CORRECTING and REPLACING Corporación Inmobiliaria Vesta Reports Fourth Quarter 2023 Earnings Results

Rhea-AI Summary

Corporación Inmobiliaria Vesta reported strong financial results for Q4 2023, achieving total income of US$ 214.5 million, a 20.5% year-over-year increase. Vesta also saw improvements in Adjusted NOI margin, Adjusted EBITDA margin, and FFO. The company had successful leasing activity, portfolio occupancy, and construction progress. Vesta completed a follow-on ADS offering and acquired a new facility in Toluca while selling a building in Tijuana. The company focused on social and environmental initiatives, achieving recognition for sustainability efforts. Vesta expects revenue growth of 16-17% in 2024 with strong margins.

Positive

• Strong financial performance in Q4 2023 with total income of US$ 214.5 million, a 20.5% increase year over year.
• Improvements in Adjusted NOI margin, Adjusted EBITDA margin, and FFO compared to the previous year.
• Successful leasing activity, portfolio occupancy, and new construction progress.
• Completion of a US$ 148.8 million follow-on ADS offering and acquisition of a facility in Toluca.
• Sale of a building in Tijuana and land in Aguascalientes as part of asset recycling strategy.
• Focus on social and environmental initiatives, leading to recognition for sustainability efforts.
• Guidance for 2024 includes revenue growth of 16-17% with strong margins.

Negative

• None.

MEXICO CITY--(BUSINESS WIRE)-- In the second sentence of the seventh bulleted item within Full Year and Q4 2023 Highlights, the figure for which the 81 thousand sf building located in Toluca was acquired should be changed to US $7.0 million (including closing costs) equivalent to an estimated 8.1% cap rate. (instead of US $25.3 million, equivalent to an estimated 8.5% cap rate).

The updated release reads:

CORPORACIÓN INMOBILIARIA VESTA REPORTS FOURTH 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 fourth quarter ended December 31, 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 consolidated financial statements, including the notes thereto. Vesta’s financial results are stated in US dollars unless otherwise noted.

Full Year and Q4 2023 Highlights

• Vesta delivered outstanding financial results for the full year 2023, achieving US$ 214.5 million in total income; a 20.5% year over year increase exceeding the upper range of its 19-20% revenue guidance for the full year 2023. 2023 Adjusted NOI margin¹ and Adjusted EBITDA margin² reached 94.6% and 82.0%, respectively, both of which exceeded guidance. Vesta FFO ended 2023 with US$ 127.9 million; a 23.6% increase compared to US$ 103.5 million in 2022.
• Vesta achieved strong leasing activity in 2023, reaching a total of 7.9 million sf; 4.5 million sf in new leases and 3.4 million in lease renewals, with a six-year average weighted lease life.
• Fourth quarter 2023 leasing activity reached 2.7 million sf: 1.7 million sf in new contracts with top quality companies such as Foxconn, Tesla, BRP, among others, and 1.0 million sf in lease renewals. Vesta’s fourth quarter 2023 total portfolio occupancy reached 93.4%, while stabilized and same-store occupancy reached 96.7% and 97.0%, respectively.
• 2023 renewals and re-leasing reached 4.1 million sf, with a weighted average spread of 6.5%. Same-store NOI increased by 9.5% in 2023.
• 2023 new construction totaled 3.2 million square feet, at a 10.1% weighted average yield on cost. Vesta’s current construction in progress reached 3.1 million sf by the end of the fourth quarter 2023, representing an estimated investment of US$ 267.1 million and a 9.8% yield on cost, in markets including Mexico City, Ciudad Juarez and Bajio region.
• Vesta successfully closed a US$ 148.8 million follow-on ADS offering in December 2023, ending the year with a strong balance sheet also with benefit of the Company’s successful July 5, 2023 IPO. This was reflected in 2.4x Net Debt to EBITDA and a 24.1% LTV.
• Vesta completed the acquisition of an 81 thousand sf facility located in Toluca, State of Mexico during the fourth quarter 2023, leased to a tier-1 supplier to the neighboring Stellantis automotive plant. The property was acquired for US $7.0 million (including closing costs) equivalent to an estimated 8.1% cap rate.
• During the fourth quarter 2023 and aligned with the Company’s asset recycling strategy, Vesta sold a 313 thousand sf building in Tijuana, Baja California for US $37.0 million, which represents an estimated 6.5% cap rate over market rent and 4.0% cap rate over in-place rent Net proceeds will be used partially to pay down Vesta’s current debt, taxes and other corporate uses.
• During the fourth quarter, Vesta sold 8.5 hectares of land in Aguascalientes for US$ 5.1 million.
• Vesta strengthened the social and environmental pillars of its strategy during 2023, including 1) prepared the Company’s first Human Rights Risk Assessment 2) implemented a Level One and Level Two Diagnosis for Vesta’s parks and offices as is required for ISO 14001:2015 Certification; 3) began implementation of sustainable taxonomy (Mexican and EU); 4) completed a biodiversity assessment based on TNFD Standards; 5) aligned with IFRS ESG Standards (S1 & S2); 6) finalized a climate change strategy (Physical and Transitional Analysis) emissions inventory; 7) and rebuilt the Company’s social investment strategy.
• Vesta was also included within the S&P/BMV Total ESG Mexico Index in 2023, for the fourth consecutive year, and was included within the S&P Global Sustainability Yearbook for the second consecutive year. Further, Vesta remains on track to achieve its targets related to the sustainability-linked bond issued at the beginning of 2021, having ended 2023 with seven new LEED certified buildings. Finally, Vesta was recognized as an Edge Champion for square footage certified with Edge Certification in 2023.

Guidance 2024

Vesta expects revenues to increase between 16-17% in 2024 with a 94.0% NOI margin and an 83.0% EBITDA margin, while maintaining the Company´s solid performance across key operational metrics.³

				12 months
Financial Indicators (million)	Q4 2023	Q4 2022	Chg. %	2023	2022	Chg. %
Total Rental Income	55.9	47.4	17.9	214.5	178.0	20.5
Total Revenues (-) Energy	54.0	46.2	17.0	212.5	176.8	20.2
Adjusted NOI	53.0	44.3	19.7	201.2	168.7	19.2
Adjusted NOI Margin %	98.1%	95.9%		94.6%	95.5%
Adjusted EBITDA	44.1	39.4	12.0	174.2	149.9	16.2
Adjusted EBITDA Margin %	81.7%	85.4%		82.0%	84.8%
EBITDA Per Share	0.0520	0.0573	(9.2)	0.2266	0.2160	4.9
Total Comprehensive Income	112.3	84.6	32.7	324.5	252.5	28.5
Vesta FFO	32.6	27.2	20.0	127.9	103.5	23.6
Vesta FFO Per Share	0.0384	0.0395	(2.7)	0.1664	0.1492	11.6
Vesta FFO (-) Tax Expense	14.4	13.2	9.3	36.0	61.6	(41.5)
Vesta FFO (-) Tax Expense Per Share	0.0170	0.0192	(11.4)	0.0468	0.0887	(47.2)
Diluted EPS	0.1323	0.1229	7.6	0.4221	0.3638	16.0
Shares (average)	848.7	688.2	23.3	768.8	694.3	10.7

• Fourth quarter 2023 revenue reached US$ 55.9 million; a 17.9% year on year increase from US$ 47.4 million in the fourth quarter 2022, primarily due to US$ 8.3 million in new revenue-generating contracts and a US$ 1.9 million inflationary benefit on fourth quarter 2023 results. Fourth quarter 2023 Adjusted NOI and EBITDA margins reached 98.1% and 81.7%, respectively.
• Fourth quarter 2023 Adjusted Net Operating Income (Adjusted NOI)⁴ increased 19.7% to US$ 53.0 million, compared to US$ 44.3 million in the fourth quarter 2022. The fourth quarter 2023 Adjusted NOI margin was 98.1%; a 220-basis-point year on year increase due to lower property-related costs.
• Fourth quarter 2023 Adjusted EBITDA⁵ increased 12.0% to US$ 44.1 million, as compared to US$ 39.4 million in the fourth quarter 2022. The Adjusted EBITDA margin was 81.7%; a 365-basis-point decrease primarily due to the peso appreciation relative to the same period last year, which in turn impacted Vesta´s employee’s benefits, auditing, legal and consulting expenses.
• Fourth quarter 2023 Vesta funds from operations (Vesta FFO) increased by 20.0% to US$ 32.6 million, from US$ 27.2 million in 2022. Vesta FFO per share was US$ 0.0384 for the fourth quarter 2023 compared with US$ 0.0395 for the same period in 2022; a 2.7% decrease resulting from the Company’s December 2023 follow-on issuance. Fourth quarter 2023 Vesta FFO excluding current tax expense was US$ 14.4 million compared to US$ 13.2 million in the fourth quarter 2022, due to higher profit with a lower interest expense in the fourth quarter 2023 relative to the same period in 2022.
• Fourth quarter 2023 total comprehensive gain was US$ 112.3 million, versus US$ 84.6 million in the fourth quarter 2022. This increase was primarily due to increased revenues, higher gain on the revaluation of investment properties and a positive effect from income tax gain for the fourth quarter 2023.
• The total value of Vesta’s investment property portfolio was US$ 3.2 billion as of December 31, 2023; a 17.3% increase compared to US$ 2.7 billion at the end of December 31, 2022.

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

CONFERENCE CALL INFORMATION

Vesta will host a conference call on Thursday, February 22, 2024, to discuss these results at 10:00 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/980213268

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 December 31, 2023, Vesta owned 213 properties located in modern industrial parks in 16 states of Mexico totaling a GLA of 37.3 million sf (3.5 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.

_________________________

1		Adjusted NOI Margin calculations have been modified, please refer to Notes and Disclaimers
2		Adjusted EBITDA Margin calculations have been modified, please refer to Notes and Disclaimers
3		These amounts are estimates and are based on management’s current 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.
4		Adjusted NOI and Adjusted NOI Margin calculations have been modified, please refer to Notes and Disclaimers
5		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/20240221476880/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 total income in Q4 2023?

Vesta reported total income of US$ 214.5 million in Q4 2023, a 20.5% increase year over year.

What were the Adjusted NOI margin and Adjusted EBITDA margin for Vesta in 2023?

Vesta achieved Adjusted NOI margin of 94.6% and Adjusted EBITDA margin of 82.0% in 2023.

Which companies were part of Vesta's leasing activity in Q4 2023?

In Q4 2023, Vesta had leasing contracts with companies like Foxconn, Tesla, BRP, among others.

What was the total portfolio occupancy for Vesta in Q4 2023?

Vesta's total portfolio occupancy in Q4 2023 reached 93.4%, with stabilized and same-store occupancy at 96.7% and 97.0% respectively.

How much did Vesta's investment property portfolio value increase by the end of 2023?

The total value of Vesta's investment property portfolio increased by 17.3% to US$ 3.2 billion by the end of 2023.