Corporación Inmobiliaria Vesta Reports Fourth Quarter 2019 Earnings Results

MEXICO CITY, Feb. 20, 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 its results for the fourth quarter ended December 31, 2019. All figures included herein were prepared in accordance with International Financial Reporting Standards (IFRS) and are stated in US dollars unless otherwise noted.

Highlights

• Year-end revenues exceeded the upper range of the Company's 2019 revenue guidance, reaching US$ 144.37 million; an 8.8% year-on-year increase, while NOI and EBITDA margins were in line with full year guidance at 95.0% and 84.1%, respectively.
• NAV per share increased 10.4% to US$ 2.34 in 4Q19, from US$ 2.12 in 4Q18, while pre-tax FFO per share increased 8.3% year on year, from US$ 0.1293 in 2018 to US$ 0.1400 at the end of 2019.
• Rent per square foot increased 6.9% during the full year of 2019 to US$ 0.417, from US$ 0.39 at the end of 2018.
• During the fourth quarter, Vesta acquired land in Monterrey through a redevelopment project on which the Company expects to construct two buildings on approximately 500,000 sf with a total investment of US$ 22 million. Also during the quarter, Vesta acquired 34.4 hectares of land in Tijuana, a region with particularly strong leasing demand, where Vesta expects to build approximately seven buildings with a total expected investment of approximately US$ 62 million.
• The Company purchased a total of US$ 22.7 million of shares during 2019. Vesta has purchased a total of US$ 68.8 million of shares since initiating its share buy-back program in 2016, all of which will be cancelled in the coming months.
• Leasing activity reached 862,987 ft² (80,174 m²) during 4Q19, with 209,802 ft² (19,491 m²) of new contracts with existing clients and 653,185 ft² (60,683 m²) of lease renewals.
• In the fourth quarter 2019 Vesta began construction of one new building in Guadalajara totaling 405,509 square-feet with a total investment of US$ 19.4 million. Therefore, Vesta's 4Q19 development portfolio totaled 762,674 ft² (70,855 m²) with a total expected investment of US$ 36.8 million. Weighted average expected return on cost is 10.8% for 4Q19 development projects.
• New buildings delivered during 4Q19 amounted to 455,792 ft² (42,344 m²) of GLA and were mostly inventory buildings in the regions of Tijuana and San Luis Potosí excluding the expansion of existing Vesta client BRP in Juarez.
• Vesta's total GLA portfolio ended the year with 29,792,047 ft² (2,767,772 m²) and a 91.7% occupancy. Vesta's stabilized portfolio grew to 28,779,464 ft² (2673,700 m²) in 4Q19, while the stabilized occupancy rate decreased to 94.7%.

2020 Guidance

Vesta expects rental revenues to increase between 4% to 5% in 2020 with a 94% NOI margin and an 83% EBITDA margin. Is important to note that the Company's May 2019 portfolio sale is reflected within 2020 guidance. Asset recycling will remain an integral component of the Company's strategy to drive value and maintain a robust balance sheet with financial flexibility to fund new, high-return investments.

• Revenues increased 3.5% in 4Q19 to US$ 36.31 million, from US$ 35.09 million in 4Q18. This is primarily due to higher rent per square foot in the occupied spaces rented during the fourth quarter 2019.
• Net Operating Income ("NOI") increased 0.9% to US$ 33.78 million in 4Q19, compared to US$ 33.48 million in 4Q18. The fourth quarter 2019 NOI margin was 93.0%; a 237-basis-point decrease due to increased costs related to rental income generating properties which resulted from an increase in property taxes, maintenance, payments executed during the 4Q not made during the year, as well as an increase in the allowance for accounts receivable.
• EBITDA decreased 0.6% to US$ 29.07 million in the fourth quarter 2019, versus US$ 29.24 million in the fourth quarter of 2018. 4Q19 EBITDA margin was 80.1%; a 326-basis point decrease, due to Vesta's portfolio sale and an increase in administrative expenses during the quarter which resulted from the statutory employee profit sharing "PTU" and bonuses.
• Pretax funds from operations ("FFO pretax") for 4Q19 decreased 0.9% to US$ 19.40 million, from US$ 19.58 million for the same period in 2018. Pretax FFO per share was US$ 0.0338 for the fourth quarter 2019, compared with US$ 0.0323 for the same period in 2018; a 4.6% increase. FFO after tax for 4Q19 was US$ 11.57 million, compared to US$ 23.80 million during 4Q18. This decrease was due to higher current taxes resulting from Mexican peso appreciation.
• Total comprehensive income for 4Q19 was US$ 49.45 million, versus a US$ 7.95 million loss in the same quarter 2018. This increase was primarily due to higher gain in revaluation of investment properties and a positive effect generated by deferred taxes in the fourth quarter of 2019.
• As of December 31, 2019, the total value of Vesta's investment property portfolio was US$ 1.99 billion; a 5.5% increase compared to US$ 1.88 billion at the end of December 31, 2018.

For a full version of Corporación Inmobiliaria Vesta Fourth Quarter 2019 Earnings Release please visit: https://www.vesta.com.mx/investors/financial_information

CONFERENCE CALL INFORMATION:

Vesta will host a conference call on Friday, February 21, 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 February 21 until March 6, 2020 and can be accessed by dialing:
US, toll-free: +1-844-512-2921
International, toll: +1 412-317-6671
Replay ID: 13698384

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 December 31, 2019, Vesta owned 184 properties located in modern industrial parks in 14 states of Mexico totaling a GLA of 29.8 million ft² (2.76 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.

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.