Corporación Inmobiliaria Vesta (VESTA) Q2 2024 earnings summary

Executive summary

• Achieved strong Q2 2024 results with a $3.52 billion portfolio spanning 42.5 million sq ft, driven by robust leasing activity and high-quality execution in Mexico's key regions.

• Leasing activity totaled 2.8 million sq ft, with 1 million sq ft in new leases, half in buildings under construction, led by e-commerce and logistics demand.

• Portfolio occupancy reached 95.0%, with stabilized occupancy at a record 97.5% and same-store occupancy at 97.8%.

• Construction pipeline reached 4.7 million sq ft, with 38.6% pre-leased and a total expected investment of $417.2 million, averaging a 10.4% yield on cost.

• Focus remains on selective investment in Mexico’s manufacturing hubs, long-term value creation, and disciplined capital allocation.

Financial highlights

• Q2 2024 revenues increased 22.4% year-over-year to $63 million, mainly from new leases and inflation adjustments.

• Adjusted NOI rose 19.6% to $57.8 million (94.7% margin), and Adjusted EBITDA grew 20% to $50.2 million (82.3% margin), both up nearly 20% year-over-year.

• FFO increased 23.2% to $37.9 million; FFO per share decreased 3.4% due to higher interest expenses.

• Pre-tax income was $132 million, up from $108 million in Q2 2023, benefiting from property revaluation and higher interest income.

• Gain on revaluation of investment properties was $100.1 million, up from $73.6 million in Q2 2023.

Outlook and guidance

• Management remains confident in capturing nearshoring and manufacturing growth opportunities in Mexico, supported by the new administration.

• Construction pipeline and land acquisition strategy to continue, focusing on high-return, urban infill locations.

• Weighted average lease spread for Q2 2024 was 7.1%, with expectations of continued rent increases and high single-digit re-leasing spreads.