VGP, a European provider of high-quality logistics and semi-industrial real estate, has seen a strong performance of its development and leasing activities in 2021 in all markets where the Group is active.
The 2021 performance was characterised by:
- €79.7 million signed and renewed lease agreements (versus €45.2 million for FY20, +76% YoY), bringing total annualized rental income to €256.1 million (+38.3% YoY, in addition to that VGP signed letters of intent over new future leases representing circa € 30 million of annualised committed rent income if and when converted to lease agreements.
- 1,478,000 m2 under construction – 1.7x the level of Dec 2020 – representing €93.9 million in additional annual rent once fully built and let (currently 83.8% pre-let)
- 652,000 m2 of new projects added to the completed portfolio, now at 3.09 million m2 (99.4% let)
- Expansion of land bank secures future growth
- 4.04 million m2 of new land positions acquired and a further 3.98 million m2 committed subject to permits
- Total land bank acquired and committed has grown to 10.94 million m2 (+43.0% YoY) which provides at least 5 million m2 of future lettable area
- Started operations in France, Serbia and Croatia and eyeing further expansion in other continental European countries including Sweden, Greece and Denmark
- Launched fourth joint venture with Allianz Real Estate with an investment capacity of €2.8 billion and first closing anticipated in second half of 2022
- Strong capital position following completion of €300 million capital increase on 24 November 2021
- Consolidated financial results for FY2021 are scheduled for publication on 24th of February. The Annual Report 2021 is scheduled to be published on 12th of April
VGP’s Chief Executive Officer, Jan Van Geet, said: “Our 2021 operational performance was underpinned by a surge in demand resulting in a record number of new leases signed : in the course of one single year to the same amount as to what our entire rent roll four years ago consisted of – with as predominant drivers space required for the adoption of new technologies and the rise of e-commerce”.
Jan Van Geet continued: “Due to our growing and readily available land bank, we have been able to start-up many iconic mostly fully pre-let projects this year – including our VGP Park Gießen Am alten Flughafen, Berlin Oberkrämer, Budapest Aerozone and Sevilla Dos Hermanas, and significantly expanded – again mostly pre-let – construction works in many existing parks, including in Bratislava, Magdeburg and Nijmegen. Yet, at the same time we have been able to make important investments into land and redevelopment opportunities that will drive our Group’s future prospects through 32 land acquisitions in the course of 2021, and 41 committed land plots. Due to the successful capital raise conducted in November and the new joint venture announced last week with Allianz we are set to continue to be able to seize more of such prime opportunities and look with confidence into 2022”.
Jan Van Geet added: “Last year, we made significant progress on our sustainability agenda as we further enhanced our building and reporting standards, are working on several DGNB Klima Positive pilot projects, switched all VGP offices to green energy and our foundation agreed to support 30 projects around environment, social engagement and cultural heritage preservation.
Jan Van Geet concluded: I want to end by thanking our colleagues and partners. The contrast between the hardship imposed on all those continued to be affected by COVID-19 and the very high level of client-led demand for logistics created a challenging and complex environment for all of us at VGP to navigate. I owe all the members of the VGP Family a great deal of gratitude.”
OPERATING HIGHLIGHTS
Strong new leasing activity continued
- Signed and renewed rental income of € 79.7 million driven by 1,313,000 m² of new lease agreements signed (corresponding to € 74.6 million of new annualized rental income), combined with 102,000 m² of lease agreements renewed (corresponding to € 5.1 million of annualized rental income).
- Germany contributed half of the new leases (€ 37.3 million; 50%) whilst the remainder was geographically well spread across the markets VGP operates: Czech Republic € 10.2 million (14%), Spain € 5.4 million (7%), Hungary € 4.2 million (6%), Romania €3.5 million (5%), Italy €3.3 million (4%), Austria €3.2 million (4%), Portugal €2.4 million (3%), Slovakia € 2.1 million (3%), Latvia €1.9 million (3%) and Netherlands €1.1 million (1%).
- Terminations represented a total of € 3.7 million or 70,000 m2 (of which 46,000 m2 within the Joint Ventures’ portfolio).
- The total signed lease agreements represent € 256.1 million1 annualized committed rental income (equivalent to 4.46 million m² of lettable area), a 38.3% increase versus December 2020 reported at € 185.2 million.
- In addition to the signed lease agreements , VGP has signed a number of Letters of Intent over new future Leases representing € 30 million of annualized committed rent income if and when converted to lease agreements.
- VGP expects a significant amount of rental increase throughout its entire portfolio as virtually all of its lease agreements are annually indexed against inflation.
Record level of construction activity
- During 2021 we delivered 26 projects representing a record 652,000 m² of lettable area, which equates to €32.0 million of annualized committed rental income (99.8% let).
- At year-end 50 projects were under construction representing 1,478,000 m² of future lettable area, which, once delivered and fully let, will generate €93.9 million of annualized committed rental income; the portfolio under construction at year-end was 83.8% pre-let2.
Record land bank expansion
- Over the last 12 month in total 4,037,000 m2 of land was acquired representing a development potential of 1,776,000 m2 and a further 3,981,000 m2 of land plots were committed, pending permits, which have a development potential of at least 1,690,000 m2 of future lettable area, bringing the total owned and committed land bank to 10,938,000 m2 (+43.0% year-over-year), supporting a minimum of 4,983,000 m2 of future lettable area
- In addition to the owned and committed land bank, VGP has signed non-binding agreements (“land under option”) and is currently performing due diligence investigations, on an exclusive basis, on the potential acquisitions of in total circa 2,859,000 m² of new land plots with a development potential of at least 1,304,000 m2.This brings the land bank of owned, committed and under option to 13,797,000 m2 supporting a minimum of 6,287,000 m2 of future lettable area.
- From an asset value perspective, the land bank is predominantly Western European-based but on the bases of square meters the land bank is well spread across the countries in which we operate.
- Our team continues to find additional – increasingly brownfield – sites for future development, and we are working with planning authorities on the most effective and sustainable utilization and regeneration of such sites in order to reduce our impact on the environment.
Significant strengthening of the team
- The team expanded to >320 FTE equivalent as we hired 60 additional people across the organization.
- We have strengthened our teams across the board which will enhance our product offerings and deepen our engagement with our clients.
Expanded relationship with Allianz through fourth joint venture
- In June 2021, VGP and Allianz Real Estate announced the successful eighth and final closing of the first 50/50 joint venture, VGP European Logistics. The transaction comprised of four logistic buildings, including two buildings in a new VGP park and another two newly completed logistic buildings which were developed in parks previously transferred to the joint venture. Following this transaction this joint venture reached its expanded investment target and is fully invested3. The transaction value was € 68.2 million4. The gross proceeds from this transaction amounts to circa € 51.8 million. Furthermore, in September 2021 VGP received a €21.1 million profit-distribution from the First Joint Venture.
- In December 2021, VGP and Allianz Real Estate entered into a new 50:50 joint venture with a €2.8 billion target. This is the fourth joint venture with Allianz Real Estate.
- The ESG setup for the new partnership aims to encompass Carbon Risk Real Estate Monitor and EU Taxonomy compliance, on a best-efforts basis, the use of Sustainable Certification including high BREEAM or DGNB ratings, and EPC criteria, among others.
- The managerial and governance setup of the new partnership is similar to the first three joint ventures with VGP serving the new joint venture as its sole asset, property and development manager. Similarly, to the first joint venture which reached its investment target, the new joint venture will concentrate on the acquisition of income-generating assets developed by VGP in Germany, Czech Republic, Slovakia and Hungary
- A first closing for the new joint venture is anticipated in the second half of 2022.
- In respect of the expansion of the Second Joint Venture, it is anticipated that a further closing will occur during the first half of 2022. This third closing is anticipated to generate proceeds of circa € 120-130 million5
Strengthened capital and financial position
- On 24 November, VGP successfully completed a €300 million offering of new shares (equivalent to 6.1% of shares outstanding).
- The net proceeds and additional leverage headroom provide VGP with the opportunity to reinvest in its development pipeline and continue to grow the business.
- The Group further benefits from renewed and expanded multi-year6 €200 million revolving credit facilities which are currently undrawn.
Expansion of the Group’s European footprint
- The Group further expanded its European footprint with the acquisition of a first land plot in Serbia, where a 1.1 million m2 land position was acquired near Belgrade Airport.
- The Group has opened its first office in France (Lyon). In the coming period the focus will be on identifying suitable development locations.
- Other continental European countries, including Sweden, Denmark and Greece, remain in focus for potential future expansion.
Significant growth in renewable energy power generation
- A total solar power generation capacity of 74.7MWp is currently installed or under construction through 57 roof-projects. This is being realized through a €38.4 million investment to date. In addition, the currently identified pipeline of 37 projects equates to an additional power generation capacity of 74.5 MWp.
Progress towards our Sustainable Development Goals
- We have made significant progress towards our Sustainable Development Goals and are on track to achieve carbon neutrality by 2025 and 50% gross reduction by 2030 under scope 1 and 2.
- With regards to the sustainable building target, the Group aims for BREEAM Excellent or equivalent for all new builds in 2022 (requirement minimum BREEAM Very Good).
- As of 1 January 2022, all of VGP’s European offices switched to renewable energy as a Virtual Power Purchase Agreement was reached with Scholt Energy B.V., the independent energy supplier, and ACT Commodities B.V., the European energy trading house, to provide solar energy from VGP’s existing solar farm on the roofs of VGP Park Nijmegen, Netherlands, to VGP offices across Europe. The agreement covers VGP’s 20 offices across 13 countries. Additionally, it is envisaged to include VGP’s new offices in France and Serbia this year also.
- Disclosure has been significantly enhanced following the publication of the GRI compliant 2020 Corporate Responsibility Report the Group reported its annual CDP and GRESB submissions and obtained an initial Sustainalytics score. The plan is to initiate an MSCI ESG score in 2022.
VGP confirms appointment of new CFO
- VGP is pleased to announce that Piet Van Geet has joined as Chief Financial Officer starting 10 January 2022. Piet will take over from Dirk Stoop who is stepping down after almost 15 years as VGP’s CFO
- Prior to joining VGP, Piet Van Geet (*1985) has been 8 years the CFO of Drylock Technologies, a leading disposable hygiene manufacturer with operations in Europe, Russia, USA and Brazil. After his studies he joined VGP as a project manager in the Baltics and Romania and continued his career at VGD in auditing and finance consulting prior to joining Drylock Technologies. Piet holds degrees at the University of Antwerp of Applied economical sciences and a Master of Tax law
- In order to ensure continuity and a smooth transition process as well as further strengthening of the Group’s corporate governance, the board has decided to appoint Dirk Stoop as Company Secretary starting 10 January 2022. By doing so, the Company implements the principles 3.19 of the Belgian Code on Corporate Governance. With the appointment of the Company Secretary, the CFO will no longer fulfil any of the secretarial duties which were previously combined with the CFO function
- The board of directors have also agreed to amend the VGP corporate governance charter to reflect the aforementioned changes
Outlook 2022
- Client demand and shortage of supply of grade A logistics and industrial buildings are supporting rent levels and occupancy. The underlying fundamentals for logistics and semi-industrial real estate remain robust with e-commerce continuing to be a big driver for demand of new lettable space.
- Based on the strong leasing activities as reported over the course of 2021 and indications of interest received for the coming period, development activities are expected to continue to operate at elevated levels well into 2022
- Longer term development activities will continue to be driven by client-led demand and our ability to meet these opportunities with a.o. VGP’s readily available prime land bank locations
- With regards to VGP Renewable Energy, the Group focuses on an expansion of the service offering through increased production of green energy used for self-consumption and facilitating our clients in their transitioning towards green energy
VGP N.V. 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 10.94 million m² and the strategic focus is on the development of business parks. Founded in 1998 as a Belgian family-owned real estate developer in the Czech Republic, VGP with a staff of circa 350 employees owns and operates assets in 12 European countries directly and through several 50:50 joint ventures. As of June 2021, the Gross Asset Value of VGP, including the joint ventures at 100%, amounted to € 4.48 billion and the company had a Net Asset Value (EPRA NTA) of € 1.51 billion.