Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: We saw good occupancy but down quarter over quarter. How are your commercial discussions going with clients, and has recent political volatility affected these discussions? Also, what is your outlook for development in the Bajio region? A: Occupancy levels have been strong, with a minor tick in the total portfolio but an increase in the same store portfolio. We have a 98% occupancy rate and a 90% retention rate. Clients are more influenced by economic trends than political considerations, as they have long-term contracts. We expect continued demand and are confident in year-end leasing activity. Development will follow market demand, with strong activity in Bajio and northern Mexico, particularly in the automotive and logistics sectors.
Q: Can you discuss the construction and stabilization cycle for your projects and the pace of new project starts? A: We have a pipeline of approximately 3.5 million square feet under construction, with nearly half already leased. Preleasing activity remains strong, and our underwriting has not changed. We focus on selecting high-quality tenants and markets. While we did not start new buildings this quarter, we plan to start some next quarter and have a robust pipeline for next year.
Q: How do you view demand on a market-by-market basis, particularly in northern markets like Tijuana and Juarez, where there are reports of slowing demand? A: We analyze both short-term behaviors and long-term trends. Despite a minor uptick in vacancies in northern markets, we see strong long-term demand. Tijuana and Juarez have seen rent increases and demand from companies linked to the U.S. economy. We expect leasing activity to remain healthy and will continue focusing on dynamic markets.
Q: Could you provide more detail about the marketing of properties in Tijuana and the market dynamics there? A: Vesta is the market leader in Tijuana, with a strong local presence. We have two buildings available in our Megaregion park, which has energy and infrastructure advantages. We are confident in achieving expected returns above 10% due to increasing rents and strategic land acquisitions at attractive prices.
Q: Are you foreseeing changes in your loan-to-value levels or buyback program given current market conditions? A: We have a strong balance sheet and are engaging in new debt totaling about $500 million, which will increase leverage but remain manageable. We are committed to active capital allocation, including buybacks when market pricing does not reflect asset value. We bought back close to $15 million worth of stock this quarter and will continue to do so if conditions are favorable.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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