What are MM’s views on WPR?

Hi Darren,

For those not familiar, Waypoint (WPR) owns petrol stations and convenience stores. At a high level, we like their asset base and believe they are a solid REIT, expected to yield 6.8% over thee next 12 months via a fairly defensive underlying portfolio.  Over the past 12 months, they have ramped up their interest rate hedging, 2023 is now 93% hedged and 2024 is now 81% hedged. They generally ran hedging around 70% so they’ve clearly taken a more defensive stance around interest rates. Hedging costs money and its a balancing act, underpinned by prevailing views on interest rates. We would argue they have hedged at the wrong time, but that is easily countered by the ‘certainty’ argument.

WPR is a stock we have considered in the past, however, its not glaringly cheap, and we struggle to identify a catalyst for a share price move. For instance, National Storage (NSR) is one we are stalking as it has been sold down due to ABP listing Storage King, and the discount they raised money at, which has dragged down NSR. With regard to Dexus (DXS), we believe the market is too negative on office and the ~30% discount to NTA may prove to be too aggressive in time, prompting a rerate of the shares.

While WPR is a solid stock, paying a nice yield, it lacks a catalyst in MM’s view.

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Waypoint REIT (WPR)

LAST UPDATED 29/07/2023 08:15

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Waypoint REIT (WPR)

LAST UPDATED 29/07/2023 08:15