VGP 4m25 Trading Update, solid leasing activity
VGP reported strong leasing activity with €39.5m in new and extended leases for an annual contracted rental income of €431.8m, up 4.7% ytd and 14.8% YoY. The statement mentions a good spread of smaller new leases over different regions, but some significant new leases are being negotiated. The current pipeline with 837k sqm in development falls in line with our estimates of cautious selective growth. The important data point of pre-let% in the pipeline stands at 75%. The occupancy rate in the standing assets remains high at 98%. A project in Riga will be sold for €30m to the tenant as was agreed in the initial lease. We like the VGP focus on the cash return through JV's and well diversified developments. Dividend proposed of €3.30 ps. Note that Mrs Reiche leaves the VGP board to become the economic secretary in the new German cabinet. We maintain our Buy and 125 TP.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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