Corporacion Inmobiliaria (NYSE:VTMX) reported first-quarter financial results on Friday. The transcript from the company’s first-quarter earnings call has been provided below.
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Summary
Vesta Real Estate Corporation SAB de CV reported strong financial performance in Q1 2026 with total rental income increasing 14.4% to $76.7 million, driven by new leases and inflationary adjustments.
The company maintained a disciplined approach to development with a focus on high-quality, tenant-aligned projects, launching new projects in Mexico City and Tijuana.
Occupancy rates remained stable, and the company anticipates continued demand from sectors such as electronics and data infrastructure, with a positive outlook for future leasing activity.
Vesta’s financial position remains robust with $250 million in cash and a low net debt to EBITDA ratio of 4.1x, enabling flexibility in capital allocation.
Management expressed confidence in the 2030 strategy, emphasizing portfolio quality over scale and anticipating favorable market dynamics and interest rate environments to support growth.
Full Transcript
OPERATOR
Greetings ladies and gentlemen and welcome to the Vesta Real Estate Corporation SAB de CV first quarter 2026 earnings conference call. All participants are currently in listen only mode. A question and answer session will follow today’s prepared remarks and as a reminder, this call is being recorded. It is now my pleasure to introduce your host Fernanda Bettinger, Vesta Real Estate Corporation SAB de CV’s Investor Relations Officer. Please go ahead. Good morning everyone and welcome to our review of the first quarter 2026 earnings results. Presenting today with me is Lorenzo Dominic Vero, Chief Executive Officer and Juan Totil, our Chief Financial Officer. The earnings release detailing our first quarter 2026 results was released yesterday after market close and is available on Vesta IR website along with our supplemental package. It’s important to note that on today’s call, management remarks and answers to your questions may contain forward looking statements. Forward looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ. For more information on these risk factors, please review our public filings. Vesta assumes no obligation to update any forward looking statements in the future. Additionally, note that all figures were prepared in accordance with ifrs which differ in certain significant respects from US gaap. All information should be read in conjunction with and is qualified in its entirety by reference to our financial statements including the notes thereto and are stated in US Dollars unless otherwise noted. I’ll now turn the call over to Lorenzo.
Lorenzo Dominic Vero (Chief Executive Officer)
Thank you for joining us today and for your continued interest in Vesta. The first quarter marked a strong start to the year with solid leasing momentum and stable portfolio performance despite ongoing global tensions. Importantly, as our results demonstrate, we’re seeing not only continued activity but growing conviction from our tenants. This was reflected in new leasing and expansions with existing clients as well as with exciting new clients during the quarter. Our performance reinforces the strength of Vesta’s platform and reaffirms our approach for 2026 and of our Route 2030 strategy which is centered on expanding a well curated, high quality portfolio for disciplined development, leveraging our privileged land bank to capture demand. We believe value creation in our space is driven more by quality than size. While we are seeing increased competition for stabilized assets, Vesta’s differentiation lies in our ability to develop and operate a selective portfolio aligned with global best practices and the evolving needs of our clients. Let me briefly highlight the key drivers of Vesta’s results. As I noted, leasing activity remains Strong with total first quarter leasing reaching approximately 1.6 million square feet, including 1 million square feet in new leases with Best in Class companies. Total portfolio occupancy reached 89.7% by quarter cent while stabilized and same store occupancy reached 93.4% and 95% respectively, reflecting the strength and stability of our tenant relationships. During the quarter, we saw strength in the electronics and aerospace sectors and also in AI related data center infrastructure which is becoming an increasingly relevant demand driver that will benefit from long term structural headwinds. On the development side, our pipeline continues to convert into active construction with vested projects breaking ground across key markets. This is further evidence of both improving demand visibility and the strength of our land bank which is expected to support stabilization and gradual recovery of occupancy. Along these lines, as leasing activity continues to gain momentum and we have selectively resumed development, we launched 2 new projects in Mexico City and one in Tijuana during the first quarter, which brings our total development pipeline to approximately 1.6 million square feet. Importantly, our approach remains disciplined and demand driven, prioritizing 10 and back projects in high conviction markets. From a financial perspective, results remain solid. Total rental income increased to $76.7 million while rental revenues reached $74 million, a 14.1% sequential increase. Also, with sustained strength across our key profitability metrics including NOI and ebitda, let me now turn to the broader market environment and how we are seeing it reflected across our portfolio. Recent data has focused on rising vacancy in certain regions, particularly in the north. However, what we are seeing is better characterized as a correction, not a structural slowdown or decline in underlying demand. Markets such as Tijuana reflect more uneven dynamics, but it’s important to note that this is largely due to supply from less experienced developers. Vesta’s high quality infrastructure ready buildings continue to outperform, reinforcing our focus on portfolio quality. We’re leveraging our strength in this market and launch a new project in Tijuana during the first quarter. New construction starts in key markets such as Monterrey, have declined significantly year over year, reflecting a market that is adjusting quickly. In Mexico City, fundamentals remain Strong. According to CBRE, Mexico City gross absorption reached approximately 6.7 million square feet during the quarter, with pre leasing accounting for most of the activity and more than half of new supply delivered already pre leased. This dynamic reinforces both demand debit and forward visibility across this market. It has also led us to launch the two new projects in Mexico City which I have described. In Guadalajara, we are seeing healthy demand, particularly from electronics and technology related tenants, a key driver of activity in the market. During the quarter, we successfully preleased the two Vesta buildings under construction underscoring the strength of underlying fundamentals and the sustained momentum we’re seeing in the region. Let me now turn to how we are executing against this environment. Our strategy remains consistent. Vesta will grow through a high quality, well created portfolio developed with discipline and aligned with the long term demand. As I have commented, our focus is on portfolio quality, not scale, ensuring that each asset meets the highest standards of infrastructure, energy and operational performance. This is particularly relevant in the current environment. Despite the competition for stabilized assets we are seeing, we believe there is greater opportunity in selective development where we can create value and differentiate through product quality and tenant alignment. Before I conclude, let me briefly touch on our capital position and outlook. As Juan will discuss, we continue to operate with a strong and flexible balance sheet, maintaining a disciplined approach to leverage and liquidity which enables us to execute our strategy while navigating uncertainty. Capital allocation remains selective with a focus on high quality projects supporting efficient growth. In closing, we are highly confident in our outlook. While near term uncertainty persists, the underlying structural drivers underpinning our business are stronger than ever. Tenant activity continues to be robust, foreign direct investment is maintaining strong momentum and manufacturing exports are at record levels. At the same time, higher value industries such as electronics, aerospace, semiconductors and data infrastructure are accelerating demand for Vestas premium properties. We also expect a more favorable interest rate environment together with greater clarity around USMCA to support activity in the quarters ahead. Let me now turn the call over to Juan to review our financial results in more detail.
Juan Totil (Chief Financial Officer)
Thank you, Lorenzo. Good day everyone. Let me start with a brief overview of our first quarter results. On the top line, we delivered a solid start of the year with total revenues increasing 14.4% to 76.7 million, primarily driven by rental income from new leases and inflationary adjustments across our portfolios. In terms of currency mix, 88.9% of first quarter 2026 rental revenues were US dollar denominated compared to 89.7% in the same period last year. Turning to profitability, adjusted net operating income increased 13.4% to 74.7 million. Our adjusted NOI margins decreased 62 basis points year on year to 95.1%, reflecting higher operating property costs. Relative to rental revenues. In the quarter, adjusted EBITDA totaled 62.1 million, up 12.4% year over year, while margin contracted by 130 basis points to 83.9%, primarily driven by higher operating and administrative expenses. During the quarter, Vesta FFO excluding current tax was $43.1 million compared to $45.1 million in the first quarter 2025. The decrease was primarily due to higher interest expense in the first quarter of 2026 compared to the same period in 2025. We closed the quarter with pre tax income of $97.9 million compared to $28.6 million in 2025. This increase was primarily to higher gains in the revaluation of investment properties, higher interest income and higher other income. This was partially offset by higher interest expense reflecting an increase in debt balance during the period, along with the increase foreign exchange losses and other expenses. Turning to our balance sheet, we ended the quarter with $250 million in cash, a cash equivalent and total debt of $1.2 billion. Net debt to EBITDA stood at 4.1 times and our loan to value ratio was 26%, down from the 28.1% at the year’s end, reflecting the prepayment of the remaining 180 million MetLife 3 facilities. As of the end of the first quarter, we have no secure debt with 100% of our debt denominated in US dollars and 87.2% of our interest rate exposure on a fixed rate basis. Finally, consistent with our balanced capital allocation strategy, on April 22, 2026, Vespas shareholders approved a $74.8 million dividend for 2026, representing a 7.5% increase year over year. On May 5, we will pay a first quarter cash dividend. This concludes our first quarter 2026 review. Operator, could you please open the floor for questions?
OPERATOR
We will now begin the question and answer session. To ask a question, press Star, then the number one on your telephone keypad. To withdraw your question, press Star one. Again, our first question will come from the line of Pierre Otrada with Citibank.
Pierre Otrada (Equity Analyst at Citibank)
Hi Lorenzo, Juan and Fernando. Thank you for the call. I have two questions. The first one is SPAC development in Tijuana. So, given this start, could you elaborate to us on the key conditions that supported the decision to move forward with this project in a market where vacancies remain high? More specifically, what metrics or market finance are you monitoring most closely when allocating capital into Tijuana? Just …
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