VGP - Strong trading statement becomes structural trend VGP BB
VGP reported a 10 month trading update that showed strong growth in its land bank, development pipeline and newly signed leases over the last 4 months. We have underestimated the structural demand and speed at which VGP can execute. VGP benefits from a combination of low interest rates, e-commerce (COVID) and environmental issues that are profoundly changing the current supply chains in Europe. We have increased our development estimates for the next 4 years. Despite building cost inflation, VGP can maintain its healthy development margins as rentals increase and financing and admin costs decrease as a percentage. We raise our TP to 250 and raise to Accumulate.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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