Blackmore Capital Australian Equities Income Portfolio
We recently added to the existing Waypoint REIT (WPR) position in the portfolio. Waypoint is Australia’s largest Food & Convenience Retail REIT with a portfolio of 427 geographically diversified service station/convenience retail properties.
We see steady income growth underpinned by a combination of contracted c.3% annual rental escalations, acquisitions, and development opportunities. The transparent and predictable cashflow backed by the high-quality portfolio contributed to WPR updating its target FY21 Distributable Earnings per security from 15.72 cents to a range of 15.72-15.80 cents, representing growth of 3.75-4.25% on FY20.
The portfolio is being sharpened as WPR continues the process of identifying and selling non-core assets while it remains a buyer of high-quality F&C properties and reinvests in its core portfolio.
WPR’s weighted average debt maturity is expected to increase by 1 year to 4.8 years post the partial repayment of a $336 million debt facility (June 2023 expiry) from the proceeds of the inaugural A-MTN issuance of $200 million. WPR is well positioned for future initiatives given its strong balance sheet and ample liquidity.
The recent valuations on WPR’s portfolio brought a valuation uplift of $189.8 million and an equivalent 10% increase in NTA per security on Dec 2020, backed by cap rate compressing 19bps to 5.37%. Our investment thesis is predicated on WPR’s trading price catching up to its NTA coupled with an attractive dividend yield of c.6% underpinned by a 10 year + lease profile.