Corporación Inmobiliaria Vesta Reports Third Quarter 2020 Earnings Results

MEXICO CITY, Oct. 22, 2020 /PRNewswire/ -- Corporación Inmobiliaria Vesta S.A.B. de C.V., ("Vesta", or the "Company") (BMV: VESTA), one of the leading pure-play industrial real estate companies in Mexico, today announced results for the third quarter ended September 30, 2020. All figures included herein were prepared in accordance with International Financial Reporting Standards (IFRS) and are stated in US dollars unless otherwise noted.

Highlights

• Revenues increased 5% during 3Q20 to US$ 37.48 million, from US$ 35.83 million in 3Q19, while NOI and EBITDA margins reached 94.7% and 85.6%, respectively. The margin increase reflects a prudent approach to administrative expenses and collections improvement that reduced the Company's doubtful accounts reserve.
• As of September 30, 2020, 95% of Vestas´s tenants have reached pre-crisis operating levels. Further, to date all 43 of the selected tenant deferral agreements have fulfilled their obligations, with most deferral commitments collected between August and December. Vesta therefore has collected US$ 3.8 million of the US$ 5.5 million deferrals as of the third quarter 2020.
• During the quarter, the Company experienced negative absorption of 627,221 ft² (58,271 m²) due to the expiration of three leases in the Central and Bajio region totaling 206,635 ft² (19,197 m²) which were not renewed, and repossessed two 377,304 ft² (35,053 m²) buildings from one tenant through bankruptcy in Tijuana.
• Leasing activity for the quarter reached 774,252 ft² (71,930 m²) comprised of 105,124 ft² (9,766 m²) in new contracts with logistics and e-commerce clients, including EP Logistics and Mercado Libre, 214,231 ft² (19,903 m²) in growth from new projects and 454,896 ft² (42,261 m²) of which represented lease renewals. This drove 2020 and 2021 maturities to 0.9% and 6.5% of total GLA, respectively.
• As a result of moderate leasing activity total portfolio occupancy, stabilized and same store decreased to 90.5%, 91.9% and 94.5%, respectively.
• Vesta signed a US$ 4.5 million sales commitment with a data center for 506,104 ft² (47,019 m²) within its Queretaro land bank. Sale completion is subject only to the final sales license from state and municipal authorities.
• During 3Q20 Vesta signed two new projects: 1) Pre-leased 283,032 ft² (26,295 m²) spec building in Monterrey at 60% for an e-commerce last mile operation; 2) 44,412 ft² (4,126 m²) expansion in Queretaro with an existing client. Therefore, Vesta's 3Q20 development portfolio totaled 1,867,911 ft² (173,535 m²) with a total expected investment of US$ 96.8 million and leased at 71.9%. Weighted average expected return on cost is 10.6% for 3Q20 development projects.
• Consistent with Vesta´s Level 3 Strategy goals, 3Q20 NAV per share increased 4% to US$ 2.39, from US$ 2.30 in 3Q19, while pre-tax FFO per share increased 6% year on year, to US$ 0.0388 at the end of 3Q20 from US$ 0.0367 in 3Q19.

• Revenues increased 4.6% in 3Q20 to US$ 37.48 million, from US$ 35.83 million in 3Q19. This is primarily due to new revenue-generating contracts during the third quarter 2020.
• Net Operating Income ("NOI") increased 4.0% to US$ 35.47 million in 3Q20, compared to US$ 34.12 million in 3Q19. The third quarter 2020 NOI margin was 94.7%; a 58-basis-point decrease due to increased costs related to rental income generating properties which resulted from an increase in the allowance for accounts receivable.
• EBITDA increased 6.2% to US$ 32.09 million in the third quarter 2020, versus US$ 30.22 million in the third quarter of 2019. 3Q20 EBITDA margin was 85.6%; a 126-basis point increase due to a 10.3% decrease in administrative expenses during the quarter through budget reviews and expense reduction for the remainder of the year.
• Pretax funds from operations ("FFO pretax") for 3Q20 increased 4.9% to US$ 22.16 million, from US$ 21.12 million for the same period in 2019. Pretax FFO per share was US$ 0.0388 for the third quarter 2020, compared with US$ 0.0367 for the same period in 2019; an 5.6% increase. FFO after tax for 3Q20 was US$ 15.53 million, compared to US$ 14.72 million during 3Q19. This increase was due to higher EBITDA during 3Q20.
• Total comprehensive gain for 3Q20 was US$ 36.24 million, versus a US$ 12.07 million gain in the same quarter 2019. This increase was primarily due to lower taxes during 3Q20.
• As of September 30, 2020, the total value of Vesta's investment property portfolio was US$ 2.06 billion; a 3.5% increase compared to US$ 1.99 billion at the end of December 31, 2019.

For a full version of Corporación Inmobiliaria Vesta Third Quarter 2020 Earnings Release please visit: https://www.vesta.com.mx/investors/financial_information

CONFERENCE CALL INFORMATION:

Vesta will host a conference call on Friday, October 23, 2020, to discuss these results at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time (Mexico City Time).

To access the call, please dial:
US, toll-free: +1 877-705-6003
International, toll: +1 201-493-6725
Mexico, toll-free: +1 800-522-0034

A replay will be available from 1 p.m. on October 23 until November 6, 2020 and can be accessed by dialing:
US, toll-free: +1 844-512-2921
International, toll: +1 412-317-6671
Replay ID: 13711473

About Vesta
Vesta is a best-in-class, fully integrated real estate company that owns, manages, acquires, sells, develops and re-develops industrial properties in Mexico. As of September 30, 2020, Vesta owned 187 properties located in modern industrial parks in 15 states of Mexico totaling a GLA of 30.2 million ft² (2.80 million m²). The Company has multinational clients, which are focused in industries such as aerospace, automotive, food and beverage, logistics, medical devices, and plastics, among others. For additional information visit: www.vesta.com.mx.

Contact Information:

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

Note on Forward-Looking Statements

This report may contain certain forward-looking statements and information relating to the Company 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. We caution you that a number of 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, whether as a result of new information, future events or otherwise.

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SOURCE Corporación Inmobiliaria Vesta, S.A.B. de C.V.