Corporacion Inmobiliaria Vesta, S.A.B de C.V. American Depositary Shares, each representing ten (10) Common Shares

Ladies and gentlemen, welcome to the Vesta Fourth Quarter 2023 Earnings Conference call. At this time, all participants are in listen mode only. A question and answer session will follow today's prepared remarks. And as a reminder, this call is being recorded. It is now my pleasure to introduce you to your host, Fernanda Bettinger, Investor Relations Officer. Please go ahead.

Good morning, everyone, and welcome to our fourth quarter earnings call. Presenting today with me is Lorenzo Dominguez, Chief Executive Officer, and Juan Sotil, our Chief Financial Officer. The earnings release detailing our fourth quarter 2023 results was released yesterday after market and is available on the company's website along with our supplemental materials. It's important to note that on today's call, management remarks and answers to our questions may contain forward-looking statements. Forward-looking statements address matters that are subject to risk and uncertainty that may cause actual results to differ. For more information on these risk factors, please review our public findings. This assumes no obligation to update any forward-looking statements in the future. Additionally, note that all figures, including hearing, were prepared in accordance with IFRS, which differed in certain significant respects from U.S. GAAPs. All information should be read in conjunction with and is qualified in its entirety by reference to our financial statements, including the notes directo and are stated in US dollars unless otherwise noted. I'll now turn the call over to Lorenzo Vero.

Good morning. Thanks, Fernanda. Before turning to our results, I would like to provide some perspective on our company. As we celebrated many significant milestones, in 2023, a tremendous year of opportunity and growth for Vesta. We have grown to become the leading premier industrial real estate asset manager and developer in Mexico, and our space has become increasingly more crowded and competitive with continued nearshoring tailwinds. Vesta is differentiated by our 25-year track record of execution excellence, disciplined investment process, and outstanding asset quality. So, while there are broad industry tailwinds which Vesta and peers will benefit from, there also are important differentiators. For example, asset quality is an important competitive advantage for Vesta. It attracts and expands our portfolio of best-in-class tenants as well as our suppliers in a virtuous cycle. Vesta's clients are top tier global companies many who expanded their relationships with us from one to several facilities during 2023. You have heard me reference Foxconn, best known for being an outstanding manufacturing in the electronics sector based in Asia. During the fourth quarter, Foxconn deepened their investment in Mexico, expanding once again within the Vesta Park, Guadalajara. We also signed with Tesla for the distribution facility in the Bajira region. and BRP expanded its relationship with Vesta, signing a new building in Ciudad Juarez. Our understanding of headwinds and how potential conflicts impact the global economy and supply chains enables us to help our clients understand how we can be helpful in diversifying or transitioning their manufacturing to Mexico. We're seeing this resonate with more Vesta clients in the electronics, automotive, and EV industries. For example, Eton Systems, Vishay Electronic Components Solutions, and Anthenol, which makes electronic and fiber optic connectors, have all shifted their production to Mexico from Asia. Let me turn to our fourth quarter 2023 results, which demonstrates the strong leasing we're seeing. Investors leasing activity reached 2.7 million square feet, another record high for our company. 1.7 million square feet was in new contracts with top quality companies such as Foxconn in Guadalajara, Tesla in the Bajio region, Eaton, BRP, as I have described, as well as ThyssenKrupp and others. One million square feet was in lease renewals during the quarter. Close client relationship and deep local experience enable us to know what's going on in our markets to anticipate and capture opportunities with agile adaptability and quick decisions. This helps drive Vesta's development pipeline. And in 2023, Vesta delivered almost 4 million square feet in new buildings and began construction on 3.2 million square feet. During the final quarter of 2023, We also completed an opportunistic acquisition of 81,000 square feet in Coluca to an 8.5% estimated cap rate. Importantly, this is aligned with a level three growth plan we presented in June to reach almost 50 million square feet by 2025. Our investment process is disciplined and based on 25 years of experience. strategically allocating capital to the markets that matter most. We ended the fourth quarter with a total development pipeline of 3.1 million square feet at an expected investment of 267.1 million and an average cap rate of 9.8%. Total portfolio occupancy for the quarter reached 93.4%. while stabilized and same-store occupancy reached 96.7% and 97% respectively, also reflecting a continued trend of increasing rents. While fourth quarter occupancy declined slightly year on year due to the new buildings in our portfolio, this declined sequentially relative to last quarter. We continue to see strong absorption in most of our markets and are actively marketing those buildings still vacant by quarter cent, which are in Mexico's most sought-out regions, Juarez, Monterrey, and Tijuana. As our peers have commented, Tijuana is one of the most constrained markets on the supply side, mainly due to limited land and electricity constraints. However, Vesta's Tijuana properties are not energy constrained. An example of our deep understanding of what's going on in the market and our ability to anticipate demand. 18 months ago, we began investing heavily in energy, in substations, voltage, and ensuring grid connectivity, a significant investment many companies were not able to make. Today, we're in a privileged position with the appropriate infrastructure. We expect the quantum market trends to further strengthen in 2024. And Vesta's advantage is an important competitive mode demonstrated by the quality of our portfolio and the rent that Vesta commands. Also note that client switching costs are high. When a client secures the right property in the right location with reliable energy, strong labor pulls on logistics, it results in natural stickiness. We ended up the year strategically executing Vesta's asset recycling strategy, another level three strategy pillar. We sold a 313,000 square foot building in Tijuana. from which we extracted 15 years of value for 37 million during the fourth quarter. A premium price reflecting a 6.5% cap rate over market rent and a 4% cap rate over in-place rent. We also sold 8.5 hectares of land in Aguascalientes during the quarter for 5.1 million. Proceeds from sales will be directed to tax payments, paying down debt, and other corporate uses. Vesta has new projects under construction and a strong pipeline, also with substantial demand for Vesta buildings in markets where we're seeing a scarcity of land. We have been successful moving into infill locations within high barrier entry markets, and our focus on Monterrey, Mexico City, and Guadalajara, which is becoming the Silicon Valley of Mexico, with some iconic projects underway. Ciudad Juarez is also leasing up. We're also starting to see strong dynamics and initial signs of rent increase in the Bajio and expect we'll continue to see rent growth similar to what we have seen in other regions. Sumitomo, Tesla, Thyssen, Safran, and Continental all wanted to go to the Bajio for the quality of infrastructure and available skilled labor pools. Releasing spreads have also increased during the quarter. We closed 2023 with renewals and releasing of 4.1 million square feet, with a weighted average spread of 6.5%, with some regions, such as Juarez and Tijuana, reaching releasing spreads of above 20%. Importantly, same-store NOI growth 9.5% during the quarter. We deliver exceptional financial results as Juan will expand upon in more detail. 2023 revenues increased more than 20% to 214.5 million with adjusted NOI and adjusted EBITDA margins of 94.6% and 82% respectively. Full year 2023 FFO reached 127.9 million. a 23.6 year-on-year increase. And we invested more than $269 million in innovative, best-in-class projects throughout the year. Investor's portfolio is supported by the industry's strongest balance sheet. Our reputation for prudent capital allocation has engendered investors' trust and enabled us to return to the market when needed to fuel our growth. I again want to thank the entire Vesta team who have contributed to 25 years of success. Before I pass our conversation over to Juan to review our financials, I'd like to note that 2024 will be a record-breaking year for elections. Around the world, more than 2 billion voters in 50 countries will head to the polls, including the United States and Mexico. Many predict a growing adversarial trend in international economic relations. higher business costs, trade restrictions, market instability, and policy swings. Testa believes that with volatility comes opportunities. We'll continue to leverage our privileged position, time-earned experience, and demonstrated track record to size the opportunities focusing on our goal, not on obstacles. As we look forward to the year ahead, I'd like to note that 2024 is the final year of strong execution on our Level 3 strategy. We look forward to presenting our plan for the next phase of our journey and continued evolution at our 2024 best day. With that, let me pass our conversation to Juan, and I'll return for some brief closing remarks.