Corporación Inmobiliaria Vesta Reports Third Quarter 2023 Earnings Results

Rhea-AI Summary

Vesta announces Q3 2023 results, showing growth in construction, leasing activity, and revenue

Positive

• Vesta began construction on nine buildings, totaling 2.6 million sf, in Mexico City and other dynamic markets
• Third quarter 2023 deliveries and buildings under development increased Vesta's total portfolio to over 40 million sf
• Leasing activity in Q3 2023 reached 1.4 million sf, with new contracts from companies like Foxconn and Sumitomo
• Vesta's stabilized occupancy increased to 97.3% in Q3 2023
• Vesta's revenue for Q3 2023 increased by 23.9% year-on-year to $56.4 million
• Adjusted NOI and EBITDA margins for Q3 2023 were 92.1% and 80.3%, respectively
• Vesta's FFO increased by 26.0% in Q3 2023 to $33.9 million
• Vesta's total comprehensive gain for Q3 2023 was $79.0 million, primarily due to increased revenues and a higher gain on the revaluation of investment properties
• Vesta's investment property portfolio increased by 13.7% to $3.11 billion as of September 30, 2023

Negative

• None.

MEXICO CITY--(BUSINESS WIRE)-- 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 third quarter ended September 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. Vesta’s financial results are stated in US dollars unless otherwise noted.

Q3 2023 Highlights

• During the quarter the Company began construction on nine buildings, or 2.6 million sf, within Mexico’s most dynamic markets including an important start in Mexico City, aligned with Vesta´s growth plan and reflecting strong market dynamics. Vesta´s total development pipeline reached 3.5 million sf as of the third quarter 2023, with a US$ 291.2 million expected investment and a 10.2% yield on cost. Third quarter 2023 deliveries of 2.3 million sf and buildings under development increased Vesta’s total portfolio to more than 40 million sf.
• Third quarter 2023 leasing activity reached 1.4 million sf: 736,473 sf in new contracts with best-in-class companies such as Foxconn, Sage Automotive, Sumitomo, and BekaertDeslee among others, and 626,411 sf in lease renewals. Vesta’s third quarter 2023 stabilized occupancy therefore increased to 97.3% from 96.6% in third quarter 2022, while total portfolio occupancy closed at 92.5% and same store occupancy at 97.6%.
• Vesta ended the quarter well positioned with a strong balance sheet, with Net Debt to EBITDA of 3.1x and LTV of 25.8%, also with benefit of the Company’s successful July 5, 2023 IPO.
• Vesta has updated its full year 2023 guidance: revenue guidance has been upwardly revised to a range of between 19-20%, an increase from the Company’s prior guidance of 17-18%, Adjusted NOI margin has been revised to 92.5% from 93.0% and Adjusted EBITDA had been revised to 81.5% from 82.0%. This reflects Vesta´s strong leasing activity, which resulted in revenue increases, as well as higher expenses, year to date.¹
• Vesta delivered US$ 56.4 million in revenue for the third quarter 2023; a 23.9% year on year increase from US$ 45.5 million in the third quarter 2022, primarily due to US$ 7.8 million in new revenue-generating contracts and a US$ 2.2 million inflationary benefit on third quarter 2023 results. Third quarter 2023 Adjusted NOI and EBITDA margins reached 92.1% and 80.3%, respectively.

				9 months
Financial Indicators (million)	Q3 2023	Q3 2022	Chg. %	2023	2022	Chg. %
Rental Income	56.4	45.5	23.9	158.52	130.60	21.4
Adjusted NOI	52.0	43.2	20.4	148.20	124.48	19.1
Adjusted NOI Margin %	92.1%	94.9%		93.5%	95.3%
Adjusted EBITDA	45.3	38.7	17.1	130.10	110.52	17.7
Adjusted EBITDA Margin %	80.3%	85.0%		82.1%	84.6%
EBITDA Per Share	0.0543	0.0559	(2.8)	0.1754	0.1590	10.3
Total Comprehensive Income	79.0	62.3	na	212.24	167.95	na
Vesta FFO	33.9	26.9	26.0	95.35	76.41	24.8
Vesta FFO Per Share	0.0407	0.0389	4.6	0.1285	0.1099	16.9
FFO attributable to common share	2.3	20.4	(88.6)	21.56	48.37	(55.4)
FFO attributable to common share Per Share	0.0028	0.0294	(90.5)	0.0291	0.0696	(58.2)
EPS	0.0947	0.0900	na	0.2861	0.2416	na
Shares (average)	833.7	691.9	20.5	741.92	695.06	6.7

• Third quarter 2023 Adjusted Net Operating Income (Adjusted NOI) increased 20.4% to US$ 52.0 million, compared to US$ 43.2 million in the third quarter 2022. The third quarter 2023 Adjusted NOI margin was 92.1%; a 273-basis-point year on year decrease due to higher costs at rent-generating properties.
• Third quarter 2023 Adjusted EBITDA increased 17.1% to US$ 45.3 million, as compared to US$ 38.7 million in the third quarter 2022. The Adjusted EBITDA margin was 80.3%; a 470-basis-point decrease primarily due to lower gross profit due to an increase in costs and higher administrative expenses related to the peso appreciation relative to last year.
• Third quarter Vesta funds from operations (Vesta FFO) increased by 26.0% to US$ 33.9 million, from US$ 26.9 million in 2022. Vesta FFO per share was US$ 0.0407 for the third quarter 2023, compared with US$ 0.0389 for the same period in 2022; a 4.6% increase. Third quarter 2023 FFO attributable to common shares was US$ 2.3 million, compared to US$ 20.4 million in the third quarter 2022, due to increased income tax expenses in the third quarter 2023 resulting from a higher exchange rate related current tax in third quarter 2023.
• Third quarter 2023 total comprehensive gain was US$ 79.0 million, versus US$ 62.3 million in the third quarter 2022. This increase was primarily due to increased third quarter 2023 revenues and a higher gain on the revaluation of investment properties.
• The total value of Vesta’s investment property portfolio was US$ 3.11 billion as of September 30, 2023; a 13.7% increase compared to US$ 2.74 billion at the end of December 31, 2022.

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

¹ 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.

CONFERENCE CALL INFORMATION

Vesta will host a conference call on Friday, October 20, 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:

U.S. Toll-Free: +1 (888) 350-3870
International Toll: +1 (646) 960-0308
International Dial-In: https://events.q4irportal.com/custom/access/2324/
Participant Code: 1849111
Webcast: https://events.q4inc.com/attendee/220220872

A telephonic replay will be available for one week following the conference call and can be accessed two hours subsequent to call’s completion via Vesta’s IR website, along with the company's earnings press release, financial tables, and slide presentation. The call can also be accessed via +1-800-770-2030, Participant Code: 1849111

About Vesta

Vesta is a real estate owner, developer and asset manager of industrial buildings and distribution centers in Mexico. As of September 30, 2023, Vesta owned 214 properties located in modern industrial parks in 16 states of Mexico totaling a GLA of 36.9 million sf (3.43 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231019997411/en/

Juan Sottil, CFO

+52 55 5950-0070 ext. 133

jsottil@vesta.com.mx

Fernanda Bettinger, IRO

+52 55 5950-0070 ext. 163

mfbettinger@vesta.com.mx

investor.relations@vesta.com.mx

Barbara Cano, InspIR Group

+1 646 452-2334

barbara@inspirgroup.com

Source: Corporación Inmobiliaria Vesta S.A.B. de C.V.

FAQ

What were Vesta's construction activities in Q3 2023?

Vesta began construction on nine buildings, totaling 2.6 million sf, in Mexico City and other dynamic markets.

How did Vesta's leasing activity perform in Q3 2023?

Vesta's leasing activity in Q3 2023 reached 1.4 million sf, with new contracts from companies like Foxconn and Sumitomo.

What was Vesta's revenue for Q3 2023?

Vesta's revenue for Q3 2023 increased by 23.9% year-on-year to $56.4 million.

What were Vesta's occupancy rates in Q3 2023?

Vesta's stabilized occupancy increased to 97.3% in Q3 2023.

What was the increase in Vesta's investment property portfolio?

Vesta's investment property portfolio increased by 13.7% to $3.11 billion as of September 30, 2023.