Corporación Inmobiliaria Vesta SAB de CV Q4 FY2024 earnings call

Management Statement and Operational Highlights:

• Introduced Route 2030 strategic plan for the next 5 years, focusing on investment, growth, profitability, energy access, and ESG objectives.
• Highlighted Mexico's near-shoring incentives and Vesta's advantageous position with LEED-certified assets, strong client relationships, and innovative energy procurement.
• 2024 leasing activity: 7.7 million square feet full year, with 3.5 million square feet in new leases (80% with current best-in-class tenants).
• 2024 financial results: revenue $252M (+17.7% y-o-y), adjusted NOI margin 94.6%, EBITDA margin 83.5%, FFO $160.1M (+25.2% y-o-y).
• Q4 2024 leasing: 1.6 million square feet, 739k sq ft new contracts, 813k sq ft renewals; occupancy 93.4%; construction in progress $2.8M sq ft, investment ~$214.1M.
• Secured $545M global syndicated sustainability-linked credit facility.
• Share repurchase program: $42.3M in 2024, 16.5M shares purchased.

Segment Performance:

• Fourth Quarter 2024: Total revenues increased 16.5% to $65.2 million. Adjusted net operating income was $59.1 million, with a margin of 93.5%. Adjusted EBITDA reached $52 million, up 18.5% y-o-y, with a margin of 82.7%. Vesta FFO excluding current tax was $41.7 million in Q4 2024, compared to $32.6 million in Q4 2023.
• Full Year 2024: Total revenue was $252 million, a 17.7% year-over-year increase. Adjusted NOI margin was 94.6% and EBITDA margin was 83.5%. Vesta FFO ended at $160.1 million, a 25.2% increase from 2023.

Guidance:

• 2025 expected to have muted performance for the industry.
• No specific forward guidance on occupancy or lease spreads provided beyond continuing discipline in strategy and capital deployment.
• Continued disciplined capital deployment with land acquisitions and development aligned with Route 2030 strategy.

Risks:

• Uncertainties in internal and external factors affecting the industry.
• Potential impact of tariffs, local regulations, energy regulations, and construction material costs on development pipeline.
• Softening activity in northern markets (Tijuana, Ciudad Juarez) affecting leasing and development.

Q: About Monterrey leasing activity A: Lorenzo Berho discussed Monterrey's key market position, ongoing construction, and confidence in leasing due to quality projects.

Q: On northern market weakness A: Discussed Tijuana and Ciudad Juarez having slowdown, but Vesta's quality products and tenants will help.

Q: On Bajio market A: Talked about Guadalajara and Queretaro's positive signs, tenant pool including electronics, e-commerce, and manufacturing sectors.

Q: On CapEx deployment A: Stated disciplined capital deployment with recent land acquisitions and credit facility to support.

Q: On development pipeline and competitors A: Mentioned Vesta's disciplined approach vs peers, focusing on profitability and quality.

Q: On Punta Norte project delay A: Explained minor delays due to tenant improvements and sustainability features, no material impact.

Q: On development pipeline risks A: Addressed no major risks from materials, emphasized vertical integration and local presence.

Q: On automotive sector A: Stated automakers reaffirmed commitments to Mexico, but uncertainties remain regarding tariffs.

Q: On CapEx deployment amount A: Discussed ongoing construction and future land development