“We expect that the existing trends (before the crisis) will continue and even accelerate: urbanization, digitalization, e-commerce, last-mile logistics” – Adrian Crizbasianu, Country Manager, VGP Romania.
What type of adaptive measures the company / your project (s) needed? What were the lessons of this period?
Nothing is more important to VGP than the well-being of its employees and partners during the present struggle with covid-19. The company and its stakeholders also recognize that life, work and business will continue after this crisis, and they are helping VGP to remain strong and ready for the future. The VGP team has mostly been working from home since mid-March. Where possible, construction work has continued. Incoming rental payments have so far been little impacted. Our primary focus today is the health and safety of employees and partners, yet, due to the agility of our teams and operating model acting as in-house contractor, our pre-let development pipeline is running nearly entirely on schedule. Combined with a full order book, a diversified and quality tenant portfolio across a broad range of industry segments and a strong balance sheet, we hope and believe we are well placed to weather the current storm.
What is the status of your current project(s) and investments planned for 2020-2021?
Wherever was possible, construction work has continued: our pre-let development pipeline is running nearly entirely on schedule. VGP launched in the midst of COVID crisis a new joint venture with Allianz for the VGP Park Munich which is under construction (photo) and a 200 Mio Eur capital increase of VGP NV that was a complete success – re-confirming investor’s confidence in VGP. In Romania the construction site for expanding VGP Park Timisoara by 20% (additional 30,000 sqm) is running full speed with first deliveries planned for Q4/2020. Expanding the land bank to secure nation-wide development & coverage in upcoming years is another priority that is in focus for 2020 and is executed almost at normal speed in spite of crisis.
Which are the advantages of your business and products, going forward?
With a full order book and 80% of our developments under construction pre-let and VGP being well financed, we feel that we are at present well sheltered from the tempest created by the massive economic disruptions and potential global economic upcoming recession due to the coronavirus COVID-19 outbreak. But we will have to see which impact all of the measures taken to control the spread of the coronavirus COVID-19 will have on our customers and suppliers before being able to make a more detailed analysis. We see mainly two big advantages of our business.
The logistics sector is undergoing rapid changes. As E-commerce continues to reshape consumption patterns, businesses and third-party logistics providers are prioritizing the delivery process within their business model. The existing trend towards more e-commerce has been accelerated by the current crisis & will increase significantly the demand for modern storage space in the market.
We have a long-term view as we continue to only purchase land when we have the legal certainty that we can use the land for its intended purpose. We are and remain confident that the real value of VGP is embedded in its land bank and the excellent locations it is made from and we believe that this will remain so over time, throughout any crisis. Developing the best plots of land requires more and more time and effort and when the opportunity arises is difficult to predict. That is why it is extremely important that we keep a large capital buffer available at all times. Only in this way and provided we have enough reserves, can we respond quickly and ingeniously to opportunities for land purchases in a market where scarcity prevails.
Despite the current uncertainties in the market, VGP must constantly be ready to respond to new investment opportunities and remain loyal to its basic investment principles, which are based on a long-term vision, throughout the economic cycles. Only in this way can we secure the further organic growth of VGP in the long term. Also thanks to the current large pipeline of pre-let projects under construction, we are optimistic about our future.
What transformations you expect in your sector?
We expect that the existing trends (before the crisis) will continue and even accelerate: urbanization, digitalization, e-commerce, last-mile logistics. To all those & particularly for Romania we foresee a re-localization from far distance & near-shoring to Europe of some production facilities who’s output is mainly directed to EU market, this being a positive demand driver for Romania’s Logistic & Industrial RE sectors.
What is your message to clients and partners?
We know we have to earn the trust and respect of our shareholders, employees, customers and the communities we serve every single day. We are devoted to doing this! Today, in response to the outbreak of COVID-19, as the health and safety of our employees, their families, our partners, and communities remains a top priority, we have taken all possible (precautionary) measures to minimize health risks throughout our pan-European platform and to contribute to the attempt to stop this pandemic whilst at the same time maintaining fully operational all our parks and services.
An article published in the exclusive supplement – “Market pulse report, Romania – The new normal” | June 2020
A property market tour, including major cities, with projects status and updated opportunities at the end of the lockdown in Romania – June 2020. | Essential news with the current status of further investments, clients and partners relations, new priorities for the post crisis cycle. | B2B communication report – to help you mark your statements during the changes period.
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