VGP NV, a European provider of high-quality logistics and semi-industrial real estate, announced the results for the financial year ended 31 December 2020:
- Record net profit of €370.9 million, an 80.4% YoY increase
- Strong business growth across the portfolio
- Signed and renewed rental income of €45.2 million, bringing total signed rental income to € 185.2 million, a 19.5% YoY increase
- A record 33 buildings with 869,000 m² under construction at year-end
- Land bank expanded to 7.65 million m² – a 23.2% YoY increase
- A record 27 projects delivered with 531,000 m² of lettable area, representing €29.1 million of annualized committed leases (entire completed portfolio is 98.5% let)
- Limited impact Covid-19: nearly all due payments received on time and very limited reprofiling
- Launched third joint venture for VGP Park München and completed four successful joint venture closings for a total value of €666 million resulting in €405.6 million net cash proceeds
- First joint venture expanded to a €2 billion net asset value target and discussions with regards to a further expansion through a new joint venture are underway
- Year-end gearing ratio reduced to 25.2%, supported by two successful share placements
- Intention to propose to the Annual Meeting of Shareholders a distribution of a gross dividend of
€ 75 million which equates to € 3.65 per share – a 24.2% YoY increase
VGP’s Chief Executive Officer, Jan Van Geet, said: “The past year was transformative for VGP in many ways. Despite unforeseen challenges, we created an equity base growth from €700 million last year to €1.3 billion today as we outpaced many trends and significantly increased the number of mostly pre-let projects under construction driven by strong lease growth and enabled through cash recycling with four joint venture closings and two successful share placements. Looking ahead at 2021, we are seeing the same strong operating trends continue, leaving us convinced that this can also be a good year.”
Jan Van Geet continued: “We have kicked off several iconic projects in the past year including our new parks in Laatzen (Hanover) and Bratislava. Furthermore, we have several milestone projects in the pipeline including VGP Park Moerdijk – the largest development project in The Netherlands – and more and more brownfield projects including in Giessen where we acquired a 32-hectare former US military airfield and in Wiesloch, Heidelberg, where 13 hectares will be redeveloped at the historic site of Heidelberger Druckmaschinen AG.”
Jan Van Geet concluded: “We have strengthened our teams across the board, including Last Mile logistics and renewable energy expertise, which will enhance our product offerings and deepen our engagement with our clients. We have also continued to invest in our communities – for example, through our contribution to the first 16 projects identified by the VGP Foundation. I want to end by thanking our colleagues and partners, who quickly adapted to the pandemic and safely helped our existing tenants, the communities in which we operate and by ensuring construction projects were delivered to our clients on time.”
FINANCIAL AND OPERATING HIGHLIGHTS
Strong new leasing activity continued
- Signed and renewed rental income of € 45.2 million driven by 625,000 m² of new lease agreements signed (corresponding to € 34.0 million of new annualized rental income), combined with 209,000 m² of lease agreements renewed (corresponding to € 11.3 million of annualized rental income)
- The new leases signed are geographically well spread: Germany € 13.3 million (39%), the Netherlands € 5.9 million (17%), Spain € 3.9 million (12%), Slovakia € 3.0 million (9%), Romania € 2.4 million (7%) and the remainder in Italy, Czech Republic and Latvia (each 5%) and Hungary (1%)
- Terminations represented a total of € 3.7 million or 71,000 m2 (of which 65,000 m2 within the Joint Ventures’ portfolio)
- The total signed lease agreements represent € 185.2 million1 annualized committed rental income (equivalent to 3.22 million m² of lettable area), a 19.5% increase since December 2019
Record level of construction activity
- During 2020 we delivered a record 27 projects representing 531,000 m² of lettable area, which equates to €29.1 million of annualized committed rental income
- At year-end we had a record 33 projects under construction or 869,000 m² of future lettable area, which, once delivered and fully let, will generate €55.2 million of annualized committed rental income; the portfolio under construction at year-end was 79% pre-let2
Implications of Covid-19
- The entire VGP team has been operational throughout the crisis with full access to central systems. None of the VGP workforce has been furloughed and the Group has not taken any government support
- The lockdown measures implemented by governments across Europe to combat the spread of the virus resulted in widespread disruption across many sectors of the economy. In some cases, this has impacted the operations and cash flows of VGP’s customers, which has in some limited cases affected the level of rent we were able to collect from such customer. VGP has worked constructively to support customers facing genuine cash flow challenges by offering to reschedule rental payments or reprofiling
- Rental collection has continued to progress well with rent collection since start of the Covid-19 pandemic at 99.7% of total rent billed
Record land bank expansion
- Acquisition of 2.57 million m² of development land and a further 2.2 million m2 committed subject to permits which brings the total land bank (owned and committed) to 7.65 million m² (a 23.2% net increase since December 2019), which supports 3.60 million m² of future lettable area
- Included within this land bank is more than 450,000 m2 gross lettable area related to VGP Park Moerdijk. On 26 November 2020, VGP entered into a partnership with Roozen Landgoederen Beheer in order to develop Logistics Park Moerdijk (“LPM”) together with the Port Authority Moerdijk on a 50:50-basis. The total development land of LPM amounts to circa 140ha with a total development potential of circa 900,000 m² of lettable area
- In addition to the land owned and committed, negotiations are underway for a further 1.49 million m² of new land plots which have a development potential of 0.66 million m² of lettable area
- More than in prior years, we have acquired several brownfield projects including our new project in Giessen where we acquired a 32-hectare former US military airfield and in Heidelberg where 13 hectares will be redeveloped at the site of Heidelberger Druckmaschinen AG. Brownfield projects are being considered due to their often-strategic location in the vicinity of metropolitan areas and as it helps nature conservation. We are evaluating several other potential brownfield projects
Significant strengthening of the team
- The team expanded to >260 FTE equivalent as we hired 40 additional people across the organization
- We have strengthened our teams across the board, including Last Mile logistics and renewable energy experts, which will enhance our product offerings and deepen our engagement with our clients
Balance sheet significantly strengthened
- In June 2020, VGP and Allianz Real Estate entered into a new 50:50 joint venture for the development of VGP Park München. This is the third joint venture with Allianz Real Estate
- The managerial and governance setup of the new partnership is similar to the first two joint ventures with VGP serving the new joint venture as its sole asset, property and development manager. Contrary to the two existing joint ventures which concentrate on the acquisition of income-generating assets developed by VGP, this new joint venture will initially be focused on the development of VGP Park München
- Also, four successful closings with the joint ventures were completed for a total gross asset value of €666 million. The first joint venture conducted a closing in October 2020 for €166 million and the second joint venture conducted a closing in November 2020 for €258 million. The third joint venture successfully completed its seed closing in June 2020 for €187 million and closed a first transaction of €55 million in December 2020. These four transactions combined resulted in €405.6 million net cash proceeds
- On 21 April 2020 VGP successfully completed an €200 million offering of new shares (equivalent to 10.8% of shares outstanding) at a discount of 4.6% compared to the last traded price and on 3 September 2020 VGP successfully completed an offering of 929,153 existing shares (equivalent to €109 million or 4.5% of the shares outstanding) at a discount of 4.2% compared to the last traded price
- These combined proceeds and existing unutilized long-term revolver facilities provide VGP with significant headroom to reinvest in its development pipeline and continue to grow the business. Gearing3 at the end of 2020 stood at 25.2% providing significant leverage headroom
Significant growth in renewable energy power generation
- VGP Renewable Energy N.V. has been setup by the Group in 2020 to broaden the ability of the Group to assist our clients in making their businesses more sustainable in a cost-effective way by offering green energy, smart energy management and facilitate our clients in their transition towards a green truck and car fleet
- A total PV power generation capacity of 42.5MWp is currently installed or under construction through 36 projects. This is being realized through a €16.2 million investment to date. In addition, the pipeline at the moment equates to an additional power generation capacity of 53.3 MWp
Progress towards our Sustainable Development Goals
- We have made significant progress towards our Sustainable Development Goals and have introduced new goals for 2021 including a target to be net carbon neutral on our footprint for scope 1 and scope 2 emissions in compliance with PAS 2060 by 2025 and comply with CDP climate change disclosure
Outlook 2021
- It is with confidence that we look at 2021 and beyond. Development activities should continue to operate at elevated levels during 2021 supported by solid demand from potential tenants as we expect technological changes and e-commerce to continue to be an important driver for demand across our platform. Our existing land bank provides the foundation for growth over the coming years and VGP expects to be able to continue expanding its rental income and property portfolio through the completion and start-up of new building projects in 2021
- Focus on expansion of service offering through VGP Renewable Energy, through increased production of green energy and facilitating our clients in their transitioning towards green energy
- Finally, we expect in the course of 2021 to be able to announce the details of a further expansion of our first joint venture with Allianz Real Estate beyond the €2.0 billion expanded target and we anticipate to be able to conduct several closings with the joint ventures in the course of this year
VGP is a pan-European developer, manager and owner of high-quality logistics and semi-industrial real estate. VGP operates a fully integrated business model with capabilities and longstanding expertise across the value chain. The company has a development land bank (owned or committed) of 7.65 million m² and the strategic focus is on the development of business parks. Founded in 1998 as a family owned real estate developer in the Czech Republic, VGP with a staff of over 260 employees today owns and operates assets in 12 European countries directly and through several 50:50 joint ventures. As of December 2020, the Gross Asset Value of VGP, including the joint ventures at 100%, amounted to € 3.84 billion and the company had a Net Asset Value (EPRA NAV) of € 1.35 billion. VGP is listed on Euronext Brussels and on the Prague Stock Exchange.
