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Annual Financial Press Release For the period from 1 January 2018 – 31 December 2018

01. 03. 2019

Transformation into truly Pan-European platform results in record profit and creates solid base for future growth

VGP NV (‘VGP’ or ‘the Group’), a leading European provider of high-quality logistics and semi-industrial real estate, today announces the results for year ended 31 December 2018:

  • Broadened European footprint, having entered Italy, the Netherlands and Austria in 2018
  • Strong operating performance resulting in record profit of € 121.1 million (+26% YoY)
     - Signed and renewed lease agreements corresponding to € 38.7 million of annualised rent income bringing the total annualised rental income to € 104.1 million (+38% YoY)[1]
     - VGP delivered 505.000 m2 of lettable area in 2018 (+44% YoY)
  • Strengthened platform for future growth
     - VGP invested in its future pipeline with 1.7 million m2 of new land bought
     - A further 1.6 million m2 committed subject to permits
     - Joint commitment with Allianz Real Estate to expand JV structure beyond existing countries[2]
  • Proposal to increase dividend by 15.8% to € 2.20 per share representing a gross dividend yield of 3.2%[3]

VGP’s Chief Executive Officer, Jan van Geet, said: “Delivering record profits, 2018 was another intensive year for VGP. We managed to successfully transform VGP towards a truly Pan-European platform as we expanded into new key markets. We put significant effort in introducing a new matrix organisation to stay close to our clients across Europe and to allow for VGP’s further geographic expansion. The significant increase of our land bank in 2018 laid the foundation for growth over the coming years.”

Jan Van Geet added: “We successfully continued our growth path in early 2019 with the expansion into Portugal and several landmark projects in Germany. We expect our development activities to continue to grow in 2019 supported by solid client demand driven by e-commerce and changing business needs. Through our integrated business model, VGP is uniquely positioned to capture the growth opportunities across Europe.”

[1] Year-over-year inclusive of Joint Venture at 100% and when excluding the sale of Mango. The Mango building located in Barcelona (Spain) sold during 2018, represented € 7.6 million in annualised rent income. [2] Of the twelve countries in which the group is active, the JV currently covers Germany, Slovakia, Czech Republic and Hungary   [3] Based on the closing share price of € 69.60 as at 28 February 2019

FINANCIAL AND OPERATING HIGHLIGHTS

Record new signed leases

  • Record signed and renewed rental income of € 38.7 million driven by 572,000 m² of new lease agreements signed, corresponding to € 32.6 million of new annualised rental income combined with 117,000 m² of lease agreements renewed corresponding to € 6.1 million of annualised rental income. Total net increase of € 21.3 million when considering the sale of Mango building[1].
  • The signed annualised committed leases represent € 104.1 million[2] (equivalent to 1.98 million m² of lettable area), a 38% increase since December 2017 (when excluding the Mango building¹).

Healthy level of construction activity

  • A total of 21 projects delivered representing 505,000 m² of lettable area, representing €26.6 million of annualised committed leases.
  • Additional 19 projects under construction representing 322,000 m² of future lettable area representing €16.4 million of annualised committed leases once built and fully let.
  • During the first 2 months of 2019 already 2 projects delivered totalling 45,000 m² of lettable area and an additional 9 new projects started up representing 178,000 m² of future lettable area.

Land bank has continued to expand

  • Acquisition of 1.7 million m² of development land and a further 1.6 million m2 committed subject to permits which brings the total owned and secured land bank to 4.45 million m² (a 31% net increase since December 2017), which supports 1.98 million m² of future lettable area.
  • A further 1.1 million m² of new land plots identified which are under negotiation which have a development potential of 514,000 m² of future lettable area.

Successful entry in The Netherlands, Italy, Austria and Portugal – VGP is now active in twelve European countries

  • Continued geographical expansion into Western Europe with the group now active in 12 European countries following the opening of our new offices in Antwerp (Belgium/Benelux offices), Milan (Italy) Vienna (Austria) and Porto (Portugal; since 2019) and the acquisition of our first land plots in The Netherlands and Italy.
  • In all these countries we have or will start-up construction activities during 2019, of which part is already pre-let to-date.
  • In Graz, Austria, VGP entered into a combined transaction whereby it acquired a 18,000 m² building leased under a long-term contract to a reputable automotive supplier and at the same time secured an adjacent land plot. The land plot is expected to be acquired during the first half of 2019 and has a development potential of circa 46,000 m² of future lettable area.

[1] The Mango building located in Barcelona (Spain) sold during 2018, represented € 7.6 million in annualized rent income. The reported annualised committed leases for December 2017 is €82.8 million, or €75.2 million if excluding Mango  [2] For Joint Venture at 100%

New organizational structure implemented and strengthening of the team

  • Management Team has been strengthened through several new senior hires and a new matrix and country organisation has been successfully rolled-out to align with the enlarged organization and create a platform for continued future growth.

Balance sheet strengthened by successful Joint Venture closing, bond offering and sale of Mango building

  • VGP European Logistics joint venture saw one closing in 2018 of c. €400 million, this is expected to be followed by an >€190 million closing by the end of March 2019 which will allow VGP to reinvest in its development pipeline and continue to grow the business.
  • Successfully expanded and extended our bond financing profile following the completion of a €190 million bond in September 2018 which was partially used to refinance the € 75 million bond maturing in December 2018. Gearing[1] at the end of 2018 stood at 34.6%, in line with the Company’s target maximum consolidated gearing of 65%.
  • Sold Mango Global Distribution Centre in Barcelona, Spain, for €150 million.
  • The net cash proceeds from the financing activity combined with the cash proceeds from the sale of the Mango building has significantly increased the Group’s cash position and fuels our ability to invest in the future of our company.

Advanced discussions with Allianz Real Estate in respect of a new Joint Venture

  • Joint commitment with Allianz Real Estate to expand JV structure beyond existing countries[1].
  • Discussions with Allianz RE expected to conclude and materialise during the first half of 2019.

[1] Calculated as Net debt / Total equity and liabilities [2] Of the twelve countries in which the group is active, the JV currently covers Germany, Slovakia, Czech Republic and Hungary

KEY FINANCIAL METRICS

 

Operations and results 2018 2017 Change (%)
Committed annualised rental income (€mm) 104.1 82.8 25.7%
IFRS Operating Profit before tax (€mm) 151.1 127.7 18.3%
IFRS net profit (€mm) 121.1 96.0 26.1%
IFRS earnings per share (€ per share) 6.52 5.17 26.1%
Dividend per share (€ per share) 2.20 1.90 15.8%

 

 

Portfolio and balance sheet 2018 2017 Change (%)
Portfolio value, including joint venture at 100% (€mm) 1,936 1,563 23.9%
Portfolio value, including joint venture at share (€mm) 1,355 1,206 12.4%
EPRA NAV per share (€ per share) 30.94 27.06 14.3%
IFRS NAV per share (€ per share) 29.25 25.09 16.6%
Net financial debt (€mm) 419.3 436.6 (4.0)%
Gearing1 (%) 34.6 42.3 -

 

CONFERENCE CALL FOR INVESTORS AND ANALYSTS

VGP will host a conference call at 10:30 (CET) on 1 March 2019
The conference call will be available on:

  • Belgium: 0800 58228 (toll free) / +32 (0)2 404 0659
  • UK: 0800 358 6377 (toll free) / +44 (0)330 336 9105
  • US: 800-239-9838 (toll free) / +1 323-794-2551
  • Confirmation Code: 9976957

A presentation is available on VGP website: http://www.vgpparks.eu/investors/en/reports-and-presentations/presentations

FINANCIAL CALENDAR

Annual Report 2018                        9 April 2019
First quarter 2019 trading update  10 May 2019
General meeting of shareholders   10 May 2019
Dividend ex-date                            20 May 2019
Dividend payment date                  22 May 2019
Half year results 2019                   23 August 2019
Third quarter 2019 trading update22 November 2019

Contact details for investors and Media enquiries

 

Martijn Vlutters

(VP – Business Development & Investor Relations)

Tel: +32 (0)3 289 1433

Petra Vanclova

(External Communications)

Tel: +42 0 602 262 107

Anette Nachbar

Brunswick Group

Tel: +49 152 288 10363