VGP Trading Update: Solid growth, record deliveries and occupancy rate boost recurring rental income

3 November 2022, 7:00 am, Antwerp, Belgium: VGP NV (‘VGP’ or ‘the Group’) today published its trading update for the first ten months of 2022, in which, against a background of volatile macro-economic and geopolitical uncertainties VGP recorded a robust operating performance:

• €53.1 million of new and renewed leases signed year-to-date (of which €21.3 million during the past 4 months) bringing the annualised committed leases for the year to date to €291.0 million[1] (+ €34.9 million compared to 31 December 2021) (+13.6% YTD and +21.0% y-o-y)
• Property portfolio[2] virtually fully let with occupancy at 99.6% as of 31 October 2022 (compared to 99.4 % as at 31 December 2021)
• Based on the current inflation, we expect our already income generating rent roll to grow by 7% (€17 million²) through indexation alone in 2023
• 37 projects under construction representing 1,253,000 m² (of which 16 projects totalling 346,000 m² started up during the year) and €8 million in additional annual rent once fully built and let. These buildings under construction are 93.7% pre-let
• 28 projects delivered during the year representing 576,000 m², or € 31 million in additional annual rent (of which 11 projects totalling 240,000 m² delivered during the 2H 2022) and a further 460,000 m² estimated for delivery in the remainder of 2022
• Photovoltaic capacity grew exponentially y-o-y to 120.9MWp operational or under construction and with a further 67.9MWp being planned. Once built, the significant photovoltaic roll-out – which is already generating €3.7 million revenues YTD – will match our 2021 tenant electricity consumption. This contributed to the three star GRESB developer rating and elevated the portfolio compliance on the Paris-aligned 1.5-degree decarbonisation pathway until the year 2045 which moves us significantly closer to a 1.5-degree ready portfolio under CRREM
• Continuing strong relationship with Allianz Real Estate evidenced by:
  • Second closing of VGP Park München joint venture with Allianz Real Estate on track for December 2022 with proceeds of circa €70 million to be expected;
  • Including the upcoming closing for VGP Park München the total JV closing in 2022 will amount to an annual record of more than €800 million;
  • Additional closing expected in Q1 2023 with the First Joint Venture for a total GAV of more than € 100 million. The transaction is currently under due diligence;
  • Profit distribution from the joint ventures gaining momentum with profit distribution year to date totalling €28.2 million with a further ca. €30 million profit distribution to be received during November 2022
• 1,925,000 m² of new development land acquired during the year (of which 378,000 m² during 2H 2022) and 696,000 m² of development land deployed during the year to support the new developments started up during the year. Total secured development land bank stand at 10,683,000 m² at the end of October 2022 representing a development potential of circa 5 million m²

VGP’s Chief Executive Officer, Jan Van Geet: “VGP is having a very solid year in terms of growth and cash generation and an absolute record year in terms of completions of long-let projects to our clients: now these rents turn effective this generates a significant boost in our recurring revenue.”

Jan Van Geet added: “These record deliveries have made evident once again that VGP's DNA is of course closely linked to the constant development of new projects. As we look forward, we see a significant need for high quality new developments, driven by many factors, as the world of tomorrow is one of sustainability and efficiency driven by smart technologies and artificial intelligence. I believe that we have only seen a fraction of the efficiency potential yet, more innovations to optimise energy and operational efficiency are inevitably going to transform our industry in the years ahead of us. I do believe that our team is well set-up to deliver those highly complex, tailor-made, and sustainable solutions to the highest quality matching future customer needs, and above all that it is set-up to do that in all the countries we are active in in a consistent way.  This is critical as our long-term development activities will always be driven by our ability to meet such client demand and our profitability looking forward.”

Jan Van Geet concluded: “It is equally important to point out to the fact that, as an economy does not develop in a linear way we have, besides the developer gains, always built different sources of recurring income – besides rental income and income from our renewable energy sources also facility and property management fees and asset management fees. These recurrent income streams, boosted by the record delivery of buildings over the past years are now becoming a substantial part of our income and give us ample room to pay out dividends in the future and strengthen substantially VGP’s balance sheet on a standalone basis.  Indeed, we have always deliberately chosen to keep recurring income from our assets partly on our balance sheet ourselves, partly through JVs we manage. Furthermore as a result, combined with the existing cash on balance sheet, undrawn RCFs and planned Munich joint venture closing we have enough means available to cover our commitments well beyond 2023.”

[1]        Including Joint Ventures at 100%. As at 31 October 2022 the annualised committed leases of the Joint Ventures stood at €174.5 million (€151.1 million as at 31 December 2021).

[2]        Including Joint Ventures at 100%.