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VGP NV
Earnings Release • Nov 9, 2023
4022_10-q_2023-11-09_e19f47a8-0304-4946-9aa4-b3e2d055b5f2.pdf
Earnings Release
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VGP TRADING UPDATE
- 9 November 2023, 7:00 am, Antwerp, Belgium: VGP NV ('VGP' or 'the Group') today published its trading update for the first ten months of 2023, reporting solid growth, enhanced liquidity and exciting new development prospects.
- €54.3 million of new and renewed leases signed year-to-date (of which € 18.1 million during the past 4 months) bringing the annualised committed leases for the year to date to €341.2 million1 (+ € 38 million compared to 31 December 2022, which is +13% YTD and +17% y-o-y). Recently we have benefited from a strong rise in demand in our portfolio.
- 24 projects under construction representing 790,000 m² (of which 16 projects totalling 402,000 m² started up during the year) and €55.5 million in additional annual rent once fully built and let. The pipeline under construction is 87.14% pre-let. Currently VGP expects to start up construction of up to 251,000 m2 before year-end. Construction prices remain in decline.
- 18 projects delivered during the year representing 426,000 m², or € 22.3 million in additional annual rent (of which 5 projects totalling 109,000 m² delivered during the 2H 2023), currently 99% let and a further 292,000 m² estimated for delivery in the remainder of 2023, currently 96,5% let.
- 1,240,000 m² of new development land acquired during the year (of which 539,000 m² during 2H 2023) and 875,000 m² of development land deployed to support the new developments started up during the year. Total secured development land bank stands at 9 million m² at the end of October 2023 representing a development potential of over 4.2 million m². As anticipated previously, VGP has been able to secure a number of iconic sites, amongst others the former R&D site of Stellantis at Vélizy-Villacoublay (14 km from Paris Eiffel tower, with direct ring road access) which has already been acquired.
- Property portfolio2 virtually fully let with occupancy at 99% as of 31 October 2023 (compared to 99 % as at 30 June 2023). Of the € 341.2 million committed annualized rental income, € 296.6 has become cash generative, an increase of 24% versus December 2022. Another € 33.1 million of rental income is expected to start within the next twelve months.
- Solid liquidity position as evidenced by:
- (i) Cash distribution relating to VGP Park München joint venture with Allianz Real Estate received in Q3 in amount of € 50 million. Additional profit distribution from the First, Second and Third Joint Venture expected in Q4 in amount of € 30-40 million;
- (ii) Successful first closing of Deka resulting in gross proceeds of € 461 million;
- (iii) Workstreams well advanced to broaden the Joint Venture model substantially further with existing and new partners;
- (iv) Repaid bond of € 225 million at maturity in September '23;
- (v) Reiteration of VGP's investment grade rating by Fitch with stable outlook.
- Photovoltaic capacity grew exponentially to 173MWp operational or under construction and with a further 95MWp being planned. Once built, the renewable energy production will exceed our annual tenant electricity consumption. This contributed to the four-star GRESB developer rating, the second highest among peers in the European logistics segment
1 Including Joint Ventures at 100%. As at 31 October 2023 the annualized committed leases of the Joint Ventures stood at €225.9 million.
2 Including Joint Ventures at 100%.
OPERATING HIGHLIGHTS – 10M 2023
Lease activities
- Over the first 10 months the signed and renewed rental income amounted to € 54.3 million bringing the total committed annualized rental income to € 341.2 million1 (or 5.6 million m2 of lettable area), a 13% increase since December 2022.
- The increase was driven by 504,000 m² of new lease agreements signed, corresponding to € 33.1 million of new annualised rental income2 , whilst during the same period for a total of 180,000 m² of lease agreements were renewed and extended, corresponding to € 10.9 million of annualised rental income (of which € 10.1 million related to the joint ventures3 ). Indexation accounted for € 10.3 million over the first 10 months of 2023 (of which € 6.3 million related to the joint ventures). Terminations represented a total of €5.4 million or 92,000 m², of which € 3.5 million within the joint ventures' portfolio.
• From a geographic perspective, Eastern Europe, mainly driven by Hungary, Romania and Slovakia, accounted for 68% of the incremental new lease agreements (€ 22.4 million, of which € 20.6 million in the own portfolio). Within segments, logistics accounted for 49% (€ 16.3 million, of which € 13.7 million in the own portfolio) of all new lease agreements. We signed a first major Lease (42,000 m2 ) in our VGP park in Rouen, France and expect before year end to be able to sign several other major leases.
1 Including JV's at 100%
2 Of which 446,000 m2 (€ 29.3 million) related to the own portfolio
3 Representing 167,000 m2in the Joint Ventures' portfolio
• The weighted average term1 of the annualised leases of the combined own and Joint Ventures' portfolio stood at 7.9 years, 9.1 years in the own portfolio and 7.3 years in the Joint Ventures portfolio. Of the annualised committed leases 87% (or € 296.6 million) has already become cash generative as of 31 October 2023. A remaining € 44.6 million signed lease agreements will become effective in the future. The breakdown as to when the annualised committed leases will become effective is as follows:
| in € mln | Annualized rental income effective before 31/10/2023 |
Annualized rental income to start within 1 year |
Annualized rental income to start between 1-5 years |
Annualized rental income to start between 5-10 years |
|---|---|---|---|---|
| Joint Ventures |
225.3 | 0.6 | - | - |
| Own | 71.3 | 32.7 | 10.3 | 1.0 |
| Total | 296.6 | 33.3 | 10.3 | 1.0 |
Construction activity
- 16 projects have started up in the course of 2023 which represent 402,000 m2 of future lettable area, or € 27.3 million of annualised lease income once fully built and let.
- This results in a total of 24 projects under construction at the end of October 2023 which will add 790,000 m2 of future lettable area representing € 55.5 million of annualised leases once fully built and let (87.1% pre-let).
| Projects under construction | ||
|---|---|---|
| Own portfolio | VGP Park | sqm |
| Austria | VGP Park Graz 2 | 14,000 |
| Austria | VGP Park Laxenburg | 49,000 |
| France | VGP Park Rouen 1 | 39,000 |
| Germany | VGP Park Erfurt 3 | 29,000 |
| Germany | VGP Park Koblenz | 32,000 |
| Germany | VGP Park Wiesloch-Walldorf | 55,000 |
| Hungary | VGP Park Budapest Aerozone | 30,000 |
| Hungary | VGP Park Gyor Beta | 38,000 |
| Hungary | VGP Park Kecskemét | 18,000 |
| Portugal | VGP Park Loures | 13,000 |
| Portugal | VGP Park Montijo | 32,000 |
| Romania | VGP Park Brașov | 53,000 |
| Serbia | VGP Park Belgrade - Dobanovci | 60,000 |
| Slovakia | VGP Park Zvolen | 9,000 |
| Czechia | VGP Park Prostějov | 10,000 |
| Czechia | VGP Park Ústí nad Labem City | 23,000 |
| Total own portfolio | 504,000 | |
| On behalf of JV | VGP Park | sqm |
| Czechia | VGP Park Olomouc 3 | 9,000 |
| Germany | VGP Park Berlin Oberkrämer | 11,000 |
| Germany | VGP Park Gießen Am alten Flughafen | 192,000 |
| Germany | VGP Park Magdeburg | 74,000 |
| Total under construction | 286,000 | |
| Total under construction | 790,000 |
1 Until the contract end date. The weighted average term until the first break is 7.6 for the portfolio as a whole, 8.7 year for the own portfolio and 7 for the Joint Venture portfolio.
• Since the 30th of June 2023, VGP completed another 5 buildings representing 109,000 m² of lettable area, bringing the total of delivered projects for the first ten months of 2023 to 18 projects, adding 426,000 m2 of lettable area representing €24.6 million of annualized leases and which are 99.2% let.
| Projects delivered 10M 2023 | |||
|---|---|---|---|
| Own portfolio | VGP Park | sqm | |
| Czechia | VGP Park České Budějovice | 14,000 | |
| Germany | VGP Park Erfurt 2 | 42,000 | |
| Germany | VGP Park Halle 2 | 15,000 | |
| Germany | VGP Park Hochheim | 12,000 | |
| Hungary | VGP Park Budapest Aerozone | 14,000 | |
| Hungary | VGP Park Kecskemét | 20,000 | |
| Latvia | VGP Park Tiraines | 29,000 | |
| Portugal | VGP Park Loures | 7,000 | |
| Romania | VGP Park Brașov | 67,000 | |
| Romania | VGP Park Bucharest | 46,000 | |
| Slovakia | VGP Park Bratislava | 19,000 | |
| Total own portfolio |
| On behalf of JV | VGP Park | sqm |
|---|---|---|
| Netherlands | VGP Park Roosendaal | 9,000 |
| Spain | VGP Park San Fernando de Henares |
28,000 |
| Germany | VGP Park Magdeburg | 59,000 |
| Germany | VGP Park Gießen Am alten Flughafen |
45,000 |
| Total on behalf of JV | 141,000 | |
| Total delivered assets | 426,000 |
• Another 292,000 m2 of other projects, which are currently under construction, are scheduled for delivery for the final months of 2023.
• In summary, total portfolio as of the end of October contained 236 buildings of which 212 (4.7 million m2 ) have been completed and 24 (790,000 m2 ) are under construction.
| square meters |
Completed Buildings | Buildings under construction |
Total Buildings | |||
|---|---|---|---|---|---|---|
| Country | Rentable space |
Number of buildings |
Rentable space |
Number of buildings |
Rentable space |
Number of buildings |
| Austria | 25,000 | 2 | 64,000 | 3 | 89,000 | 5 |
| France | - | - | 39,000 | 1 | 39,000 | 1 |
| Germany | 2,315,000 | 86 | 393,000 | 8 | 2,708,000 | 94 |
| Hungary | 197,000 | 12 | 86,000 | 3 | 283,000 | 15 |
| Italy | 86,000 | 7 | - | - | 86,000 | 7 |
| Latvia | 133,000 | 4 | - | - | 133,000 | 4 |
| Netherlands | 259,000 | 6 | - | - | 259,000 | 6 |
| Portugal | 37,000 | 2 | 44,000 | 2 | 81,000 | 4 |
| Romania | 316,000 | 15 | 53,000 | 1 | 369,000 | 16 |
| Serbia | - | - | 60,000 | 2 | 60,000 | 2 |
| Spain | 389,000 | 21 | - | - | 389,000 | 21 |
| Czechia | 745,000 | 48 | 42,000 | 3 | 787,000 | 51 |
| Slovakia | 227,000 | 9 | 8,000 | 1 | 235,000 | 10 |
| Total | 4,730,000 | 212 | 790,000 | 24 | 5,520,000 | 236 |
| square meters |
Completed Buildings | Buildings under construction |
Total Buildings | |||
| Ownership | Rentable space |
Number of buildings |
Rentable space |
Number of buildings |
Rentable space |
Number of buildings |
| Own | 974,000 | 42 | 790,000 | 241 | 1,764,000 | 66 |
| JV | 3,756,000 | 170 | - | - | 3,756,000 | 170 |
Total 4,730,000 212 790,000 24 5,520,000 236
1 Contains buildings under construction that are destined for the joint venture but currently fall under the economic ownership of VGP, the assets will be transferred into the JV upon completion.
Land bank
• Year -to-date VGP acquired 1,240,000 m² of land and a further 719,000 m² is currently committed, subject to permits. This brings the current owned and committed landbank to 9.0 million m² which entails a development potential of over 4.2 million m².
- The most important land plots that VGP has been able to acquire in the second half have been in France and Italy:
- VGP Park Vélizy (former R&D site of Stellantis), Paris region, France. With the acquisition of this 194,000 m2 land plot VGP managed to secure its first position in the economical centre of France. Located in Vélizy, south of Paris and east of Versailles, the site has great connectivity, located directly to the outer-ring road of Paris (A86), adjacent to public transport access, at 15 minutes from Orly airport and only 8 km removed from the inner city of Paris. The site has a development potential of 80,000 m². Having been a R&D site of the car manufacturer Stellantis since the 1960's, it will be VGP's goal to rehabilitate this brownfield. The redevelopment of old industrial sites in close collaboration with the local community is a core expertise of VGP.
- VGP Park Parma Paradigna will consist of 50,000 m² lettable area about 7 km from the city centre of Parma and, immediately adjacent to the A1 motorway exit. The park will boast a strategic position as it is situated on one of the most important road axes in central northern Italy.
- From an asset value perspective, the land bank is predominantly Western European-based but on the bases of square meters the land bank is well spread across the countries in which we operate.
- In total 87% of the land bank is owned or committed by VGP for its own portfolio, whereas 13% is in co-ownership with various Joint Venture partners. It concerns mainly LPM (929,000 m²) in the Netherlands, Grekon (34,000 m²) in Germany, Belartza (145,215 m² ) in Spain and Ymir (52,719 m²) for the remaining development land in VGP Park Münich (building D).
Renewable energy
- 112 roof-solar installations with a total capacity of 172.9 MWp are currently operational or under construction; a 31% increase YTD, of which 83.9 MWp is operational and 89.0 MWp is currently under construction. This is being realised through a € 94.2 million investment to date In addition, the identified pipeline equates to an additional power generation capacity of 95.1 MWp.
- Despite a significant growth in tenant electricity demand due to the growth of the standing portfolio, as well as a switch to heat pumps, the renewable energy project pipeline has kept pace as the anticipated annual electricity production outpaces total tenant annual electricity demand. The potential current annual energy production, including PV projects under construction and in the pipeline is estimated at 241.275 GWh per year, which is more than the total electricity consumption of all our tenants in VGP buildings in 2022.
ESG initiatives
- The Group was awarded by GRESB with a four green star rating and a second place in their peer comparison group in the Development category. On the Standing Investments the Group has also shown progress and was able to maintain its three green star status.
- For the EPRA's Sustainable Best Practice Reporting VGP has been recognised in the category 'most improved' and was awarded with a bronze medal for the first time.
Update on Joint Ventures
- Ymir, the Third Joint Venture containing VGP Park Munich drew its available credit facility of € 65.5 million in July 2023. Following the refinancing, the entity initiated a distribution of excess cash available to their shareholders, amounting to € 86 million. Out of this amount, € 43 million was allocated to VGP. Along with a final € 7 million top-up payment for the buildings currently constructed in VGP Park Münich, VGP as such received € 50 million of cash in July 2023.
- On July 21st 2023 VGP signed a new joint venture agreement with Deka Immobilien. The first closing of this Fifth Joint Venture took place on the 31st of August. In this closing 17 of the total 20 buildings that were earmarked for this Joint Venture, have been transferred. The gross proceeds from this first closing amounted to €461 million.
- VGP has several workstreams running with new and existing partners to broaden the Joint Venture model further.
Outlook
- VGP has been able to exclusively secure a number of iconic sites in the vicinity of major economic hubs in Europe's largest markets. We are very excited on the development potential and long term value of these assets and expect to materialize several transactions in the next months.
- With sharply declining construction costs in most countries, VGP is gradually able to construct again at good value for money, also speculatively, keeping an eye on a prudent pre-let nonetheless. Recently we have seen and benefitted from a strong rise in demand and we expect to initiate up to 251,000 square meters still this year, which will lead to initiated construction of new developments over 2023 at the high end of our estimations.
- As we are broadening our Joint Venture model and are set to recycle cash in 2024 on a number of closings, as well as profiting from our cash generating deliveries, we expect to pay out a dividend at least similar to FY 2023.
CONTACT DETAILS FOR INVESTORS AND MEDIA ENQUIRIES
| Investor Relations | Tel: +32 (0)3 289 1433 | ||
|---|---|---|---|
| [email protected] | |||
| Karen Huybrechts | Tel: +32 (0)3 289 1432 | ||
| (Head of Marketing) |
Forward-looking statements: This press release may contain forward-looking statements. Such statements reflect the current views of management regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. VGP is providing the information in this press release as of this date and does not undertake any obligation to update any forward-looking statements contained in this press release considering new information, future events or otherwise. The information in this announcement does not constitute an offer to sell or an invitation to buy securities in VGP or an invitation or inducement to engage in any other investment activities. VGP disclaims any liability for statements made or published by third parties and does not undertake any obligation to correct inaccurate data, information, conclusions or opinions published by third parties in relation to this or any other press release issued by VGP.
ABOUT VGP
VGP is a pan-European owner, manager and developer of high-quality logistics and semi industrial real estate as well as a provider of renewable energy solutions. VGP operates a fully integrated business model with capabilities and longstanding expertise across the value chain. Founded in 1998 as a Belgian family-owned real estate developer in the Czech Republic, VGP with a staff of circa 371 FTEs today operates in 17 European countries directly and through several 50:50 joint ventures. As of June 2023, the Gross Asset Value of VGP, including the joint ventures at 100%, amounted to € 6.76 billion and the company had a Net Asset Value (EPRA NTA) of € 2.2 billion. VGP is listed on Euronext Brussels (ISIN: BE0003878957).
For more information, please visit: http://www.vgpparks.eu/en