Corporación Inmobiliaria Vesta Reports Third Quarter 2024 Earnings Results

Rhea-AI Summary

Vesta (NYSE: VTMX) reported strong Q3 2024 results with total income reaching US$ 63.7 million, up 14.4% year-over-year. The company updated its 2024 guidance, expecting revenue growth to exceed 17%, with improved Adjusted NOI margin to 94.5% and Adjusted EBITDA to 83.5%. Q3 leasing activity totaled 1.3 million sf, with portfolio occupancy at 93.9%. The company acquired 35.7 hectares in Tijuana and has 3.4 million sf under construction representing a US$ 328.9 million investment. Vesta FFO increased 20.3% to US$ 40.4 million, while maintaining strong financial metrics with Adjusted NOI and EBITDA margins at 94.2% and 84.5% respectively.

Positive

• Revenue increased 14.4% YoY to US$ 63.7 million
• FFO grew 20.3% to US$ 40.4 million
• Upward revision of 2024 revenue guidance to exceed 17%
• Strong leasing activity with 1.3 million sf in Q3
• Investment property portfolio value increased 11.8% to US$ 3.6 billion
• Same-store NOI increased by 3% year on year

Negative

• Total comprehensive gain decreased to US$ 27.7 million from US$ 79.0 million in Q3 2023
• EBITDA per share declined 16.0%
• Diluted EPS decreased 53.5% to US$ 0.0530

Insights

Financial Analyst

Strong quarterly performance with $63.7M revenue, up 14.4% YoY, driven by new contracts and inflationary benefits. Notable highlights include improved guidance with revenue expected to exceed 17%, enhanced NOI margin to 94.5% and EBITDA margin to 83.5%.

The portfolio metrics show robust health with 93.9% total occupancy and impressive 98.3% same-store occupancy. The $328.9M construction pipeline yielding 10.4% and strategic Tijuana land acquisition positions well for future growth. The new $500M syndicated facility strengthens the balance sheet while maintaining financial flexibility.

Real Estate Market Analyst

The 7.1% trailing twelve-month rental spread demonstrates strong pricing power in Mexico's industrial market. Strategic expansion in Tijuana with 35.7 hectares acquisition shows smart positioning in key logistics corridors, particularly valuable given nearshoring trends. The 1.3M sf leasing activity, split between new contracts and renewals, indicates robust demand from automotive and e-commerce sectors.

LEED certification commitment for new developments aligns with growing ESG demands while potentially commanding premium rents. The 3% same-store NOI growth reflects healthy market fundamentals and effective asset management.

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, 2024. 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 consolidated financial statements, including the notes thereto. Vesta’s financial results are stated in US dollars unless otherwise noted.

Q3 2024 Highlights

• Vesta updated its full year 2024 guidance: revenue guidance has been upwardly revised and is expected to exceed 17%, an increase from the Company´s prior guidance of 16-17%, Adjusted NOI margin has been revised to 94.5% from 94.0% and Adjusted EBITDA has been revised to 83.5% from 83.0%. This reflects Vesta’s financial discipline and strong leasing activity throughout the year.
• Vesta’s third quarter 2024 total income was US$ 63.7 million; a 14.4% year over year increase. third quarter 2024 Adjusted NOI¹ margin and Adjusted EBITDA² margin reached 94.2% and 84.5%, respectively. Vesta FFO ended third quarter 2024 at US$ 40.4 million; a 20.3% increase compared to US$ 33.6 million in the third quarter 2023.
• Third quarter 2024 leasing activity reached 1.3 million sf: 476 thousand sf in new contracts in the Bajio and Mexico City, with best-in-class automotive and e-commerce sector companies, and 787 thousand sf in lease renewals. Vesta’s third quarter 2024 total portfolio occupancy therefore reached 93.9%, while stabilized and same-store occupancy reached 95.8% and 98.3%, respectively.
• During the quarter renewals and re-leasing reached 787 thousand sf with a trailing twelve-month weighted average spread of 7.1%. Same-store NOI increased by around 3% year on year.
• Vesta finalized a new strategic land acquisition in Tijuana, Baja California, comprised of 35.7 hectares of landbank directly adjacent to the Company´s existing Vesta Park Mega Region. The new park will ultimately total 1.0 million square feet with six LEED certified world-class buildings aligned with the highest global sustainability standards.
• Vesta’s current construction in progress reached 3.4 million sf by the end of the third quarter 2024, representing a US$ 328.9 million estimated investment and a 10.4% yield on cost, in markets including Mexico City, Puebla, Ciudad Juarez, Monterrey and the Bajio region.
• The Company continued to strengthen its balance sheet and successfully signed in October, after the third quarter’s end, a mandate letter for a US$ 500 million syndicated credit facility comprised by a US$ 300 million term loan, with an 18-month availability period, and a US$ 200 million revolving credit facility replacing the current revolving credit line.
• During the quarter Vesta paid US$ 65 million of the first tranche of the Company’s 2017 private placement bond which matured in September 2024.
• Vesta´s share repurchase program was approximately US$ 15 million during the third quarter 2024. The Company’s strategy remains focused on consistently allocating capital to ensure the most significant shareholder return.
• During October 14^th, Vesta paid dividends for US$ 16.2 million equivalent to PS$ 0.3576 per ordinary share for the third quarter.

				9 months
Financial Indicators (million)	Q3 2024	Q3 2023	Chg. %	2024	2023	Chg. %
Total Rental Income	63.7	55.7	14.4	187.3	157.1	19.2
Total Revenues (-) Energy	61.1	55.3	10.4	180.8	157.1	15.1
Adjusted NOI	57.6	51.7	11.4	171.7	148.8	15.3
Adjusted NOI Margin %	94.2%	93.4%		95.0%	94.8%
Adjusted EBITDA	51.6	45.0	14.8	151.4	130.8	15.8
Adjusted EBITDA Margin %	84.5%	81.3%		83.7%	83.2%
EBITDA Per Share	0.0545	0.0649	(16.0)	0.1698	0.1762	(3.6)
Total Comprehensive Income	50.2	79.0	(36.4)	283.5	212.2	33.6
Vesta FFO	40.4	33.6	20.3	117.7	96.0	22.6
Vesta FFO Per Share	0.0427	0.0485	(12.0)	0.1320	0.1294	2.0
Vesta FFO (-) Tax Expense	34.9	2.0	1628.0	87.3	22.4	290.6
Vesta FFO (-) Tax Expense Per Share	0.0368	0.0029	1164.5	0.0980	0.0301	225.1
Diluted EPS	0.0530	0.1140	(53.5)	0.3181	0.2861	11.2
Shares (average)	947.0	693.0	36.6	891.3	741.9	20.1

• Third quarter 2024 revenue reached US$ 63.7 million; a 14.4% year on year increase from US$ 55.7 million in the third quarter 2023 primarily due to US$ 7.4 million in new revenue-generating contracts during the quarter and a US$ 2.0 million inflationary benefit on third quarter 2024 results.
• Third quarter 2024 Adjusted Net Operating Income (Adjusted NOI) increased 11.4% to US$ 57.6 million, compared to US$ 51.7 million in the third quarter 2023. The third quarter 2024 Adjusted NOI margin was 94.2%; an 87-basis-point year on year increase due to higher rental revenue.
• Adjusted EBITDA for the quarter increased 14.8% to US$ 51.6 million, as compared to US$ 45.0 million in the third quarter 2023. The Adjusted EBITDA margin was 84.5%; a 322-basis-point increase primarily due to a decrease in administrative expenses during the quarter.
• Third quarter 2024 Vesta funds from operations after tax (Vesta FFO (-) Tax Expense) increased to US$ 34.9 million, from US$ 2.0 million for the same period in 2023. Vesta FFO per share was US$ 0.0368 for the third quarter 2024 compared with US$ 0.0029 for the same period in 2023; the increase is due to a decrease in current taxes for the third quarter 2024. Third quarter 2024 Vesta FFO excluding current tax was US$ 40.4 million compared to US$ 33.6 million in the third quarter 2023, due to higher profit relative to the same period in 2023.
• Third quarter 2024 total comprehensive gain was US$ 27.7 million, versus US$ 79.0 million in the third quarter 2023, primarily due to a decrease in profit from the revaluation of investment properties during the quarter.
• The total value of Vesta’s investment property portfolio was US$ 3.6 billion as of September 30, 2024; an 11.8% increase compared to US$ 3.2 billion at the end of December 31, 2023.

For a full version of Corporación Inmobiliaria Vesta Third Quarter 2024 Earnings Release, please visit: https://ir.vesta.com.mx/financial-results

CONFERENCE CALL INFORMATION

Friday, October 25, 2024
9:00 a.m. (Mexico City Time)
11:00 a.m. (Eastern Time)

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

International Toll-Free: +1 (888) 350-3870
International Toll: +1 (646) 960-0308
International Numbers: https://events.q4irportal.com/custom/access/2324/
Participant Code: 1849111

Webcast: https://events.q4inc.com/attendee/535529886

The replay will be available two hours after the call has ended and can be accessed from 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 September 30, 2024, Vesta owned 221 properties located in modern industrial parks in 16 states of Mexico totaling a GLA of 39.1 million sf (3.6 million m²). Vesta has several world-class clients participating in a variety of industries such as automotive, aerospace, retail, 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.

___________________________

1 Adjusted NOI and Adjusted NOI Margin calculations have been modified, please refer to Notes and Disclaimers.

2 Adjusted EBITDA and Adjusted EBITDA Margin calculations have been modified, please refer to Notes and Disclaimers

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241024429855/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 was Vesta's (VTMX) revenue growth in Q3 2024?

Vesta's total income in Q3 2024 was US$ 63.7 million, representing a 14.4% increase compared to the same period in 2023.

What is Vesta's (VTMX) updated revenue guidance for 2024?

Vesta updated its 2024 revenue guidance to exceed 17%, increased from the previous guidance of 16-17%.

What was Vesta's (VTMX) portfolio occupancy rate in Q3 2024?

Vesta's total portfolio occupancy reached 93.9% in Q3 2024, with stabilized occupancy at 95.8% and same-store occupancy at 98.3%.

How much construction is Vesta (VTMX) currently undertaking as of Q3 2024?

Vesta has 3.4 million sf under construction, representing a US$ 328.9 million investment with an expected 10.4% yield on cost.