VGP’S H1 2023 RESULTS

VGP NV (‘VGP’ or ‘the Group’), a European provider of high-quality logistics and semi-industrial real estate, announced the results for half-year ended 30 June 2023.

In the first half of 2023, the company achieved significant milestones, including €36.2 million worth of signed and renewed lease agreements, resulting in a total committed annualized rental income of €328.1 million, showing an 8.2% year-to-date increase. Net rental and renewable energy income on a look-through basis also saw a remarkable 60% year-over-year increase, reaching €75.6 million. The company demonstrated robust financial performance with a pre-tax profit of €48.6 million, driven by €33.5 million of net rental and renewable energy income (a 96% YoY increase) and €45.5 million in net valuation gains on the portfolio. Furthermore, the company has an extensive construction pipeline, with 732,000 m2 under construction across 24 projects, projected to generate an additional annual rent of €50.6 million when fully built and leased. Additionally, €150 million of bonds were repaid in April ’23, with further bond repayments of €225 million scheduled for September ’23, to be covered by additional Joint Venture cash recycling.

“It has been an eventful and productive first half of the year, marked by a considerable € 36.2 million of annualized committed rental growth. We are pleased to have welcomed numerous new tenants to our portfolio whilst successfully executing multiple transactions with our existing Joint Venture partners. Moreover, we are witnessing a decline in construction prices which allows us to initiate new constructions at favourable margins,” said VGP’s Chief Executive Officer, Jan Van Geet. 

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As at 30 June 2023, the signed and renewed rental income amounted to € 36.21 million, bringing the total committed annualized rental income to € 328.1 million2 (equivalent to 5.4 million m² of lettable area), a 8.2% increase since December 2022.

“I believe many have been waiting for an update on the broadening of our Joint Venture model and I am convinced that with Deka we have found comparable DNA to sustain a long term 50:50 partnership. By the end of Q3 a first closing comprising over € 700 million of gross asset value will materialize and by Q3 ’24 the entire portfolio, totalling over € 1.1 billion, will have transferred into the joint venture allowing VGP to recycle over € 700 million of cash. The joint venture will be managed by VGP in a similar way to our existing Joint Ventures and as I have been told, the transaction forms the largest of Europe in its class year to date. In these times, I believe I can proudly state that this is a testament to the resilient quality of our portfolio,” continued Jan Van Geet.

From a geographic perspective, Eastern Europe, mainly Romania, accounted for 68.5% of the incremental new lease agreements (€ 13.4 million, of which € 11.1 million in the own portfolio). Within segments, light industrial accounted for 66%5 (€ 11.9 million, of which € 10.2 million in the own portfolio) of all new lease agreements.

“As expected, the real estate industry’s recent shake-up on the back of rising interest rates has revealed a multitude of opportunities, and we are ready to capitalize on them. As such, VGP has signed exclusivity on a number of iconic industrial sites on absolute top locations.In this respect, our solid balance sheet and transactions with existing and new Joint Ventures facilitates us to recycle cash to sustain continuous growth. A prospect I am indeed very excited aboutand look forward to report upon as we progress,” Jan Van Geet, concluded.

In VGP parks in Romania, at the end of the first semester, 14 buildings were completed on an area of 295,000 square meters, and one building was under construction on an area of 21,000 square meters.

VGP is developing industrial parks in Romania in Bucharest, Arad, Brasov, Timisoara, and Sibiu. VGP Park Bucharest North is developed on approximately 250,000 square meters of land with a total leasable area of approximately 120,000 square meters divided into 4 buildings. VGP Park Arad is developed on 390,000 square meters of land, with a leasable area of up to 200,000 square meters. VGP Park Brasov is developed on an area of approximately 370,000 square meters and has 200,000 square meters of leasable space. VGP Park Timisoara covers an area of 360,000 square meters and has a leasable area of 180,000 square meters. VGP Park Sibiu is developed on an area of 220,000 square meters and has 100,000 square meters available for lease.