VGP Trading Update: Surge in VGP’S New Contracted Rental Income Doubles Development Activity
19 November 2021 - 5:00PM
VGP Trading Update: Surge in VGP’S New Contracted Rental Income
Doubles Development Activity
19
November 2021, 7:00am, Antwerp,
Belgium: VGP NV (‘VGP’ or ‘the Group’), a European
provider of high-quality logistics and semi-industrial real estate,
today published a trading update for the first ten months of
2021:
- Record
operating performance underpinned by strong client-led demand
- €63.4 million
signed and renewed lease agreements (versus €34.6 million for
10M’20), bringing total annualized rental income to €240.5 million
(+29.8% year-to-date)
- 1,619,000 m2
under construction – 2.2x the level of Oct 2020 – representing
€100.0 million in additional annual rent once fully built and let
(currently 80.7% pre-let)
- 427,000 m2
added to the completed portfolio, now at 2.87 million m2 (98.8%
let)
- Expansion of
land bank despite significant consumption secures future growth
- 3.17 million m2
of new land positions bought and a further 4.21 million m2
committed subject to permits
- Total land bank
acquired and committed has grown to 10.49 million m2 (+37.1%
year-to-date) which provides 4.69 million m2 of future lettable
area
- Agreement in
principle with Allianz Real Estate in respect of setting up a
fourth joint venture with an investment capacity of €2.8 billion
and first closing anticipated in 2022
VGP’s Chief Executive Officer, Jan Van
Geet, said: “The year 2021 is turning into a record year
in many respects as e-commerce demand continues to go through a
structural shift and adjustments to business supply chains increase
demand for warehouse space. We have achieved our best-ever new
leases signed and square meters under construction whilst
maintaining a high pre-let level of 80.7%.”
Jan Van Geet continued: " I am most delighted
that we have managed to further expand our land bank. The level of
elevated construction activity consumed a significant amount of our
existing land bank, yet even on a net-basis we managed to continue
to increase it – since December 2020 by 2.84 million m2 – as we
have managed to secure several more iconic land positions during
the last few months. These include positions in Vienna, Budapest
and San Sebastián, and an extension of our existing park in
Bratislava, that will drive our Group’s future prospects and
growth. VGP further expanded its footprint across Europe as we have
acquired a first land position in Serbia and will open our first
office in France, allowing us to serve more businesses and
communities across Europe. We are also expanding our renewable
energy business with now 145.4 MWp in solar roof projects installed
or in the pipeline.”
Jan Van Geet concluded: “In addition to our outstanding
operating performance, the increasing engagement with our clients
is a strong proof point of our successful strategy as we remain
committed to using our resources to drive sustainable solutions to
support our employees, clients and the communities we serve. Our
expanding balance sheet and growing capital base allows us to
expand our client-led construction activities and keep
income-generating assets on our balance sheet longer. Our newly
announced joint venture with Allianz Real Estate will, once
operational, provide us with the ability to continue to recycle our
capital expenditures and re-invest into new development
opportunities”
OPERATING HIGHLIGHTS –
10M 2021
Strong lease activity
reflects significant
client demand
- Signed and
renewed rental income of €63.4 million driven by €58.5 million of
new leases (€5.9 million on behalf of the Joint Ventures1) and €4.9
million of renewals (all on behalf of the Joint Ventures). Lease
agreements in the amount of €3.3 million were terminated
- Annualized
committed leases as of October 2021 (including Joint Ventures at
100%) of €240.5 million (vs €185.2 million at Dec-20) of which
€149.6 million related to the Joint Ventures
- Our commercial
teams are experiencing significant demand. Based on already signed
letters of intent for additional future lease contracts, we expect
the current pace to continue into the coming period as clients
respond to consumer desire for convenience. Changing consumption
trends across the physical and digital space are fundamentally
impacting and changing the nature of demand from our clients
- The new leases
signed are typically long-term (increasing our weighted average
lease term of the total portfolio from 8.5 years in Dec 2020 to 8.7
years today) and indexed annually to inflation
Development activities
- Delivery of 16
projects during the first ten months of 2021 adding 427,000 m2 of
lettable area representing € 21.1 million of annualized leases;
these buildings are 98.4% let. It is expected that circa 100,000 m²
of additional lettable area will be delivered prior to the year-end
(100% pre-let)
- A total of 58
projects under construction which will create 1,619,000 m2 of
future lettable area representing € 100.0 million of annualised
leases once fully built and let (80.7% pre-let)
- Whilst
construction costs have trended upward, this has been offset
through higher rental prices and lower yields
- The significant
investments into our organizational structure over the last few
years – the Group today has circa 350 employees, with local
technical expertise available across the Group and in all of our
markets – have enabled the Group to swiftly gear-up for the current
surge in demand without impacting timelines and quality of our
construction pipeline
- Geographical
split of parks under construction, based on square meters: 46% are
located in Germany, 12% Spain, 12% in Czech Republic, 9% Slovakia,
7% Romania, 6% the Netherlands, 4% Hungary, 3% Latvia, 2% Italy and
1% Austria
Expanding land bank
with strategic geographic spread
- During the first
ten months of 2021 in total 3,165,000 m2 of land was acquired
representing a development potential of 1,320,000 m2 and a further
4,205,000 m2 of land plots were committed, pending permits, which
have a development potential of 1,770,000 m2 of future lettable
area, bringing the total owned and committed land bank to
10,490,000 m2 (+37.1% year-to-date), supporting 4,685,000 m2 of
future lettable area
- A further
3,230,000 m² of new land plots have been identified and secured
which are under due diligence and have a development potential of
1,470,000 m² of future lettable area. This brings the land bank of
owned, committed and secured to 13,720,000 m2 supporting 6,155,000
m2 of future lettable area
- 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
- Our team
continues to find additional – increasingly brownfield – sites for
future development, and we are working with planning authorities on
the most effective and sustainable utilization and regeneration of
such sites in order to reduce our impact on the environment
Expansion of the Group’s
European footprint
- The Group
further expanded its European footprint with the acquisition of a
first land plot in Serbia, where a 1.1 million m2 land position was
acquired near Belgrade Airport. The main focus will now be on the
development of this location as several, primarily Western European
manufacturing companies have expressed interest
- The Group will
open its first office in France (Lyon). In the coming period the
focus will be on identifying suitable development locations
- Other
continental European countries, including Sweden and Greece, remain
in focus for potential future expansion
Renewable Energy
- A total solar
power generation capacity of 62.8MWp is currently installed or
under construction through 54 roof-projects. This is being realised
through a €32.3 million investment to date. In addition, the
currently identified pipeline equates to an additional power
generation capacity of 82.6 MWp
Agreement in principle with Allianz Real Estate
regarding setup of fourth
joint venture2
- Agreement in
principle with Allianz Real Estate has been reached in respect of
setting up a fourth 50:50 joint venture between the two partners.
This new Joint Venture is replacing the investment capacity of the
First Joint Venture – which has reached its investment capacity at
€2 billion – and covers the same countries
- The new joint
venture will have an investment target of €2.8 billion and follows
a similar structure as the first two joint ventures with VGP
servicing the new joint venture as its asset, property and
development manager
- A first closing
with the new joint venture is anticipated in the course of
2022
Capital and liquidity position
- In September
2021 VGP received a €21.1 million profit-distribution from the
First Joint Venture
- In respect of
the expansion of the Second Joint Venture, it is anticipated that a
further closing will occur during the first half of 2022. This
third closing is anticipated to generate proceeds of circa €
120-130 million3
- The newly
announced joint venture with Allianz Real Estate will provide the
Group with the ability to continue recycle its capital expenditures
whilst simultaneously finance the build-out of the existing
pipeline and acquire new land positions. A first closing with the
new joint venture is anticipated in the course of 2022
- The Group
believes that it is important to maintain a strong capital position
and continually evaluates its capital markets options to finance
the investment pipeline and any opportunistic investment
opportunities as they arise
Outlook
- The Group looks
confidently at the last few weeks of 2021 and into 2022
- Client demand
and supply constraints are supporting rents and occupancy, and
underlying real estate fundamentals are expected to continue to
support a strong positive near-term valuation outlook and sustained
long-term demand
- Based on the
strong leasing activities as reported over the last few months and
indications of interest received for the coming period, development
activities are expected to continue to operate at elevated levels
well into 2022
- Longer term
development activities will continue to be driven by client-led
demand and our ability to meet these opportunities
CONTACT DETAILS FOR INVESTORS AND MEDIA
ENQUIRIES
Martijn Vlutters (VP – Business Development & Investor
Relations) |
Tel: +32 (0)3 289 1433 |
Petra Vanclova (External Communications) |
Tel: +42 0 602 262 107 |
Anette NachbarBrunswick Group |
Tel: +49 152 288 10363 |
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 in light
of 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 developer, manager and
owner of high-quality logistics and semi-industrial real estate.
VGP operates a fully integrated business model with capabilities
and longstanding expertise across the value chain. The company has
a development land bank (owned or committed) of 10.49 million m²
and the strategic focus is on the development of business parks.
Founded in 1998 as a Belgian family-owned real estate developer in
the Czech Republic, VGP with a staff of circa 350 employees owns
and operates assets in 12 European countries directly and through
several 50:50 joint ventures. As of June 2021, the Gross Asset
Value of VGP, including the joint ventures at 100%, amounted to €
4.48 billion and the company had a Net Asset Value (EPRA NTA) of €
1.51 billion. VGP is listed on Euronext Brussels (ISIN:
BE0003878957).
For more information, please visit:
http://www.vgpparks.eu
1 Joint Ventures means either and each of (i)
the First Joint Venture i.e. VGP European Logistics S.à.r.l., the
50:50 joint venture between VGP and Allianz and (ii) the Second
Joint Venture i.e. VGP European Logistics 2 S.à.r.l., the 50:50
joint venture between VGP and Allianz, and (iii) the Third Joint
Venture i.e. VGP Park München GmbH, the 50:50 joint venture between
VGP and Allianz, and (iv) LPM Joint Venture, i.e. LPM Holding B.V.,
the 50:50 joint venture between VGP and Roozen Landgoederen Beheer2
Whilst the new joint venture will be the fifth joint venture
entered into by the Group, it will be the fourth joint venture
together with Allianz Real Estate3 Subject to final agreement
between the joint venture partners in terms of the transferred
income generating assets and pricing
- VGP - Trading update 19 November 2021 (EN)
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