Corporación Inmobiliaria Vesta S.A.B. de C.V., a real estate owner, developer and asset administrator of industrial buildings and distribution centers in Mexico, on April 27 announced the successful conclusion of its primary equity offering of common shares through the Mexican Stock Exchange (BVM), successfully raising US$ 229 million in gross proceeds.
The publicly traded company with a market capitalization of approximately US$1 billion, also announced results for the first quarter ended March 31, 2021.
Revenues increased by 1.8% in 1Q21 to US$ 38.39 million, from US$ 37.71 million in 1Q20. This increase is primarily due to new revenue-generating contracts closed during the first quarter 2021. Net Operating Income (NOI) increased 5.0% to US$ 37.22 million in 1Q21, compared to US$ 35.44 million in 1Q20. The first quarter 2021 NOI margin was 96.9%; a 298-basis-point increase due to lower costs related to rental income generating properties. EBITDA increased 6.3% to US$ 33.44 million in the first quarter 2021, as compared to US$ 31.46 million in the first quarter of 2020. 1Q21 EBITDA margin was 87.1%; a 366-basis point increase.
During the first quarter 2021, Vesta acquired additional land in the city of Monterrey on which it plans to develop a Vesta Park of approximately 1.4 million square feet, representing a total investment of approximately US$ 70 million including land cost and infrastructure costs.
Leasing activity for the quarter reached 1,303,180 ft² (121,069 m²). The company closed 1Q21 with a 90.0% occupancy in its total portfolio. Vesta began construction of two 305,684 ft² (28,399 m²) inventory building in Ciudad Juarez and has resumed the construction of a 405,509 ft² (37,673 m²) inventory building in Guadalajara.
Vesta´s 1Q21 development portfolio therefore totaled 1,257,366 ft² (116,813 m²) with a US$ 68.8 million total investment, 18% of which has been leased, with a 10.6% expected weighted average return on cost.
As of March 31, 2021, the total value of Vesta’s investment property portfolio was US$ 2.12 billion; a 0.9% increase compared to US$ 2.10 billion at the end of December 31, 2020
In March 2021, Vesta’s shareholders approved the company’s new financial plan at its annual Shareholders’ Meeting. The plan includes raising US$ 300 million in capital and increasing Vesta’s debt limit to US$ 1,250 million from US$ 850 million, ensuring Vesta has the necessary financial flexibility to continue its growth plans.
As presented in the Shareholder´s Meeting and as part of the company’s financial plan, Vesta is considering, subject to market and other conditions, the issuance of a new bond in order to refinance some of its existing debt and to extend the maturity profile of its debt portfolio.
The Covid-19 crisis had a moderate impact on Vesta’s operations during 2020, with a stabilization of the activities towards the fourth quarter of the year. The company´s YE 2020 revenues and EBITDA were US$150 million and US$126 million, respectively, with a high EBITDA margin of 84.2%.
Credit rating agency Fitch which revised Vesta’s outlook to Negative and affirmed IDRs at ‘BBB- in March, believes the Mexican industrial real estate sector’s business fundamentals remain robust over the medium term due to the country’s economic competitive advantages, which include its strategic location and lower labor cost relative to other manufacturing hubs.
