Corporación Inmobiliaria Vesta Reports Second Quarter 2019 Earnings Results

MEXICO CITY, July 25, 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 second quarter ended June 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

• On May 6, 2019, Vesta announced the successful completion of a portfolio sale totaling 1.6 million square-feet at a 7.1% blended cap rate, representing a 20% premium over book value, for a total of US$ 109.3 million.
• Vesta announced on June 24, 2019 the prepayment of a US$150 million syndicated loan, due July 2021, and the dual-tranche private placement of US$85 million in unsecured investment grade bonds, maturing in 10 and 12 years with 5.18% and 5.28% semi-annual coupons, respectively. The Company also announced a commitment letter to receive an unsecured syndicated loan and revolving credit facility for US$80 million and US$ 125 at interest rates of Libor + 190 bps and Libor + 185 bps, respectively. Following this refinancing, Vesta has no material debt maturities for the next five years and the weighted average maturity of the Company's debt has been extended to 7.2 years, while maintaining the same 4.8% weighted average interest rate.
• Vesta had a robust 1.04 million ft² (96,493 m²) in leasing activity, of which 687,153 ft² (63,839 m²) were new leases with existing and new international clients such as 3M, Daimler, Schlemmer, among others, and 351,494 million ft² (32,665 m²) of which were lease renewals, driving maturing GLA to 0.5% in 2019 and 6.6% in 2020. The Company expects continued renewals, while extending current contracts and increasing rents.
• The Company purchased 8.9 million shares during 2Q19 as part of Vesta's share buy-back program, enabling a 15% increase in the quarterly dividend per share to US$0.4290 in 2Q19, from US$0.3740 in 2Q18. All shares repurchased under the buy-back program will be cancelled.
• NAV per share increased 13.1% to US$2.27 in 2Q19, from US$2.01 in 2Q18 representing a 9.4% CAGR over the last three years, in dollar terms.
• Continued growth of rent per square foot during the second quarter 2019; with a 4.9% increase to US$0.423 in 2Q19, from US$0.403 in 2Q18.
• Second quarter 2019 revenues increased by 11.0% to US$ 35.94 million, from US$ 32.28 million in 2Q18.
• Second quarter NOI and EBITDA margins reached 95.3% and 84.2%, respectively.
• Pre-tax FFO decreased 1.7% year over year, to US$ 19.05 million from US$ 19.39 million due to the reduced 2Q19 revenues related to the May 2019 portfolio sale and the increased interest expenses produced by the syndicated loan prepayment. Pre-tax FFO per share for 2Q19 remained at US$ 0.032, from US$ 0.032 in 2Q18.
• New buildings delivered during 2Q19 amounted to 419,673 ft² (38,989 m²) of GLA, of which 37% have been occupied.
• Stabilized portfolio grew to 27,527,064 ft² (2,557,348 m²) in 2Q19, from 27,036,573 ft² (2,511,780 m²) in 2Q18, while the stabilized occupancy rate remained stable at 95.4%. Vesta increased its total GLA portfolio by 785,466 ft² (72,972 m²) to 29,262,345 ft² (2,718,561 m²) in 2Q19, from 28,476,879 ft² (2,645,589 m²) in 2Q18. Total portfolio occupancy for 2Q19 was 91.2%, from 91.9% in 2Q18.
• Vesta's development portfolio totaled 529,486 ft² (49,191 m²) of GLA in 2Q19, with no new additions. Weighted average expected return on cost is 11.4% for 2Q19 development projects.

• Revenues increased 11.0% in 2Q19 to US$ 35.94 million, from US$ 32.38 million in 2Q18. This is primarily due to the increase in occupied space which was rented during the second quarter of the year.
• Net Operating Income ("NOI") increased 9.4% to US$ 34.25 million in 2Q19, compared to US$ 31.31 million in 2Q18. The second quarter 2019 NOI margin was 95.3%; a 139-basis-point decrease due to increased costs related to rental income generating properties, as well as the impact of the portfolio sale during the quarter.
• EBITDA increased 9.1% to US$ 30.26 million in the second quarter 2019, versus US$ 27.73 million in the second quarter of 2018. The EBITDA margin was 84.2% in 2Q19; a 143-basis point decrease, due to portfolio sale which resulted in lower income, while administrative expenses remained constant.
• Pretax funds from operations ("FFO pretax") for 2Q19 decreased by 177-basis points to US$ 19.05 million, from US$ 19.39 million for the same period in 2018. Pretax FFO per share was US$ 0.0321 for the second quarter 2019, compared with US$ 0.0324 for the same period in 2018; a 1.0% decrease. FFO after tax for 2Q19 was US$ 6.78 million, compared to US$ 19.09 million during 2Q18. This decrease was due to higher taxes resulting from the portfolio sale, which increased the current tax by US$ 6.14 million.
• Total comprehensive income for 2Q19 was US$ 51.41 million, versus US$ 7.29 million in the same quarter 2018. This increase was primarily due to US$ 16.02 in gains associated with properties sold, which were recognized in the second quarter of 2019.
• As of June 30, 2019, the total value of Vesta's investment property portfolio was US$ 1.88 billion; a 0.3% decrease compared to US$ 1.88 billion at the end of December 31, 2018.

For a full version of Corporación Inmobiliaria Vesta Second Quarter 2019 Earnings Release, please use this link or visit: https://www.vesta.com.mx/investors/financial_information

CONFERENCE CALL INFORMATION:

Vesta will host a conference call on Friday, July 26, 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 July 26 until August 9, 2019 and can be accessed by dialing:
US, toll-free: +1-844-512-2921
International, toll: +1 412-317-6671
Replay ID: 13687095

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 June 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.