VGP Conference call review and some bullets
The call floated on a convincing positive tone, despite the sentiment in the European market. The company gave more details than normal. They are committed to change the perception of the market about the total value creation generated by a hybrid company Developer/JV Investor. The JV is now reported separately in the statements as an EPRA accounting entity. This makes it easy to compare the JV with other REITS. However, the CFO made it perfectly clear that an EPRA profit on the VGP consolidated is completely worthless as it takes all of the development costs into the calculation and 0% of the profits as they are reported as unrealised gains. The CEO added that 80% of the cost base (415 FTE) is related to development activity. As we are now in a stable yield environment, the 141.5m valuation gains are a good indication of their development value creation. The cash recycling is estimated at 500m to 1bn over the next 12 months. There is a 1bn potential from the 3 existing JV's (Allianz, DEKA and AREIM). Depending on the project completions there are 2 closings expected with AREIM, but also a new JV partner of the same type could be added.Bullets from the analyst call
VGP NV is a Belgium-based real estate development company that constructs and develops industrial real estate and ancillary offices, which are rented out to clients on long term lease contracts. The Company operates in three business segments: the Development activities segment is focused on the identification and acquisition of the land and development of the infrastructure, the design of buildings, the coordination of architectural and engineering aspects, the administration to obtain the necessary permits, the tendering and coordination of the construction works, including site management, and the facility management of the real estate portfolio; the Property Management and Leasing services segment is responsible for managing the operation of the buildings, and the Facilities Management services segment is responsible for managing the operation of the buildings and performs all actions, such as maintenance services, waste management services and maintenance greenery, among others.
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