- Pretax Profit: EUR154.6 million, a 218% increase versus last year.
- Net Profit: EUR141.5 million, a 308% increase compared to the first six months of 2023.
- Signed and Renewed Lease Agreements: EUR45.6 million in the first half of 2024.
- Total Committed Annualized Rental Income: Over EUR390 million, a more than 10% increase year-to-date.
- New Lease Agreements: EUR28.7 million, a 47% increase versus last year.
- Square Meters Under Construction: 835,000 square meters across 34 projects.
- Land Bank: 8.5 million square meters, with a development potential of roughly 4 million square meters.
- Gross Renewable Income: Increased by 31% to EUR3.8 million.
- Total Cash Available: EUR625 million, with EUR400 million of undrawn credit facilities.
- Gearing Ratio: Reduced from 40.3% to 32.7%.
- Net Cash Recycling: EUR662 million this year.
- Net Rental and Renewable Energy Income: Grew by 20.2% year-on-year.
- Occupancy Rate: 99% stable.
- Top 10 Tenants: 30% of committed leases with a combined WAULT of 9.9 years.
- Activated Rental Income: EUR327.2 million as of June 2024.
- Proportional Annualized Rental Income: EUR250 million.
- EBITDA: EUR182 million, up 60%.
- Total Assets: Increased from EUR4.4 billion to EUR4.6 billion.
- Investment Property: EUR1.7 billion, with a weighted average yield of 7.6%.
- Cash Flow: Total cash flow of EUR405.7 million for the period.
- Average Cost of Debt: Reduced to 2.21%.
Release Date: August 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- VGP SA (VGPBF, Financial) reported a significant increase in pretax profit, reaching EUR154.6 million, marking a 218% rise compared to the previous year.
- The company signed and renewed lease agreements worth EUR45.6 million in the first half of 2024, increasing the total committed annualized rental income to over EUR390 million.
- VGP SA (VGPBF) has a solid balance sheet with EUR625 million in cash and EUR400 million in undrawn credit facilities, reducing the gearing ratio from 40.3% to 32.7%.
- The company has a substantial land bank of 8.5 million square meters, offering a development potential of approximately 4 million square meters.
- VGP SA (VGPBF) has increased its photovoltaic capacity by 115% year-on-year, contributing to a 31% rise in gross renewable income despite falling energy prices.
Negative Points
- The vacancy rate has edged up to approximately 5%, although the existing portfolio remains more than 99% let.
- Speculative supply in the market has decreased from 43% in 2022 to 36%, indicating potential challenges in future development pipelines.
- Logistic prime rents have shown a slight decrease in some markets, although there is still rental growth in others.
- The company faces increased construction costs due to stringent ESG requirements, impacting development margins.
- Despite a strong performance, there is a noted slowdown in traditional tenant demand, particularly in the retail sector.
Q & A Highlights
Q: Many of your peers are discussing a slowdown in occupier demand, yet you seem to see the opposite. How do you assess the current demand versus last year?
A: Jan Van Geet, CEO: We signed EUR28.7 million of new leases in the first half of the year, and demand remains strong. We have started more speculative construction, but most buildings are already partly pre-let. Traditional tenants are slower, but new onshoring and investment activities in new technologies are compensating. Construction costs have decreased, making investments more attractive.
Q: Can you give an indication of what you expect to complete in the second half of this year and what a sustainable annual run rate of development activity completions is?
A: Jan Van Geet, CEO: We plan to deliver roughly 600,000 to 700,000 square meters this year, with the bulk in the second half. Our normal run rate is 400,000 to 600,000 square meters per annum, but this year might exceed that due to several large projects in the pipeline.
Q: The implied tax rate dropped to about 13% from 25%. Will this be the case for the full year?
A: Piet Van Geet, CFO: The tax rate is influenced by effective and deferred taxes, with deferred taxes related to revaluations. The effective tax was EUR4 million, mainly due to the tax position of VGP NV. The proportional tax rate should remain stable as the JVs grow.
Q: Can you elaborate on your strategy for countries covered by the second JV, Aurora, now that Allianz no longer has exclusivity?
A: Jan Van Geet, CEO: We are negotiating with existing and potential new joint venture partners to expand our strategy. We have released assets in the Aurora-covered countries and are free to manage them as we see fit. We hope to communicate more by year-end.
Q: How are land prices evolving, and how do you see your light industrial exposure given the economic slowdown in Europe?
A: Jan Van Geet, CEO: Land prices are stable, with no significant decreases. We focus on land plots with at least a 30% margin. Our light industrial projects are performing well, with long-term leases and strong tenants. We see new industrial activity and remain confident in our portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
