
(i) Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge its obligation and cause the other party to incur a
financial loss. Waypoint REIT’s maximum credit risk exposure at balance date in relation to each class of recognised financial asset,
other than derivative financial instruments, is the gross carrying amount of those assets as indicated in the consolidated balance sheet.
Financial assets such as cash at bank and interest rate derivative financial instruments are held across a number of high credit
quality financial institutions, therefore Waypoint REIT does not have a concentration of credit risk in relation to these financial assets.
Tenant concentration risk, financial standing and sector concentration risk
96% of Waypoint REIT’s rental income is received from Viva Energy. If Viva Energy’s financial standing materially deteriorates and
impacts their ability to make rental payments, Waypoint REIT’s financial results, financial position and ability to service and/or obtain
financing may be adversely impacted. Furthermore, a material decline in the profitability of Viva Energy’s business due to the global
transition to a low carbon economy, the possible termination of Viva Energy’s right to use the Shell brand (current agreement expires
in 2029) or other factors (including international conflict) could affect the perceived stability of the rental income of Waypoint REIT and
may affect Waypoint REIT’s security price and/or ability to obtain financing on acceptable terms. A material decline in the profitability
of Viva Energy’s business could also lead to reduced capacity or ability for Viva Energy to pay market rents when renewal options
are exercised, which could result in lower rental receipts and/or a decline in the values of Waypoint REIT’s investment properties
if Waypoint REIT is unable to lease the property to an alternate tenant.
Collection risk
Waypoint REIT performs financial due diligence on potential new tenants and holds collateral in the form of security deposits or bank
guarantees where appropriate. Rent is due in advance on the first day of each billing period (typically monthly), with arrears monitored
and arrears notices issued on a regular basis (where required). Waypoint REIT applies the AASB 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss allowance for all trade and other financial assets. The loss allowances
for trade and other financial assets are based on assumptions about risk of default and expected loss rates. Waypoint REIT uses
judgement in making these assumptions, based on Waypoint REIT’s past history and existing market conditions as well as forward-
looking estimates at the end of each reporting period.
58
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 During the mobility restrictions (lockdowns and other travel or movement restrictions) in 2020 and 2021, the fuel tenants in Waypoint REIT’s
portfolio continued to operate, providing essential services to the community. Waypoint REIT’s performance has not been materially
impacted by COVID-19 to date.
The table below shows the ageing analysis of rent receivables of Waypoint REIT.
31 December 2022
Rent receivables
Expected credit loss provision
31 December 2021
Rent receivables
Expected credit loss provision
Accounting policy – Rent receivables
Less than
31 days
$ million
31 to 60 days
$ million
61 to 90 days
$ million
More than
90 days
$ million
Total
$ million
0.1
–
–
–
–
–
0.1
–
–
–
–
–
–
–
0.1
(0.1)
0.1
–
0.2
(0.1)
Other current assets include rent receivables which are recognised initially at fair value and subsequently measured at amortised
cost, less provision for expected credit losses. They are generally due for settlement within 30 days and are therefore all classified as
current. Waypoint REIT applies the AASB 9 simplified approach to measuring expected credit losses which involves a lifetime expected
loss allowance for all rent receivables and other financial assets.
To measure the expected credit losses, rent receivables are grouped based on shared credit risk characteristics, the days past due
and the expected loss rates based on historical credit losses experienced. The historical loss rates are adjusted to reflect current
and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the rent receivables.
Rent receivables are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation
of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with Waypoint REIT and a failure to make
contractual payments for a period of greater than 365 days past due. Impairment losses on rent receivables are recorded within
management and administration expenses within distributable earnings. Subsequent recoveries of amounts previously written off
are credited against the same line item.
(ii) Liquidity risk
Liquidity risk is the risk that Waypoint REIT may not be able to generate sufficient cash resources to settle its obligations in full as they
fall due or can only do so on terms that are materially disadvantageous. Waypoint REIT monitors its exposure to liquidity risk by setting
budgets and projecting cash flows to help ensure there is sufficient cash on hand as required or debt facility funding is available to meet
financial liabilities as they fall due.
Debt agreement and refinancing risk
Waypoint REIT has outstanding debt facilities. General economic and business conditions as well as sector-specific environmental,
sustainability and governance considerations that impact the debt or equity markets could impact Waypoint REIT’s ability to refinance
its debt facilities when required. If the covenants in these facilities are breached by Waypoint REIT this may result in Waypoint REIT
being subject to increased interest rate margins and covenants restricting its ability to engage in certain types of activities or to pay
distributions to securityholders. Debt may not be able to be obtained at all.
If debt facilities are not available or are not available in adequate volume, Waypoint REIT may need to sell assets to repay debt. There is
no guarantee that there will be willing purchasers for Waypoint REIT’s assets or that purchasers will pay prices at or greater than the
book value of these investment properties. To help mitigate this risk, debt maturities are staggered, debt is held across a diverse set
of sources, lenders and geographies, and debt is typically refinanced at least 12 months in advance of maturity.
If a third-party entity gains control of Waypoint REIT, this would constitute a review event under certain of Waypoint REIT’s debt facility
agreements, and (subject to specified negotiation and notification periods) a repayment of Waypoint REIT’s debt facilities may be required.
The Directors regularly monitor the debt facility covenants to ensure compliance and consider the refinancing options and timing
available to Waypoint REIT.
59
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory 3. Capital management continued
3.(d) Financial risk management continued
(ii) Liquidity risk continued
Cash flow and fair value interest rate risk
Waypoint REIT’s cash and cash equivalents, floating rate borrowings and derivative financial instruments expose it to a risk of change
in future cash flows or the fair value of derivative financial instruments due to changes in interest rates. Waypoint REIT uses interest
rate derivative financial instruments to partially hedge its economic exposure to changes in interest rates on variable rate borrowings.
By hedging against changes in interest rates, Waypoint REIT has reduced exposure to changes in interest rates on its outward cash
flows so long as the counterparties to those interest rate derivative financial instruments meet their obligations to Waypoint REIT.
The table below analyses Waypoint REIT’s financial liabilities into relevant maturity groupings based on the remaining period as at the
reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows and
for borrowings the values include future interest payments. Waypoint REIT has no debt facilities due to expire in the next 12 months.
Less than
12 months
$ million
Between
1 and 2 years
$ million
Over 2 years
$ million
Total
contractual
cash flows
$ million
Carrying
amount
liabilities
$ million
3.7
6.2
1.7
27.1
39.3
14.8
92.8
–
–
0.1
–
39.3
14.8
54.2
–
–
0.3
–
1,032.7
77.4
1,110.4
Less than
12 months
$ million
Between
1 and 2 years
$ million
Over 2 years
$ million
3.4
5.9
2.2
30.4
18.8
15.1
75.8
–
–
0.2
–
18.8
12.7
31.7
–
–
0.4
–
1,029.9
48.9
1,079.2
3.7
6.2
2.1
27.1
1,111.3
107.0
1,257.4
Total
contractual
cash flows
$ million
3.4
5.9
2.8
30.4
1,067.5
76.7
1,186.7
3.7
6.2
2.1
27.1
889.8
33.3
962.2
Carrying
amount
liabilities
$ million
3.4
5.9
2.8
30.4
935.7
25.5
1,003.7
Waypoint REIT
31 December 2022
Trade and other payables
Interest payable
Provisions and other liabilities
Distribution payable
Borrowings
Derivative financial liabilities
Contractual cash flows
31 December 2021
Trade and other payables
Interest payable
Provisions and other liabilities
Distribution payable
Borrowings
Derivative financial liabilities
Contractual cash flows
60
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 Trust Group
31 December 2022
Trade and other payables
Interest payable
Distribution payable
Borrowings
Derivative financial liabilities
Contractual cash flows
31 December 2021
Trade and other payables
Interest payable
Distribution payable
Borrowings
Derivative financial liabilities
Contractual cash flows
(iii) Capital risk management
Less than
12 months
$ million
Between
1 and 2 years
$ million
Over 2 years
$ million
Total
contractual
cash flows
$ million
Carrying
amount
liabilities
$ million
5.7
6.2
27.1
39.3
14.8
93.1
–
–
–
39.3
14.8
54.1
–
–
–
1,032.7
77.4
1,110.1
Less than
12 months
$ million
Between
1 and 2 years
$ million
Over 2 years
$ million
7.3
5.9
30.4
18.8
15.1
77.5
–
–
–
18.8
12.7
31.5
–
–
–
1,029.9
48.9
1,078.8
5.7
6.2
27.1
1,111.3
107.0
1,257.3
Total
contractual
cash flows
$ million
7.3
5.9
30.4
1,067.5
76.7
1,187.8
5.7
6.2
27.1
889.8
33.3
962.1
Carrying
amount
liabilities
$ million
7.3
5.9
30.4
935.7
25.5
1,004.8
Waypoint REIT aims to invest to meet Waypoint REIT’s investment objectives while maintaining sufficient liquidity to meet its
commitments. Waypoint REIT regularly reviews performance, including asset allocation strategies, investment and operational
management strategies, investment opportunities and risk management.
In order to maintain an appropriate capital structure, Waypoint REIT may adjust the amount of distributions paid to securityholders,
return capital to securityholders, issue new securities, sell or buy assets or reduce or raise debt.
Waypoint REIT monitors capital through the analysis of a number of financial ratios, including the Debt Covenant Gearing ratio.
Total liabilities (excluding derivative financial liabilities)
Total assets (excluding derivative financial assets)
Debt Covenant Gearing ratio
31 Dec 2022
$ million
31 Dec 2021
$ million
963.0
2,964.1
32.5%
993.9
3,126.1
31.8%
61
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory 3. Capital management continued
3.(d) Financial risk management continued
(iv) Market risk
Interest rate risk
Waypoint REIT’s cash and cash equivalents, floating rate borrowings and derivative financial instruments expose it to a risk of change
in fair value of derivative financial instruments or future cash flows due to changes in interest rates. Waypoint REIT uses interest rate
derivative financial instruments to partially hedge its exposure to changes in interest rates on variable rate borrowings. By hedging
against changes in interest rates, Waypoint REIT has reduced exposure to changes in interest rates on its outward cash flows so long
as the counterparties to those interest rate derivative financial instruments meet their obligations to Waypoint REIT.
Waypoint REIT’s exposure to interest rate risk at reporting date, including its sensitivity to changes in market interest rates that were
reasonably possible, is as follows:
Financial assets
Cash and cash equivalents
Derivative financial instruments (notional principal amount)
– Interest rate derivative financial instruments
Financial liabilities
Interest-bearing liabilities – floating rate interest
Derivative financial instruments (notional principal amount)
– Cross currency swaps
Net exposure
Sensitivity of Distributable Earnings to movements in market interest rates:
Increased by 25 basis points
Decreased by 25 basis points
31 Dec 2022
$ million
31 Dec 2021
$ million
14.0
19.0
674.6
500.5
478.5
507.0
248.6
(38.5)
248.6
(236.1)
2022
$ million
2021
$ million
(0.1)
0.1
(1.2)
1.2
The interest rate range for sensitivity purposes has been determined using the assumption that interest rates changed by +/- 25 basis
points from balance date rates with all other variables held constant. In determining the impact on Distributable Earnings arising from
interest rate risk, Waypoint REIT has considered historic and expected future interest rate movements in order to determine a reasonably
possible shift in assumptions.
Foreign exchange rate risk
A portion of Waypoint REIT’s debt is denominated in US dollars and as a result, Waypoint REIT is exposed to a risk of change in fair
value or future cash flows due to changes in foreign exchange rates. Waypoint REIT economically hedges 100% of its exposure to
changes in foreign exchange rates by using cross currency derivative financial instruments. By hedging against changes in foreign
exchange rates, Waypoint REIT eliminates its exposure to changes in foreign exchange rates on its outward cash flows so long as
the counterparties to those cross currency derivative financial instruments meet their obligations to Waypoint REIT.
(v) Other material business risks
Waypoint REIT’s operations are also subject to the following other material business risks.
Investment property value
The value of Waypoint REIT’s portfolio of investment properties may be adversely affected by a number of factors, including factors
outside the control of Waypoint REIT, including the supply and demand for fuel and convenience retail properties, general property market
conditions, physical climate change-related considerations, the availability and cost of credit including sector-specific environmental,
sustainability and governance considerations, the ability to attract and implement economically viable rental arrangements, Viva Energy’s
financial condition deteriorating, occupiers not extending the term of leases, and general economic factors such as the level of inflation
and interest rates, which may adversely impact capitalisation rates.
A key long-term consideration in the valuation of fuel and convenience properties is an increasing uptake of vehicles fuelled by alternative
energy sources due to factors including changes in consumer behaviour, pro-emission reduction policies, reduced supply and/or higher
pricing of fossil fuels.
62
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 As changes in valuations are recorded on the statutory statements of comprehensive income, any decreases in value will have a negative
impact on the statutory statements of comprehensive income and balance sheet (including the net tangible assets per security) and
in turn the market price of Waypoint REIT’s securities may fall. The property portfolio is geographically diversified to mitigate the risk
of localised valuation impacts and the majority of assets are located in metropolitan areas which typically have higher underlying land
values and alternative use potential. Active asset management, including the disposal of assets with heightened vacancy or negative
rental reversion risk, and Waypoint REIT’s long-term diversification strategy, also, in part, can mitigate this risk.
Re-leasing and vacancy risk
Waypoint REIT’s property portfolio is 99.9% occupied with a weighted average lease expiry of 9.0 years. Only 12 leases (representing 1.2%
of income) expire before the end of 2025. The majority of the portfolio (355 of 419 contracted leases) is subject to multiple 10-year
options in favour of the tenant, with the rent from commencement of each option period to either be agreed between the parties or set
by independent market rent determination. However, there is a risk that tenants may not exercise their option, or that the commencing
rent will be lower than passing rent and/or market rent (if agreed between the parties).
Environmental and climate change risk
Waypoint REIT depends on its tenants to perform their obligations under various environmental arrangements in relation to properties
they lease. Waypoint REIT has an indemnity from Viva Energy in respect of certain liability for historical environmental contamination
across 355 assets acquired at the time of Waypoint REIT’s initial public offering. Waypoint REIT also carries out environmental due
diligence in relation to potential property acquisitions. If any property in the portfolio is contaminated by a fuel tenant or its invitee
during the term of the lease, the tenant under that lease must remediate it, at their cost to a standard consistent with operating the
site as a fuel and convenience property or similar commercial use. If the tenants were to fail to meet their obligations under these
arrangements (including due to their insolvency), Waypoint REIT may incur significant costs to rectify contamination on its properties
and also on other properties which may be consequently impacted.
Waypoint REIT is subject to a range of regulatory regimes (including environmental regulations) that cover the specific assets of
Waypoint REIT and how they are operated. These regulatory regimes are subject to ongoing review and change that may increase
the cost of compliance, reporting and maintenance of Waypoint REIT’s assets. There remains a risk that Waypoint REIT, as owner of
the properties in the portfolio, may face liability for breach by others of environmental laws and regulations.
Changes to existing regulatory regimes or the introduction of new regulatory regimes (including environmental or climate change-related
regulation) may also increase the cost of compliance, reporting and maintenance of Waypoint REIT’s assets.
Extreme weather and other climate change-related events have the potential to damage Waypoint REIT’s assets and disrupt the tenants’
operations. Although 90.6% of Waypoint REIT’s portfolio by value is subject to triple net leases where the tenant is responsible for
maintenance and insurance costs, such events may result in higher maintenance and insurance costs for Waypoint REIT’s assets that
are not subject to triple net leases. Such events may also affect the ability to re-lease Waypoint REIT’s investment properties in the
future and the rent levels for which they can be leased, thereby affecting future investment property valuations and rental cash flows.
Insurance premiums and/or deductibles may change or insurance may not be able to be obtained at all.
The precise nature of these risks is uncertain as it depends on complex factors such as policy and regulatory change, technology
development, market forces, and the links between these factors and climatic conditions. The impacts of physical and transition risks
on the valuation of Waypoint REIT’s property portfolio are further considered under Investment property valuation risk above.
AFSL compliance risk
VER Limited, a subsidiary of Waypoint REIT Limited, holds an Australian Financial Services Licence (AFSL) and acts as the responsible
entity for Waypoint REIT Trust. The AFSL requires, among other matters, minimum levels of net tangible assets, liquid assets, cash reserves
and liquidity, which may restrict Waypoint REIT in paying distributions that would breach these requirements.
The Directors review and monitor VER Limited’s balance sheet quarterly and the adequacy and ongoing training of responsible managers
annually to ensure compliance with its AFSL requirements.
Personnel risk
Loss of key personnel could potentially have an adverse impact on the management and the financial performance of Waypoint REIT
and in turn may affect the returns to securityholders. To mitigate this risk, processes and procedures are standardised and automated
to the extent practicable, remuneration structures include components payable on a deferred basis, and employees are subject to
market-standard notice periods to ensure that Waypoint REIT has sufficient time in which to identify and hire replacement employees.
Cyber security risk
Cyber-attacks are becoming increasingly sophisticated and a material data breach, ransom attack or data loss could have an adverse
financial or reputational impact. To help mitigate this risk, Waypoint REIT uses the services of third-party technology experts, provides
regular staff training and performs pre-implementation and annual reviews over key Software as a Service providers.
63
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory 3. Capital management continued
3.(d) Financial risk management continued
(vi) Fair value hierarchy
Classification of financial assets and financial liabilities
AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level of fair value hierarchy. The fair value hierarchy
has the following levels:
• quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
• inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices)
or indirectly (that is, derived from prices) (level 2); and
• inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis
of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is
assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant
adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input
to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.
The determination of what constitutes observable requires significant judgement by the Directors. The Directors consider observable
data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided
by independent sources that are actively involved in the relevant market.
The following table presents Waypoint REIT’s financial assets and liabilities (by class) measured at fair value according to the fair value
hierarchy at balance date on a recurring basis:
31 December 2022
Assets held for sale
Investment properties
Derivatives
Total
31 December 2021
Assets held for sale
Investment properties
Derivatives
Total
Level 1
$ million
Level 2
$ million
–
–
–
–
–
–
(9.3)
(9.3)
Level 1
$ million
Level 2
$ million
–
–
–
–
–
–
(23.3)
(23.3)
Level 3
$ million
–
Total
$ million
–
2,947.6
2,947.6
–
(9.3)
2,947.6
2,938.3
Level 3
$ million
33.9
3,069.0
–
Total
$ million
33.9
3,069.0
(23.3)
3,102.9
3,079.6
Waypoint REIT’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
There were no transfers between levels during the period.
Waypoint REIT did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 31 December 2022.
Valuation techniques used to derive level 2 and level 3 values
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined
using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as
little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument
is included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
The fair value of interest rate derivative financial instruments is calculated as the present value of the estimated future cash flows
based on observable yield curves, taking into account any material credit risk.
64
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 3.(e) Contributed equity
Opening balance at 1 January 2021
On-market buy-back (including transaction costs)1
Capital return and security consolidation
(including transaction costs)2
On-market buy-back (including transaction costs)3
Waypoint REIT
Trust Group
Number of
securities
‘000
785,022
(7,139)
Number of
units
‘000
785,022
(7,139)
$ million
1,634.8
(19.5)
(48,067)
(8,166)
(132.2)
(22.0)
(48,067)
(8,166)
$ million
1,627.1
(19.4)
(132.2)
(22.0)
Closing balance at 31 December 2021
721,650
1,461.1
721,650
1,453.5
Opening balance at 1 January 2022
On-market buy-back (including transaction costs)4
On-market buy-back (including transaction costs)5
Closing balance at 31 December 2022
721,650
(9,833)
(40,000)
671,817
1,461.1
721,650
1,453.5
(27.1)
(102.4)
(9,833)
(40,000)
(26.8)
(102.2)
1,331.6
671,817
1,324.5
1. On-market buy-back established on 30 July 2021 with securities bought back and cancelled between 16 August and 13 October 2021.
2. Security consolidation effective 10 November 2021 and capital return paid on 12 November 2021.
3. On-market buy-back established on 16 November 2021 with securities bought back and cancelled between 1 December and 10 December 2021.
4. On-market buy-back established on 16 November 2021 with securities bought back and cancelled between 1 February and 7 March 2022.
5. On-market buy-back established on 29 August 2022 with securities bought back and cancelled between 12 September and 21 November 2022.
3.(f) Treasury securities
Waypoint REIT and Trust Group
Opening balance
Securities acquired
Securities transferred to employees on vesting
Closing balance
2022
Number of
securities
2021
Number of
securities
2022
$ million
2021
$ million
–
175,979
(738)
175,241
–
–
–
–
–
0.4
–
0.4
–
–
–
–
Waypoint REIT established a new Equity Incentive Plan in 2021 under which participating employees are eligible to receive Waypoint REIT
stapled securities on a deferred settlement basis under the short-term incentive (STI) and general employee offer plans and performance
rights under the long-term incentive (LTI) plan.
Waypoint REIT has formed a trust, Waypoint REIT Equity Incentive Plan Trust, to administer the Equity Incentive Plan. This trust is
consolidated for reporting purposes as the trust is controlled by Waypoint REIT. Stapled securities held by the trust are disclosed
as Treasury Securities, and the acquisition value is deducted from equity (allocated between the Company and the Trust Group based
on their relative Net Assets).
During the year, 175,979 stapled securities were purchased on-market by the Waypoint REIT Equity Incentive Plan Trust at an average
price of $2.71 per security to satisfy obligations under the STI and general employee offer plans.
65
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory 3. Capital management continued
3.(g) Non-controlling interests
The financial statements reflect the consolidation of Waypoint REIT. For financial reporting purposes, one entity in the stapled group must
be identified as the acquirer or parent entity of the others. The Company has been identified as the acquirer of the Trust, resulting in the
Trust being disclosed as non-controlling interests.
Opening balance
Profit for the year
Effective portion of changes in fair value of cash flow hedges
On-market buy-back (including transaction costs)
Capital return and security consolidation (including transaction costs)
Acquisition of treasury securities
Distributions paid or provided for
Closing balance
3.(h) Reserves
Waypoint REIT’s reserves movements were:
Hedge reserve
Opening hedge reserve
Net change in fair value of cash flow hedges
Reclassified to profit and loss
Closing hedge reserve
Share-based payments reserve
Opening share-based payments reserve
Share-based payment expenses*
Closing share-based payments reserve
Total closing reserves
* Refer to Note 3.(i)(i) below for unrounded figures.
2022
$ million
2,120.7
133.0
11.7
(129.0)
–
(0.4)
(116.1)
2,019.9
2021
$ million
1,946.5
442.6
27.8
(41.4)
(132.2)
–
(122.6)
2,120.7
Waypoint REIT
Trust Group
2022
$ million
2021
$ million
2022
$ million
2021
$ million
(5.7)
11.3
0.4
6.0
–
0.6
0.6
6.6
(33.5)
21.9
5.9
(5.7)
–
–
–
(5.7)
(5.7)
11.3
0.4
6.0
–
–
–
6.0
(33.5)
21.9
5.9
(5.7)
–
–
–
(5.7)
66
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 3.(i) Security-based benefits expense
Waypoint REIT established an Equity Incentive Plan in 2021 under which participating employees are eligible to receive Waypoint REIT
stapled securities on a deferred settlement basis under the short-term incentive (STI) and general employee offer plans and performance
rights under the long-term incentive (LTI) plan.
(i) Share-based payment expense
Share-based payment expenses recognised during the year as part of management and administration expenses were as follows:
Deferred stapled securities1
General employee offer2
Performance rights
Total
Waypoint REIT
Trust Group
31 Dec 2022
$
31 Dec 2021
$
31 Dec 2022
$
31 Dec 2021
$
273,948
189,426
273,948
189,426
8,016
40,976
5,300
48,679
8,016
40,976
5,300
48,679
322,940
243,405
322,940
243,405
1. Granted under Waypoint REIT’s short-term incentive scheme, subject to ongoing service conditions.
2. Cost of stapled securities bought on-market.
(ii) Deferred stapled securities – reconciliation
Reconciliation of the number of deferred stapled securities outstanding during the year is as follows:
Waypoint REIT and Trust Group
Deferred stapled securities
Opening balance
Granted during the year
Forfeited and lapsed during the year
Closing balance
(iii) General employee offer securities – reconciliation
Reconciliation of the number of general employee offer securities outstanding during the year is as follows:
Waypoint REIT and Trust Group
General employee offer securities
Opening balance
Granted during the year
Transferred to employees on vesting
Forfeited and lapsed during the year
Closing balance
2022
Number
2021
Number
–
173,027
(36,919)
136,108
–
–
–
–
2022
Number
2021
Number
1,975
2,952
(1,133)
–
3,794
–
1,975
–
–
1,975
67
Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory 3. Capital management continued
3.(i) Security-based benefits expense continued
(iv) Performance rights – reconciliation
Reconciliation of the number of performance rights outstanding during the year is as follows:
Waypoint REIT and Trust Group
Performance rights
Opening balance
Granted during the year
Forfeited and lapsed during the year
Closing balance
2022
Number
2021
Number
155,916
287,806
(42,139)
401,583
–
155,916
–
155,916
The weighted average remaining contractual life of performance rights outstanding as at 31 December 2022 is 1.9 years.
(v) Performance rights – valuation inputs
The Monte Carlo method is utilised for valuation and accounting purposes. The model inputs to assess the fair value of the performance
rights granted during 2022 are as follows:
Grant date1
Stapled security price at grant date
Fair value of right
Expected volatility2
Dividend yield
Risk-free interest rate
CEO
Other
executives
Other
executives
12 May 2022
11 May 2022 4 October 2022
$2.42
$1.55
20%
6.4%
2.84%
$2.45
$1.60
20%
6.4%
2.88%
$2.49
$1.91
20%
6.4%
3.16%
1. The grant date is determined in accordance with AASB 2 Share-based Payment. Performance rights have a nil exercise price, vest on or around 1 March
2025 if vesting conditions are met or otherwise expire on this date and are subject to DEPS and TSR conditions over a three-year performance period
commencing on 1 January 2022.
2. Expected volatility takes into account historical market price volatility.
Accounting policy – Share-based compensation expense
Deferred securities (STI plan)
Eligible employees receive a portion of their STI in deferred securities which are subject to ongoing service conditions between one
and two years. The expense is recognised over the vesting period, commencing on the first day of the service period and ending
on or around 1 March in the year following the end of the service period.
Deferred securities (general employee offer)
Eligible employees receive up to $1,000 in stapled securities which vest immediately on issue but are subject to a trade lock until the
earlier of the completion of three years’ service or termination. The expense is recognised in the period securities are acquired on-market.
Performance rights (LTI plan)
For market-based performance rights, the fair value at grant date is independently valued using a Monte Carlo simulation pricing model
that takes into account the exercise price, the term of the rights, impact of dilution, stapled security price at grant date, expected price
volatility of the underlying stapled security, expected dividend yield and the risk-free interest rate for the term of the rights and market
vesting conditions, but excludes the impact of any non-market vesting conditions (i.e. Distributable Earnings growth targets). Non-market
vesting conditions are included in assumptions about the number of rights that are expected to vest. For non-market-based performance
rights, the fair value at grant date is independently valued using the binominal tree methodology. At each reporting date, Waypoint REIT
revises its estimate of the number of rights that are expected to vest. The expense is recognised over the vesting period commencing
on the first day of the service period and ending on or around 1 March in the year following the end of the service period, with the annual
expense recognised taking into account the most recent estimate. Upon the vesting of stapled securities, the balance of the stapled
security-based benefits reserve relating to those stapled securities is transferred to contributed equity, net of any directly attributable
transaction costs.
68
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 4. Additional information
4.(a) Related party information
(i) Parent entity
The Company has been assessed as the parent entity of Waypoint REIT; the securityholders’ interests in the Trust are included in equity
as non-controlling interests relating to the stapled entity.
(ii) Subsidiaries
Interests in subsidiaries are set out in Note 4.(c).
(iii) Key Management Personnel compensation
Below are the aggregate amounts paid or payable to Key Management Personnel (including Non-Executive Directors):
Short term benefits
Post-retirement benefits
Other long-term benefits
Share-based payments
Waypoint REIT
Trust Group
2022
$
2021
$
2022
$
2021
$
2,214,919
2,221,793
2,214,919
2,221,793
167,991
(509)
264,540
112,837
32,860
211,061
167,991
(509)
264,540
112,837
32,860
211,061
2,646,941
2,578,551
2,646,941
2,578,551
There were no loans made, guaranteed or secured, directly or indirectly, by Waypoint REIT to KMP or their related parties during the year.
There were no other transactions between Waypoint REIT and any KMP or their related parties during the year.
(iv) Transactions with related parties
Management services are provided to VER Limited by Waypoint Operations Pty Limited, a subsidiary of Waypoint REIT Limited,
on a cost recovery basis in accordance with a management agreement dated 30 September 2020. Responsible Entity fees are charged
in accordance with VER Limited’s Constitution.
The following transactions occurred with related parties:
Payment of Responsible Entity fees and costs reimbursement
to VER Limited
Reimbursement of costs to Waypoint REIT Limited
Reimbursement of costs to Waypoint Operations Pty Limited
Disposal management fee paid to Waypoint REIT Limited
Amounts receivable:
Receivable from Waypoint REIT Limited
Receivable from VER Custodian Pty Limited
Amounts payable:
Payable to Waypoint Operations Pty Limited
Payable to VER Limited
Waypoint REIT
Trust Group
2022
$ ’000
2021
$ ’000
2022
$ ’000
2021
$ ’000
–
–
–
–
–
–
–
–
304
4,152
4,395
759
321
4,040
4,439
746
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
–
–
–
–
–
–
–
–
4,813
1,040
1,580
114
8,397
1,450
1,704
133
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Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory 4. Additional information continued
4.(b) Parent entity financial information
The individual financial statements for the parent entity of the Waypoint REIT, Waypoint REIT Limited, and the parent entity of the
Trust Group, Waypoint REIT Trust, are below:
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Contributed equity
Retained profits/(Accumulated losses)
Total equity
Profit/(loss) for the year after tax
Total comprehensive income/(loss) for the year
Waypoint REIT Ltd
Waypoint REIT Trust
2022
$ million
2021
$ million
2022
$ million
2021
$ million
3.4
11.1
14.5
6.5
6.5
7.1
0.9
8.0
0.6
0.6
7.9
11.1
19.0
11.1
11.1
7.6
0.3
7.9
1.0
1.0
531.6
1,650.2
2,181.8
729.3
729.3
1,324.0
128.5
1,452.5
120.5
120.5
214.6
1,650.2
1,864.8
546.7
546.7
1,453.5
(135.4)
1,318.1
(8.8)
(8.8)
The parent entity did not have any guarantees, contingent liabilities or commitments as at 31 December 2022 or 31 December 2021.
4.(c) Investments in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following material subsidiaries of the Company
and the Trust:
Name
Controlled by the Company
VER Limited
VER Custodian Pty Limited
Waypoint Operations Pty Limited
Waypoint REIT Equity Incentive Plan Trust
Controlled by the Trust
VER Trust
VER Finco Pty Limited
Date of establishment
16 December 2015
27 May 2016
5 May 2020
1 March 2022
10 July 2016
10 June 2016
All companies and trusts are incorporated or established in Australia.
2022
%
2021
%
100
100
100
100
100
100
100
100
100
–
100
100
70
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 4.(d) Remuneration of auditors
During the period the following fees were paid or payable for services provided by the auditor of the parent entity and its related practices.
PricewaterhouseCoopers Australia
Audit and review of financial statements
Group
Trust
Total audit and review of financial reports
Other statutory assurance services
Other assurance services
Total audit and assurance services
Other services
Tax compliance services
Tax advisory services
Regulatory administration services
Total other non-audit services
Total remuneration of auditors
4.(e) Subsequent events
2022
$
2021
$
158,655
18,187
176,842
20,975
32,350
134,881
22,275
157,156
20,975
24,930
230,167
203,061
86,460
1,000
14,929
78,780
7,140
77,181
102,389
163,101
332,556
366,162
No matter or circumstance has arisen since 31 December 2022 that has significantly affected, or may significantly affect:
• the operations of Waypoint REIT in future financial years;
• the results of those operations in future financial years; or
• the state of affairs of Waypoint REIT in future financial years.
4.(f) Summary of significant accounting policies
Significant accounting policies adopted in the preparation of these consolidated financial statements to the extent they have not
already been disclosed in the other notes are listed below. These policies have been consistently applied to all the years presented,
unless otherwise stated.
(i) Basis of preparation
These general-purpose financial statements have been prepared in accordance with the requirements of the Corporations Act 2001,
Australian Accounting Standards (AASB) and interpretations issued by the Australian Accounting Standards Board and International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. Waypoint REIT and Waypoint REIT
Trust Group are for-profit entities for the purpose of preparing the financial statements.
The financial report has been prepared on an accruals and historical cost basis except for investment properties, derivative financial
instruments and share-based payments, which are measured at fair value. Cost is based on the fair value of consideration given in
exchange for assets.
The consolidated financial statements are prepared and presented in Australian dollars (the presentation currency).
Unless otherwise stated, the accounting policies adopted in the preparation of the financial report are consistent with those of the
previous financial year.
(ii) Rounding of amounts
Waypoint REIT is an entity of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts
in the financial report. Amounts in the financial report have been rounded to the nearest hundred thousand dollars in accordance
with that instrument, unless otherwise indicated.
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4.(f) Summary of significant accounting policies continued
(iii) Comparative information
Where necessary, comparative information has been adjusted to conform to changes in presentation in the current period.
(iv) Net current asset deficiency position
At 31 December 2022, Waypoint REIT had a net current asset deficiency of $22.4 million and the Trust Group had a net current asset
deficiency of $31.1 million. Waypoint REIT uses cash at bank to pay for distributions and expenses (including property purchases),
drawing down on revolving debt facilities when required. Revolving debt facilities are then repaid when there is excess cash available.
Waypoint REIT has $121.5 million of unused debt facilities at 31 December 2022, which can be drawn upon to fund Waypoint REIT’s
cash flow requirements provided that Waypoint REIT meets its debt covenants and further borrowing will not cause gearing to exceed 45%.
After taking into account all available information, the Directors have concluded that there are reasonable grounds to believe:
• Waypoint REIT and the Trust Group will be able to pay their debts as and when they fall due; and
• the basis of preparation of the financial report on a going concern basis is appropriate.
(v) Principles of consolidation
Stapled entities
Waypoint REIT is a stapled group consisting of the Company and the Trust and their wholly owned entities. The Trust indirectly owns
the investment property portfolio through its 100% ownership of the trusts which own the investment properties and receive rent under
operating leases. The Company directly owns all of the shares in the Responsible Entity. Each stapled security consists of one share
in the Company and one unit in the Trust. The shares and the units were stapled at allotment in accordance with the constitutions of
the Company and the Trust and the Stapling Deed and trade together on the ASX. The securities in Waypoint REIT cannot be traded
separately and can only be traded as a stapled security.
As permitted by Class Order 13/1050, issued by ASIC, this financial report is a combined financial report that presents the financial
statements and accompanying notes of both Waypoint REIT and the Trust Group as at and for the year ended 31 December 2022.
AASB 3 Business Combinations requires one of the stapled entities in a stapling structure to be identified as the parent entity for the
purpose of preparing consolidated financial reports. In accordance with this requirement, the Company has been identified as the parent
entity in relation to the stapling with the Trust under Waypoint REIT.
The consolidated financial statements of Waypoint REIT incorporate the assets and liabilities of the entities controlled by the Company
during the period, including those deemed to be controlled by the Trust, by identifying it as the parent of the Waypoint REIT, and the results
of those controlled entities for the period then ended. The effect of all transactions between entities in Waypoint REIT is eliminated
in full.
Non-controlling interests in the results and equity are shown separately in the consolidated statement of comprehensive income,
consolidated balance sheet and consolidated statement of changes in equity respectively. Non-controlling interests are those interests
in the Trust which are not held directly or indirectly by the Company.
Subsidiaries
Subsidiaries are all entities (including trusts) over which Waypoint REIT has control. Waypoint REIT controls an entity when Waypoint REIT
is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to Waypoint REIT.
They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by Waypoint REIT.
Inter-entity transactions, balances and unrealised gains on transactions between Waypoint REIT entities are eliminated. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the policies adopted by Waypoint REIT.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive
income, consolidated balance sheet and consolidated statement of changes in equity respectively.
(vi) Presentation of members’ interests in the Trust
As the Company has been assessed as the parent entity of Waypoint REIT, the securityholders’ interests in the Trust are included in
equity as non-controlling interests relating to the stapled entity. Securityholders’ interests in the Trust are not presented as attributable
to owners of the parent, reflecting the fact that they are not owned by the Company, but by the securityholders of the stapled group.
72
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 (vii) Revenue
Interest income is recognised as it accrues using the effective interest rate method. Interest income is included in finance income
in the consolidated statement of profit or loss.
All income is stated net of goods and services tax.
(viii) Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave that are expected to be settled wholly within 12 months
after the end of the period in which the employees render the related service, are recognised in respect of employees’ service up to
the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are
presented as current employee benefit obligations in the balance sheet.
Other long-term employee benefit obligations
The liabilities for long service leave that are not expected to be settled wholly within 12 months after the end of the period in which
the employees render the related service are recognised as the expected future payments to be made in respect of services provided
by employees up to the end of the reporting period. Consideration is given to expected future wages and salary levels, experience of
employee departures, periods of service and market interest rates.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer
settlement for at least 12 months after the reporting period, regardless of when the actual settlement is expected to occur.
(ix) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, unless the GST incurred is not recoverable from the taxation
authority. In this case, it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of GST receivable or payable. The net amount of GST recoverable from, or payable to,
the taxation authority is included with other current assets and trade and other payables in the consolidated balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which
are recoverable from, or payable to, the taxation authority are presented as operating cash flows.
(x) Leases
Waypoint REIT leases office premises. Waypoint REIT assesses at contract inception whether a contract is, or contains, a lease. This is,
if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Waypoint REIT
applies a single recognition and measurement approach for all leases. Waypoint REIT recognises lease liabilities to make lease payments
and right of use assets representing the right to use the underlying assets.
Right of use assets
Waypoint REIT recognises right of use assets at the commencement date of the lease (that is, the date the underlying asset is available
for use). Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right of use assets includes the amount of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before the commencement date less any lease incentives received. Right of use assets are
depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
Lease liabilities
At the commencement date of the lease, Waypoint REIT recognises lease liabilities measured at the present value of lease payments to
be made over the lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include
the exercise price of a purchase option reasonably certain to be exercised by Waypoint REIT and payments of penalties for terminating
the lease, if the lease term reflects Waypoint REIT exercising the option to terminate.
In calculating the present value of lease payments, Waypoint REIT uses its incremental borrowing rate at the lease commencement
date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount
of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (for example,
changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the
assessment of an option to purchase the underlying asset.
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Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory 4. Additional information continued
4.(f) Summary of significant accounting policies continued
(xi) Financial instruments
Classification
Waypoint REIT’s investments are classified as at fair value through profit or loss. They comprise:
• Financial instruments held for trading – Derivative financial instruments such as interest rate swaps are included under this classification.
• Financial instruments designated at fair value through profit or loss upon initial recognition – These include financial assets that
are not held for trading purposes and which may be sold.
Financial assets designated at fair value through profit or loss at inception are those that are managed and their performance evaluated
on a fair value basis in accordance with Waypoint REIT’s documented investment strategy. Waypoint REIT’s policy is for the Responsible
Entity to evaluate the information about these financial instruments on a fair value basis together with other related financial information.
Recognition/derecognition
Financial assets and financial liabilities are recognised on the date Waypoint REIT becomes party to the contractual agreement
(trade date) and it recognises changes in fair value of the financial assets or financial liabilities from this date.
Investments are derecognised when the right to receive cash flows from the investments has expired or Waypoint REIT has transferred
substantially all risks and rewards of ownership.
Measurement
Financial assets and liabilities held at fair value through profit or loss
At initial recognition, financial assets are recognised at fair value. Transaction costs of financial assets carried at fair value through
profit or loss are expensed in profit or loss.
The fair value of financial assets and liabilities traded in active markets is subsequently based on their quoted market prices at the
end of the reporting period without any deduction for estimated future selling costs. The quoted market price used for financial assets
held by Waypoint REIT is the current bid price and the quoted market price for financial liabilities is the current asking price.
The fair value of financial assets and liabilities that are not traded in an active market are determined using valuation techniques.
Accordingly, there may be a difference between the fair value at initial recognition and amounts determined using a valuation technique.
If such a difference exists, Waypoint REIT recognises the difference in profit or loss to reflect a change in factors, including time that
market participants would consider in setting a price.
Further detail on how the fair values of financial instruments are determined is disclosed in Note 3.(c).
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the consolidated balance sheet when there is a legally
enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle
the liability simultaneously.
(xii) Provisions
A provision is recognised when Waypoint REIT has a legal or constructive obligation as a result of past events, it is probable that an
outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at the
present value of Waypoint REIT’s best estimate of the expenditure required to settle the present obligation at the end of the reporting
period. The discount rate used to determine the present value reflects current market assessments of the time value of money and
the risks specific to the liability.
(xiii) New accounting and sustainability standards and interpretations not yet adopted
In March 2022, the International Sustainability Standards Board (ISSB) released their first two exposure drafts.
When the exposure drafts are issued as standards, these will be available for voluntary adoption and will not become mandatory until
aligned standards are adopted in Australia. Waypoint REIT will assess the potential impact of these new standards on the consolidated
financial statements once they have been issued by the ISSB and will continue to monitor developments in Australia.
There are no issued standards that are not yet effective and that are expected to have a material impact on Waypoint REIT in the current
or future reporting periods and on foreseeable future transactions.
74
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDWaypoint REIT Limited – Annual Report 2022 DIRECTORS’ DECLARATION
In the Directors’ opinion:
(a)
the financial statements and notes set out on pages 41 to 74 are in accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
giving a true and fair view of Waypoint REIT’s and Waypoint REIT Trust Group’s financial positions at 31 December 2022
and of their performance for the year ended on that date; and
(b)
there are reasonable grounds to believe that Waypoint REIT and Waypoint REIT Trust Group will be able to pay their debts
as and when they become due and payable.
Note 4(f)(i) to the financial statements confirms that the financial statements also comply with the International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The Directors have been given declarations by the Chief Executive Officer and the Chief Financial Officer as required by section 295A
of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Laurence Brindle
Chair
27 February 2023
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INDEPENDENT AUDITOR’S REPORT
Independent auditor’s report
To the stapled securityholders of Waypoint REIT and the unitholders of Waypoint REIT Trust
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial reports of Waypoint REIT Limited and its controlled entities and Waypoint
REIT Trust and its controlled entities (together Waypoint REIT) and Waypoint REIT Trust and its
controlled entities (together the “Trust Group” or the “Trust”) are in accordance with the Corporations
Act 2001, including:
(a)
giving a true and fair view of the financial positions of Waypoint REIT and the Trust as at 31
December 2022 and of their financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The financial reports of Waypoint REIT and the Trust (the financial report) comprise:
•
•
•
•
•
•
the consolidated balance sheets as at 31 December 2022
the consolidated statements of comprehensive income for the year then ended
the consolidated statements of changes in equity for the year then ended
the consolidated statements of cash flows for the year then ended
the notes to the financial statements, which include significant accounting policies and other
explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of Waypoint REIT and the Trust in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) (the Code) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation.
76
Waypoint REIT Limited – Annual Report 2022 77
Our audit approach An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of Waypoint REIT and the Trust, its accounting processes and controls and the industry in which they operate. Group Materiality •For the purpose of our audit of Waypoint REIT and the Trust we used overall materiality of $5.8 million and$5.7 million respectively, which represents approximately 5% of Distributable Earnings. The metric is definedin note 1 of the financial report.•We applied this threshold, together with qualitative considerations, to determine the scope of our audit andthe nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on thefinancial report as a whole.•We chose Distributable Earnings because, in our view, it is the benchmark against which the performance ofWaypoint REIT and the Trust are most commonly measured in the industry.•We chose a 5% threshold based on our professional judgement, noting that it is within the common rangerelative to profit-based benchmarks.Group Audit Scope •Our audit focused on where Waypoint REIT and the Trust made subjective judgements; for example,significant accounting estimates involving assumptions and inherently uncertain future events.•The audit team consisted of individuals with the appropriate skills and competencies needed for the audit,which included industry expertise in real estate and treasury professionals.Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period and were determined separately for Waypoint REIT and the Trust. Relevant amounts listed for each part of the stapled group represent balances as Waypoint REIT Limited – Annual Report 2022Overview and HighlightsChair and MD/CEO ReportBusiness ReviewSustainabilityFinancial ReportInvestor InformationCorporate Directory INDEPENDENT AUDITOR’S REPORT CONTINUED
they are presented in the financial report and should not be aggregated. The key audit matters were
addressed in the context of our audit of the financial report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters. Further, any commentary on the
outcomes of a particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit matter
Valuation of Investment Properties
(Refer to note 2(a))
Waypoint REIT – $2,947.6 million
Trust Group – $2,947.6 million
Waypoint REIT and the Trust’s investment property
portfolio comprised fuel and convenience retail
properties (“Investment Properties”) at 31 December
2022.
Investment Properties were valued at fair value as at
balance sheet date primarily using a combination of the
income capitalisation method and the direct
comparison methods.
Factors such as current market conditions, existing
lease contracts, and comparable sales impact fair
values. Amongst others, the following inputs and
assumptions were key in establishing fair value:
● annual market rent
● capitalisation rates
● lease terms
At each balance sheet date the directors determine the
fair value of the Investment Properties in accordance
with Waypoint REIT’s valuation policy as described in
note 2(a).
This was a key audit matter because of the:
● relative size of the Investment Property portfolio to
net assets and related valuation movements, and
● the inherent subjectivity of the significant
assumptions that underpin the valuations.
To assess the valuation of Investment Properties we
performed the following procedures, amongst others:
• We developed an understanding of Waypoint
REIT and the Trust’s processes and controls for
determining the valuation of Investment Property;
• We assessed the scope, competence and
objectivity of the independent valuation expert
engaged by Waypoint REIT and the Trust to
provide independent valuations at reporting date;
• We met with the independent valuation expert
used by Waypoint REIT and the Trust to develop
an understanding of their processes, judgements
and observations;
• We compared the valuation methodology
adopted by Waypoint REIT and the Trust with
commonly accepted valuation approaches used
in the real estate industry for investment
properties;
• We agreed the rental income used in a sample of
Investment Property valuations to relevant lease
agreements;
• We assessed the appropriateness of significant
assumptions, including capitalisation rates, for a
risk-based sample of Investment Properties with
reference to market data and comparable
transactions, where possible;
• We tested the mathematical accuracy of a
sample of the Investment Property valuations;
• We agreed the fair value of each Investment
Property to the independent valuation or
Directors valuation, as applicable;
78
Waypoint REIT Limited – Annual Report 2022 Key audit matter
How our audit addressed the key audit matter
• We assessed the reasonableness of the
disclosures against the requirements of
Australian Accounting Standards.
Other information
The directors of Waypoint REIT Limited and VER Limited, the Responsible Entity of Waypoint REIT
Trust (collectively referred to as the “directors”) are responsible for the other information. The other
information comprises the information included in the annual report for the year ended 31 December
2022, but does not include the financial report and our auditor’s report thereon. Prior to the date of this
auditor's report, the other information we obtained included the Directors' Report. We expect the
remaining other information to be made available to us after the date of this auditor's report.
Our opinion on the financial report does not cover the other information and we do not and will not
express an opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the directors and use our
professional judgement to determine the appropriate action to take.
Responsibilities of the directors for the financial report
The directors are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of Waypoint
REIT and the Trust to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
the Waypoint REIT and the Trust or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
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INDEPENDENT AUDITOR’S REPORT CONTINUED
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 25 to 38 of the directors’ report for the
year ended 31 December 2022.
In our opinion, the remuneration report of Waypoint REIT for the year ended 31 December 2022
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors are responsible for the preparation and presentation of the remuneration report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion
on the remuneration report, based on our audit conducted in accordance with Australian Auditing
Standards.
PricewaterhouseCoopers
JDP Wills
Partner
Sydney
27 February 2023
80
Waypoint REIT Limited – Annual Report 2022 ADDITIONAL INFORMATION
The information below is current as at 15 March 2023.
There were 671,816,547 fully paid securities on issue, held by 13,662 securityholders. There were 404 holders holding less than
a marketable parcel based on a closing price of $2.58.
The voting rights attaching to the stapled securities, set out in section 253C of the Corporations Act 2001, are:
• in the case of a resolution of Waypoint REIT Limited, each shareholder has one vote for each share held in the Company; and
• in the case of a resolution of the Waypoint REIT Trust, each unitholder has one vote for each $1.00 of the value of the units
held in the Trust.
Top 20 securityholders
The top 20 largest registered securityholders as at 15 March 2023 are shown below.
Rank Holder name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
IOOF INVESTMENT SERVICES LIMITED
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
NETWEALTH INVESTMENTS LIMITED
BNP PARIBAS NOMS(NZ) LTD
WARBONT NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
IOOF INVESTMENT SERVICES LIMITED
NETWEALTH INVESTMENTS LIMITED
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
NULIS NOMINEES (AUSTRALIA) LIMITED
Number of
securities
179,685,762
137,239,156
75,497,731
50,979,894
18,244,920
17,797,325
6,680,501
5,528,533
4,975,119
4,041,061
3,826,182
2,852,327
1,950,604
1,610,762
1,490,325
1,332,623
1,252,660
1,135,670
974,507
901,472
% of issued
capital
26.75
20.43
11.24
7.59
2.72
2.65
0.99
0.82
0.74
0.60
0.57
0.42
0.29
0.24
0.22
0.20
0.19
0.17
0.15
0.13
Total
517,997,134
Balance of register
153,819,413
Grand total
671,816,547
77.11
22.89
100.00
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Waypoint REIT Limited – Annual Report 2022
ADDITIONAL INFORMATION CONTINUED
Distribution of securityholdings as at 15 March 2023
Range
1 to 1,000
1001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Unmarketable parcels
Number of holders
Number of securities
% of total
1,539
4,384
3,376
4,253
110
13,662
404
719,204
13,050,098
25,345,250
95,379,333
537,322,662
671,816,547
21,007
0.11
1.94
3.77
14.20
79.98
100.00
Substantial securityholders as at 15 March 2023
Date of notice received
Name of substantial securityholder
Number of securities1
31 Dec 2020
30 Nov 2021
20 Aug 2021
23 Aug 2021
30 Nov 2022
The Vanguard Group, Inc.
BlackRock Group
First Sentier Investors Holdings Pty Limited
Mitsubishi UFJ Financial Group, Inc.
State Street Corporation
81,069,400
54,638,681
39,265,257
39,265,257
40,972,605
1. The number of securities quoted is based on the number of securities disclosed in the substantial shareholder notices lodged by each holder.
Effective 11 November 2021 Waypoint REIT has undertaken a security consolidation where each security held on 10 November 2021 was
consolidated into 0.9382 securities (with any resulting fraction of an ordinary security rounded up to the next whole number of securities).
Securities purchased on-market
Waypoint REIT purchased securities on-market for the purposes of our Employee Security Plan and for the purposes of our
incentive plans.
During FY22, 175,979 securities were purchased on-market at an average price of $2.71 per security.
On-market buy-back
During FY22, Waypoint REIT conducted on-market buy-backs which completed on 21 November 2022.
The Company bought back 49.8 million securities under these programs.
Unquoted equity securities
As at 15 March 2023, Waypoint REIT has 401,583 performance rights on issue, held by four employees.
82
Waypoint REIT Limited – Annual Report 2022 DISCLOSURES
On 1 August 2016, Waypoint REIT was granted certain waivers from the Australian Securities Exchange (ASX) with regard to ASX
Listing Rule 10.1. Pursuant to those waivers, the following disclosures are outlined below.
Summary of Certain Arrangements between Waypoint REIT and Viva Energy Australia
Waypoint REIT and Viva Energy Australia have entered into a Master Agreement to govern, among other things, certain rights and
obligations with respect to the properties in the Initial Portfolio and any additional service station sites that become the subject
of a lease between the parties in the future.
Waypoint REIT’s
first right of refusal
Waypoint REIT has a first right to acquire any service station site that Viva Energy Australia offers for sale,
subject to the rights of Coles Express if that site is the subject of a Site Agreement1.
Viva Energy
Australia’s first
right of refusal
Viva Energy Australia has a first right to acquire any property that is subject of a lease or which is used as a
retail service station and which Waypoint REIT offers for sale, subject to the rights of Coles Express if that site
is the subject of a Site Agreement1.
Viva Energy
Australia’s
call option
• Viva Energy Australia has a call option to acquire all or any part of the Initial Portfolio upon certain insolvency
trigger events.
• If a call option trigger event occurs and the call option is exercised by Viva Energy Australia in respect of a
site, Viva Energy Australia may acquire that site for a price determined via an independent valuation process,
subject to the rights of Coles Express if that site is the subject of a Site Agreement1.
Right of first
refusal on new
lease properties
If Waypoint REIT proposes to grant a new lease in respect of a site which is not (and has not been) the subject
of a lease to Viva Energy Australia, Waypoint REIT must first offer to lease that site to Viva Energy Australia
before entering into a new lease with another party.
Right of first
refusal under a
third party lease
From 1 October 2020 to 1 January 2030, if Viva Energy Australia does not exercise its Third Party Lease right
of first refusal in its own right, then it must offer a right of first refusal to Waypoint REIT.
As at the date of this Report, the Master Agreement is still in place and the rights of first refusals as described above still operate.
In 2022 no new leases were entered into between Viva Energy Australia and Waypoint REIT.
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1. Coles Express has a right of first refusal in respect of any disposal of any site that is the subject of a Site Agreement, but that right is unlikely to
apply to any transfer between Viva Energy Australia and Waypoint REIT. Please refer to PDS Section 13.2 for a summary of the Master Agreement
and PDS Section 13.10 for a summary of the Site Agreement.
Waypoint REIT Limited – Annual Report 2022
GLOSSARY
Alliance
AMTN
ASX
bps
CAGR
Arrangement between Coles Express and VEA in respect of the operation of a national network of
retail fuel and convenience sites
Australian Medium-Term Notes
Australian Securities Exchange
Basis points
Compound annual growth rate
Coles Express
Coles Express, a division of Coles Group Limited (ABN 11 004 089 936)
COVID-19
CPI
cps
DEPS
Infectious disease caused by a newly discovered coronavirus in 2019 – COVID and COVID-19
describe the global pandemic as a result of the virus
Consumer Price Index
Cents per security
Distributable Earnings per security. Calculated as Distributable Earnings divided by the weighted
average number of ordinary securities on issue during the period
Distributable Earnings
This is a non-IFRS measure being statutory net profit adjusted to remove transaction costs
and non-cash items, including straight-lining of rental income, amortisation of debt and
establishment fees and any fair value adjustments to investment properties or derivatives
Distributable EPS
Distributable Earnings Per Security – calculated as Distributable Earnings divided by the
weighted average number of ordinary securities on issue during the period
Employee Security Plan
An equity incentive plan under which participating employees are eligible to receive Waypoint REIT
stapled securities on a deferred settlement basis under the short-term incentive (STI) and general
employee offer plans and performance rights under the long-term incentive (LTI) Plan
EPS
FY
Gearing
Earnings per security
Waypoint REIT financial year, being year end 31 December
Net debt (excluding foreign exchange and fair value hedge adjustments) to total assets
(excluding cash)
Interest Cover Ratio
Earnings before interest, tax, depreciation and amortisation (excluding any asset revaluations,
mark-to-market movements and transaction costs) divided by net interest expense
IPO
Liquidity
LTI plan
Initial Public Offering
Measure of funding available to Waypoint in the short term. Includes unrestricted cash, undrawn
debt and asset sale deposit receivable net of distribution provision
Long Term Incentive Plan
M&A expenses
Management and administration expenses
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Waypoint REIT Limited – Annual Report 2022 Master Agreement
The agreement between Viva Energy Australia and Viva Energy REIT, as summarised
in Section 13.2 of the PDS
MER
Management expense ratio is calculated as the ratio of M&A expenses (excludes net property
expenses) over average total assets (excluding derivative financial assets)
Metropolitan
Includes capital cities and other metro
Moody’s
Moody’s Investors Service
Net Interest Expense
Finance costs less finance income
NNN
NTA
Popn
Review Event
S&P
S&P CSA
Site Agreement
See triple net lease
Net tangible assets
Population of Australia
The review event triggered under Waypoint REIT’s debt facilities as a result of Viva Energy
Australia’s sell down of its securityholding in Waypoint REIT in February 2020. As a result,
existing lenders at the time had a period of 60 days to consult as to the continuation
of the existing facilities
Standard & Poor’s Financial Services LLC
S&P Global Corporate Sustainability Assessment
The leases, licences and options between Viva Energy Australia (as lessor, licensor and grantor
respectively) and Coles Express (as lessee, licensee and grantee respectively) relating to sites
that Coles Express occupies. This extends to Coles Express having certain rights to acquire
the properties in the Portfolio, as described in Section 13.10 of the PDS
TCFD
Task Force on Climate-related Financial Disclosures
Triple net lease (NNN)
A lease where the tenant is responsible for all outgoings relating to the property being leased
in addition to the rent fee applied under the lease. This includes all repairs and maintenance
(including structural repairs and maintenance), rates, taxes, insurance and other direct
property costs
USPP
United States Private Placement
Viva Energy Australia
Viva Energy Australia Pty Ltd (ABN 46 004 610 459) (a wholly owned subsidiary of Viva Energy
Group Limited ABN 74 626 661 032)
Waypoint REIT or WPR
Waypoint REIT is a stapled entity comprising one share in Waypoint REIT Limited
(ABN 35 612 986 517) and one unit in the Waypoint REIT Trust (ARSN 613 146 464)
WALE
WARR
Weighted average lease expiry, weighted by rental income
Weighted average rent review, weighted by rental income
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Waypoint REIT Limited – Annual Report 2022
CORPORATE DIRECTORY
Auditor
PricewaterhouseCoopers
One International Towers Watermans Quay
Barangaroo NSW 2000 Australia
Security registry
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235 Australia
Telephone: 1300 554 474
Investor enquiries
and correspondence
admin@waypointreit.com.au
Stock exchange listing
Waypoint REIT stapled securities are
listed on the Australian Securities
Exchange with the code WPR.
Waypoint REIT Limited
ABN 35 612 986 517
Waypoint REIT Trust
ARSN 613 146 464
VER Limited
ACN 609 868 000 AFSL 483795
Responsible Entity
Registered office
Level 15, 720 Bourke Street
Docklands VIC 3008 Australia
Telephone: +61 3 9081 8439
www.waypointreit.com.au
Directors of
Waypoint REIT Limited
Laurence Brindle
Georgina Lynch
Susan MacDonald
Stephen Newton
Hadyn Stephens
Directors of VER Limited
Laurence Brindle
Georgina Lynch
Susan MacDonald
Stephen Newton
Hadyn Stephens
Company Secretary
Tina Mitas
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Waypoint REIT Limited – Annual Report 2022
Important information
Waypoint REIT is a stapled entity comprising one share in Waypoint
REIT Limited (ABN 35 612 986 517) and one unit in Waypoint REIT
Trust (ARSN 613 146 464).
The Responsible Entity of Waypoint REIT Trust is VER Limited
ACN 609 868 000 Level 15, 720 Bourke Street, Docklands VIC 3008
Reporting period
This Annual Report details the consolidated results of Waypoint REIT
for the year ended 31 December 2022.
Disclaimer
This Annual Report is for information purposes only, is of a general
nature, does not constitute financial product advice, nor is it intended
to constitute legal, tax or accounting advice or opinion. It does not
constitute in any jurisdiction, whether in Australia or elsewhere, an
invitation to apply for or purchase stapled securities of Waypoint
REIT or any other financial product.
In preparing this Annual Report, the authors have relied upon
and assumed, without independent verification, the accuracy
and completeness of all information available from public sources
or which has otherwise been reviewed in preparation of the
Annual Report.
All reasonable care has been taken in preparing the information
and assumptions contained in this Annual Report. However, no
representation or warranty, express or implied, is made by Waypoint
REIT, its related bodies corporate, any of their respective officers,
directors, employees, agents or advisers as to the fairness, accuracy,
completeness or correctness of the information, opinions and
conclusions contained in this Annual Report.
The information contained in this Annual Report is current as at the
date it is published and is subject to change without notice. To the
maximum extent permitted by law and subject to any continuing
obligations under the ASX listing rules, Waypoint REIT Pty Ltd and
VER Limited and each of their respective associates, related entities,
officers, directors, employees, agents, consultants and advisers and
each of the Limited Parties do not accept and expressly disclaim
any liability for any loss or damage (including, without limitation, any
liability for any loss or damage (whether direct, indirect, consequential
or otherwise) arising from the use of, or reliance on, anything contained
in or omitted from this report.
This Annual Report contains forward-looking statements, including
statements regarding the plans, strategies and objectives of
Waypoint REIT management and distribution guidance. To the
extent that certain statements in this Annual Report may constitute
‘forward-looking statements’ or statements about ‘future matters’,
the information reflects Waypoint REIT’s intent, belief or expectations
at the date of the Annual Report. Forward-looking statements can
generally be identified by the use of forward-looking words such as
‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘should, ‘could’, ‘may’, ‘predict’,
‘plan’, ‘propose’, ‘will’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’, ‘guidance’
and other similar expressions. Indications of, and guidance or
outlook on, future earnings or financial position or performance are
also forward- looking statements. Any forward-looking statements,
including projections, guidance on future revenues, earnings and
estimates, are provided as a general guide only and should not be
relied upon as an indication or guarantee of future performance.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause Waypoint REIT’s
actual results, performance or achievements to differ materially
from any future results, performance or achievements expressed
or implied by these forward-looking statements. Any forward-looking
statements, opinions and estimates in this presentation are based
on assumptions and contingencies that are subject to change
without notice, as are statements about market and industry trends,
which are based on interpretations of current market conditions.
This Annual Report may not be reproduced or published, in whole
or in part, for any purpose without the prior written permission of
Waypoint REIT.
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Waypoint REIT Limited – Annual Report 2022