Corporación Inmobiliaria Vesta, S.A.B. (VTMX)

Corporación Inmobiliaria Vesta SAB – Annual Financial Report

Report Date: 2025-04-30
Period Covered: Full Year 2024

Executive Summary

• Total revenue rose to $2.523 billion ( ↑ 18.2% YoY), driven by new leases and rent escalations.
• Net profit was $2.233 billion ( ↓ 29.4% YoY), impacted by currency translation and a higher deferred tax expense.
• Total debt fell to $8.47 billion ( ↓ 7.5% YoY) following strategic prepayments and the refinancing of older facilities.
• Portfolio expanded to 224 properties (40.3 million ft²) at a 95.5% stabilized occupancy rate.

Profit & Debt Analysis

Profit Drivers:

• Rental Income: Increased 18.2% to $2.520 billion from $2.134 billion.
• Fair‑Value Gains: A $2.707 billion revaluation gain on investment properties supported overall profitability.
• Tax Impact: A $1.709 billion deferred tax charge and a $319 million current tax expense drove the effective tax rate to 47.6%.

Debt Evolution:

• Refinancing: Closed a $545 million green loan in December 2024 with 3–5 year tranches at SOFR+1.30–1.50%.
• Repayments: Prepaid $69.6 million of legacy debt during 2024.
• Leverage Ratios: Net debt/EBITDA stands at 3.3× (target ≤4.0×).

Reasons for Profit Decline

• Currency Translation: Peso appreciation against the dollar generated a one‑off exchange loss of $108 million.
• Higher Deferred Tax: A strong revaluation gain created larger temporary differences, resulting in a $1.709 billion deferred tax charge.
• Sale Proceeds: Lower contribution from land sales in 2024 vs. 2023.

Pros & Cons

Pros:

• High Occupancy: 95.5% stable booking across 224 buildings.
• Premium Tenant Base: Top 10 clients account for only ~27% of GLA, mitigating single‐tenant risk.
• ESG Leadership: First Latin American REIT to issue sustainability‑linked debt; strong GRESB/CDP scores.
• Strategic Land Bank: 6,579 acres enabling 12.9 million ft² of future development.

Cons:

• Concentration Risk: Dollar‐denominated leases expose cash flow to peso fluctuations.
• High Effective Tax Rate: Deferred tax drag reduces reported profits.
• Economic Sensitivity: Mexican real estate is cyclical; downturns and rising rates could pressure rents and occupancy.

All amounts in USD unless otherwise noted.

By industry segment in 2024:

• Automotive: 25.6% of rental income
• Logistics: 16.5%
• Electronics: 7.1%
• E‑commerce: 6.6%
• Food & Beverage: 6.1%
• Aerospace: 6.4%
• Renewable Energy: 3.8%
• Recreational Vehicles: 1.7%
• Medical Devices: 2.2%
• Plastics: 2.3%
• Paper: 0.1%
• Other Manufacturing: 13.3%

Vesta is on a stable growth trajectory with a focus on sustainable industrial developments and disciplined capital allocation. The company has:

1. Diversified Tenant Mix across multiple high‑growth sectors, reducing concentration risk.
2. Strong ESG Credentials that enable green financing and appeal to institutional investors.
3. Healthy Balance Sheet with net debt/EBITDA at 3.3× and an LTV of 21.4%.

Opportunities:

• Nearshoring trends boosting demand along Mexico’s northern corridor.
• Expansion into multi‑tenant parks and built‑to‑suit logistics projects.
• Continued asset recycling via selective land/property sales at premium yields.

Challenges:

• Potential peso volatility impacting dollar‑denominated cash flows.
• Macroeconomic headwinds (inflation, rate hikes) may slow leasing momentum.
• Execution risk in large‑scale development pipeline (~63 million ft² by 2030, requiring $1.7 billion in capex).

Overall, Vesta’s strong platform and financial stability position it well for long‑term value creation, but close monitoring of currency and tax dynamics is critical.