Corporación Inmobiliaria Vesta Reports Third Quarter 2019 Earnings Results

MEXICO CITY, Oct. 24, 2019 /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 third quarter ended September 30, 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

• NAV per share increased 9.9% to US$2.30 in 3Q19, from US$2.11 in 3Q18 representing an 8.9% CAGR over the last three years, in dollar terms.
• Continued growth of rent per square foot during the third quarter 2019; with a 3.6% increase to US$0.426 in 3Q19, from US$0.411 in 3Q18.
• During the third quarter, Vesta acquired land in the city of Guadalajara. The Company plans to develop a Vesta Park of approximately 1.7 million square-feet representing a total investment of up to US$ 85 million, including land cost and infrastructure costs.
• Vesta had solid leasing activity of 798,380 ft² (74,172 m²), of which 484,029 ft² (45,029 m²) where new leases with existing and new international clients such as FedEx, Home Depot, DSV, among others, and 313,692 ft² (29,143 m²) of which were lease renewals, driving maturing GLA to only 0.5% in 2019 and 7.3% in 2020. The Company expects continued renewals, while extending current contracts and increasing rents.
• The Company purchased 4.9 million shares during 3Q19 as part of Vesta's share buy-back program, enabling a 16% increase in the quarterly dividend per share to US$0.4352 in 3Q19, from US$0.3740 in 3Q18. All shares repurchased under the buy-back program will be cancelled.
• Vesta began the construction of three new buildings in Juarez and Puebla, totaling 357,166 square-feet with a total investment of US$ 17.4 million. Vesta's 3Q19 development portfolio totaled 812,958 ft² (75,526 m²) with a total expected investment of US$ 38.7 million. Weighted average expected return on cost is 11.3% for 3Q19 development projects.
• Third quarter 2019 revenues increased by 5.9% to US$ 35.83 million, from US$ 33.82 million in 3Q18.
• Third quarter NOI and EBITDA margins reached 95.2% and 84.4%, respectively.
• Pre-tax FFO increased 10.1% year over year, to US$ 21.12 million from US$ 19.18 million due to higher EBITDA and lower interest expenses during 3Q19. Pre-tax FFO per share for 3Q19 reached US$ 0.0367, from US$ 0.0321 in 3Q18 a 14.5% increase.
• New buildings delivered during 3Q19 amounted to 73,694 ft² (6,846 m²) of GLA, of which 100% have been occupied, reflecting the expansion of existing Vesta client BRP.
• Stabilized portfolio grew to 28,232,060 ft² (2,622,844 m²) in 3Q19, from 27,061,611 ft² (2,514,106 m²) in 3Q18, while the stabilized occupancy rate decreased to 95.6% form 96.4%, respectively. Vesta increased its total GLA portfolio by 73,694 ft² (6,846 m²) to 29,336,039 ft² (2,725,407 m²) in 3Q19, from 28,897,590 ft² (2,684,674 m²) in 3Q18. Total portfolio occupancy for 3Q19 was 92.6%, from 91.9% in 3Q18.

Guidance 2019

Vesta has adjusted guidance for the full year 2019 to appropriately reflect the portfolio sale effect, and a delay in income generation in certain projects. As such, Vesta has revised its 2019 guidance to an increase in rental revenue between 7.5% and 8.5%, with a net operating income (NOI) margin of 95% and 84% EBITDA margin. Recycling assets remains an integral component of the Company's strategy to drive value as well as maintain a robust balance sheet and financial flexibility to fund new, high-return investments.

• Revenues increased 5.9% in 3Q19 to US$ 35.83 million, from US$ 33.82 million in 3Q18. This is primarily due to the increase in occupied space which was rented during the third quarter of the year, as well as higher rent per square foot.
• Net Operating Income ("NOI") increased 4.9% to US$ 34.12 million in 3Q19, compared to US$ 32.53 million in 3Q18. The third quarter 2019 NOI margin was 95.2%; a 91-basis-point decrease due to increased costs related to rental income generating properties.
• EBITDA increased 4.3% to US$ 30.22 million in the third quarter 2019, versus US$ 28.97 million in the third quarter of 2018. The EBITDA margin was 84.4% in 3Q19; a 130-basis point decrease, due to portfolio sale which resulted in lower income, while administrative expenses remained constant.
• Pretax funds from operations ("FFO pretax") for 3Q19 increased 10.1% to US$ 21.12 million, from US$ 19.18 million for the same period in 2018. Pretax FFO per share was US$ 0.0367 for the third quarter 2019, compared with US$ 0.0321 for the same period in 2018; a 14.5% increase. FFO after tax for 3Q19 was US$ 14.72 million, compared to US$ 4.10 million during 3Q18. This increase was due to lower current taxes resulting from the depreciation of the peso.
• Total comprehensive income for 3Q19 was US$ 12.07 million, versus US$ 51.79 million 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 third quarter of 2018.
• As of September 30, 2019, the total value of Vesta's investment property portfolio was US$ 1.93 billion; a 2.3% increase compared to US$ 1.88 billion at the end of December 31, 2018.

For a full version of Corporación Inmobiliaria Vesta Third 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, October 25, 2019, 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 October 26 until November 8, 2019 and can be accessed by dialing:
US, toll-free: +1-844-512-2921
International, toll: +1 412-317-6671
Replay ID: 13694496

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, 2019, Vesta owned 182 properties located in modern industrial parks in 14 states of Mexico totaling a GLA of 29.3 million ft² (2.72 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.