Corporación Inmobiliaria Vesta Reports Second Quarter 2023 Earnings Results

Corporación Inmobiliaria Vesta S.A.B. de C.V., (“Vesta”, or the “Company”) (BMV: VESTA) (NYSE: VTMX), a leading industrial real estate company in Mexico, today announced results for the second quarter ended June 30, 2023. All figures included herein were prepared in accordance with International Financial Reporting Standards (IFRS), which differs in certain significant respects from U.S. GAAP. This information should be read in conjunction with, and is qualified in its entirety by reference to, our financial statements, including the notes thereto and are stated in US dollars unless otherwise noted.

Q2 2023 Highlights

• Vesta announced the closing of its Initial Public Offering (IPO) in the United States on July 5, 2023, of 14,375,000 American Depositary Shares (“ADSs”), representing 143,750,000 common shares at US$ 31.00 per ADS. The gross proceeds were approximately US$ 445.6 million, which the Company will use to fund its growth strategy.
• Vesta has updated its full year 2023 guidance: revenue guidance has been upwardly revised to a range of between 17-18% from the Company’s prior guidance of 13-14%, Adjusted NOI margin and Adjusted EBITDA margin guidance remains at 93.0% and 82.0%, respectively. This reflects Vesta´s significant progress on its Level 3 strategy in a continued strong demand environment.i
• Second quarter 2023 leasing activity reached 1.6 million sf; 891,687 sf in new contracts with best-in-class companies such as Eaton, Sumitomo, and Iron Mountain, among others, and 769,054 sf in lease renewals. Vesta’s second quarter 2023 stabilized occupancy therefore increased to 96.9% from 95.9% in second quarter 2022, while total portfolio occupancy closed at 94.7% and same store occupancy at 96.7%.
• Vesta delivered 831,309 sf during the second quarter 2023, with a weighted average occupancy of 60%. During the quarter the Company began construction on one 214,760 sf BTS building in Queretaro for Eaton Corporation. Vesta´s total development pipeline reached 3.2 million sf as of the second quarter 2023, with a US$ 205.6 million expected investment and a 10.0% average cap rate.
• Vesta delivered US$ 51.9 million in revenue for the second quarter 2023; a 20.5% year on year increase from US$ 43.1 million in the second quarter 2022, primarily due to US$ 6.6 million in new revenue-generating contracts and a US$ 2.2 million inflationary benefit on second quarter 2023 results. Second quarter 2023 Adjusted NOI and EBITDA margins reached 93.5% and 82.5%, respectively.

 

 

 

 

6 months

 

Financial Indicators (million)

Q2 2023

Q2 2022

Chg. %

2023

2022

Chg. %

Rental Income

51.9

43.1

20.5

102.13

85.09

20.0

Adjusted NOI

48.5

40.7

19.4

96.25

81.05

18.8

Adjusted NOI Margin %

93.5%

94.3%

 

94.2%

95.2%

 

Adjusted EBITDA

42.8

36.4

17.5

84.88

71.84

18.1

Adjusted EBITDA Margin %

82.5%

84.5%

 

83.1%

84.4%

 

EBITDA Per Share

0.0616

0.0529

16.3

0.1221

0.1031

18.4

Total Comprehensive Income

98.6

50.4

na

157.72

105.71

na

Vesta FFO

31.0

24.5

26.7

61.48

49.51

24.2

Vesta FFO Per Share

0.0447

0.0356

25.4

0.0884

0.0711

24.4

FFO attributable to common share

9.6

12.2

(21.3)

19.25

28.03

(31.3)

FFO attributable to common share Per Share

0.0138

0.0177

(22.1)

0.0277

0.0402

(31.2)

EPS

0.1418

0.0732

na

0.2268

0.1517

na

Shares (average)

695.3

688.2

1.0

695.27

696.67

(0.2)

• Second quarter 2023 Adjusted Net Operating Income (Adjusted NOI) increased 19.4% to US$ 48.5 million, compared to US$ 40.7 million in second quarter 2022. The second quarter 2023 Adjusted NOI margin was 93.5%; an 86-basis-point year on year decrease due to higher costs at rent-generating properties.
• Second quarter 2023 Adjusted EBITDA increased 17.5% to US$ 42.8 million, as compared to US$ 36.4 million in the second quarter 2022. The Adjusted EBITDA margin was 82.5%; a 207-basis-point decrease is primarily due to the peso appreciation versus last year, which in turn impacted Vesta´s employee’s benefits, auditing, legal and consulting expenses, and an increase in employee long-term incentive plan during second quarter 2023.
• Second quarter Vesta funds from operations (Vesta FFO) increased by 26.7% to US$ 31.0 million, from US$ 24.5 million in 2022. Vesta FFO per share was US$ 0.0447 for the second quarter 2023, compared with US$ 0.0356 for the same period in 2022; a 25.4% increase. Second quarter 2023 FFO attributable to common share was US$ 9.6 million, compared to US$ 12.2 million in the second quarter 2022, due to increased income tax expenses in the second quarter 2023 resulting from a higher exchange rate related current tax in second quarter 2023.
• Second quarter 2023 total comprehensive gain was US$ 95.6 million, versus US$ 50.4 million in the second quarter 2022. This increase was primarily due to increased second quarter 2023 revenues and a higher gain on the revaluation of investment properties.
• The total value of Vesta’s investment property portfolio was US$ 2.92 billion as of June 30, 2023; a 6.7% increase compared to US$ 2.74 billion at the end of December 31, 2022.

i These amounts are estimates and are based on current management expectations. Amounts are subject to change and Vesta undertakes no responsibility to update this outlook. The Company is unable to present a quantitative reconciliation of expected NOI margin and expected Adjusted EBITDA margin which are forward-looking non-IFRS measures, because the Company cannot reliably predict certain of their necessary components, such as gain on revaluation of investment property, exchange gain (loss) – net, or gain on sale of investment property, among others.

For a full version of Corporación Inmobiliaria Vesta Second Quarter 2023 Earnings Release, please visit: https://ir.vesta.com.mx/financial-results

CONFERENCE CALL INFORMATION

Vesta will host a conference call on Friday, July 21, 2023, to discuss these results at 11:00 a.m. Eastern Time / 9:00 a.m. Mexico City Time.

To participate in the conference call, please connect via webcast or by dialing:

US: [phone]

Mexico: [phone]

Brazil: [phone]

Participant code: 748643

Webcast: https://mm.closir.com/slides?id=748643

The call replay will be available 2 hours after the call has ended and can be accessed on Vesta’s IR website.

About Vesta

Vesta is a real estate owner, developer and asset manager of industrial buildings and distribution centers in Mexico. As of June 30, 2023, Vesta owned 204 properties located in modern industrial parks in 15 states of Mexico totaling a GLA of 34.6 million sf (3.26 million m2). Vesta has several world-class clients participating in a variety of industries such as automotive, aerospace, high-tech, pharmaceuticals, electronics, food and beverage and packaging. For additional information visit: www.vesta.com.mx.

Note on Forward-Looking Statements

This report may contain certain forward-looking statements and information relating to the Company and its expected future performance that reflects the current views and/or expectations of the Company and its management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like “believe,” “anticipate,” “expect,” “envisages,” “will likely result,” or any other words or phrases of similar meaning. Such statements are subject to a number of risks, uncertainties and assumptions. Some of the factors that may affect outcomes and results include, but are not limited to: (i) national, regional and local economic and political climates; (ii) changes in global financial markets, interest rates and foreign currency exchange rates; (iii) increased or unanticipated competition for our properties; (iv) risks associated with acquisitions, dispositions and development of properties; (v) tax structuring and changes in income tax laws and rates; (vi) availability of financing and capital, the levels of debt that we maintain; (vii) environmental uncertainties, including risks of natural disasters; (viii) risks related to any potential health crisis and the measures that governments, agencies, law enforcement and/or health authorities implement to address such crisis; and (ix) those additional factors discussed in reports filed with the Bolsa Mexicana de Valores and in the U.S. Securities and Exchange Commission. We caution you that these important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation and in oral statements made by authorized officers of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to update or revise any forward-looking statements, including any financial guidance, whether as a result of new information, future events or otherwise except as may be required by law.

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Juan Sottil, CFO [phone] ext. 133 [e-mail]

Fernanda Bettinger, IRO [phone] ext. 163 [e-mail] [e-mail]

Barbara Cano, InspIR Group [phone] [e-mail]