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

Greetings, ladies and gentlemen. Welcome to the Vesta fourth quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. 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 your host for today, Fernanda Bettinger, Vesta's investor relations officer. Please go ahead.

Good morning, everyone, and welcome to our review of Vesta's fourth quarter earnings results. Presenting today with me is Lorenzo Domenic Vero, chief executive officer, and Juan Sotil, our chief financial officer. The earnings release detailing our fourth quarter 2024 results was released yesterday after market closed and is available on Vesta's IR website along with our supplemental package. It's important to note that on today's call, management remarks and answer to your questions may contain forward-looking statements. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ. For more information on these risk factors, please review our public filings. Vesta assumes no obligation to update any forward-looking statements in the future. Additionally, note that all figures included herein were prepared in accordance with IFRS, which differ in certain significant risk per from US tax. All information should be read in conjunction with and is qualified in its entirety by reference to our financial statements, including the notes thereto and are stated in US dollars unless otherwise noted. And now, turn the call over to Lorenzo Vero.

Thank you, Fernanda. Good morning, everyone. Before turning to our results, I would like to provide some perspective on our company as we review the past year. We have grown Vesta into a global leader in premier industrial real estate, in some cases managing through very turbulent times. In November, we unveiled our Route 2030 strategic plan, a detailed roadmap for the next five years led by a balanced approach to investment, growth, profitability, assured access to energy, and with ambitious net zero and ESG objectives. Route 2030 builds on the outstanding results we delivered on our 2019 to 2024 Level 3 strategy. All related targets which Vesta not only met but exceeded. With this, we have clearly illustrated our next phase in Vesta's journey. Therefore, what we expect 2025 will continue to present is challenges likely resulting in more muted performance for our industry. Many agree it will be very difficult for uncertainties, either internal or external effects, to alter the opportunities that we see in Mexico. In late January, President Sheenbaum launched a 1.4 billion near-shoring incentive package designed to strengthen the country's role in regional supply chains as part of a multi-franch plan to grow Mexico's economy, all-plan Mexico. In part, by embracing its role in manufacturing inputs for North America's supply chains. President Sheenbaum's administration, through a presidential decree, will offer graded incentives for companies seeking to relocate their manufacturing operations to Mexico to be closer to the U.S. market, including generous tax incentives. What remains clear is that both countries have a vested interest in maintaining and strengthening the trade relationship. With just over 78% of Mexico's exports going to the U.S., and some companies considering expanding their presence in Mexico, the economic interdependence between these nations cannot be overstated. Near-shoring as a strategy for economic growth and supply chain resilience therefore remain undeniable. And Vesta is in a particularly advantageous position. We benefit from outstanding LEED certified assets, a deep footprint in Mexico's most resilient and desirable markets, strong relationships with premier clients, and one of our industry's most innovative approaches to procuring energy. We are a landlord to some of the world's most important manufacturers and not by accident. Deep and lasting client relationships create new avenues for reoccurring growth. Our tenant base has solid credit as part of leasing criteria, and our portfolio is well diversified with a mix that is always changing and adapting. Best illustrated by the fact that we are seeing increasing demand in electronics, manufacturing, and in e-commerce from local and regional consumers. These are important differentiators should our industry experience a slowdown. And as I noted, our board and management team has considerable experience successfully navigating geopolitical and macro headwinds. Therefore, as we begin implementing our 2030 plan this year, we remain vigilant and cautious, fully aware of this year's importance as a foundation for the rest of the roadmap. Moving forward, we will continue to make strategic investments, prioritizing land acquisition and development only when they provide a clear competitive advantage, but also focusing on capturing every potential leasing opportunity. A few other notable highlights for 2024 before I turn to the quarter, leasing activity reached 7.7 million square feet for the full year 2024, of which 3.5 million square feet were through new leases, nearly 80% of which was signed with current testing class tenants in e-commerce as well as light manufacturing for the North American supply chain. We saw 4.2 million in renewals during the year, with an .4% increase in rent spreads and a six-year waiter average lease term. Our focus on dollar-denominated contracts resulted in 89% of our 2024 revenues being in dollars, an important competitive advantage and non-negotiable stabilizing factor which will never change at Vesta. Vesta also delivered exceptional financial results for the full year 2024, for passing revised guidance to reach $252.3 million, a .7% increase year over year. Full year 2024 adjusted NOI margin and EBITDA margin reached .6% and .5% respectively. Vesta FFO ended 2024 at $160.1 million, a .2% increase compared to $127.9 million in 2023. And in 2024, we secured a global syndicated sustainability link credit facility for $545 million, as Juan will discuss shortly. Turning to our fourth quarter 2024 operating results, leasing activity reached 1.6 million square feet, 739,000 square feet in new contracts, most in the Vajillo region with premier global companies in the electronics, automotive, and logistics sector, and 813,000 square feet in lease renewals. Vesta's fourth quarter 2024 total portfolio occupancy therefore reached 93.4%. Our stabilized and same store occupancy reached .5% and .6% respectively. We ended the quarter with current construction in progress, which reached 2.8 million square feet, and an estimated investment of approximately $214.1 million, and a .9% yield on cost in markets including Mexico City, Puebla, Queretaro, Aguascalientes, and Monterrey. We're pleased to see continued absorption strength in the Vajillo region. For during the quarter, we began construction on three new buildings in Queretaro, totaling 560,000 square feet. As a related update on our portfolio, we shifted the delivery timing of two buildings at our Apodaca project to April from December. We chose to upgrade and expand the size of several buildings during the final stage of this project, also seeing an opportunity to reconfigure the park. These improvements therefore slowed down the delivery of certain buildings within the project, but the adjustments enhanced the overall quality and functionality of the development and therefore the final value. So while this impacted our near-term timeline, they will not materially delay the expected income during the year, and this overall project remains on track for success. In closing, while we are certainly operating in interesting times, at the end of the day, we control our destiny. Our competitive advantages are clear and compelling, and our solid financial position means we are very comfortable being extremely selective in the tenants to which we lease. As I have commented in the past, we are focused on consistency and discipline as we navigate through potential headwinds on our route 2030-PAC. In the meantime, we're allocating capital to ensure meaningful shareholder returns through opportunistic land acquisitions such as our recent purchase in Guadalajara and Ciudad Juarez, aligned with delivering on our 2030 strategy. Investors' 2024 share repurchase program reached $42.3 million by year end, 16.5 million shares, which is .9% of total outstanding shares. With that, let me now turn it over to Juan to review this quarter's results in more detail.

Thank you, Lorenzo. Good day, everyone. MESTA closed the year with exceptional financial results, as Lorenz noted. Our total revenue reached $252 million, marking a 17.7 -on-year increase, and surprising our revised guidance of 17%. NOI margin also exceeded our revised guidance of 94.5%, reaching 94.6%, while EBITDA margin was in line with our guidance at 83.5%. MESTA FFO ended 2024 at $160.1 million, a .2% increase compared to $127.9 million in 2023. Turning to our fourth quarter results, and beginning with our top line, total revenues increased 16.5%, to $65.2 million, mainly due to higher rental revenue coming from new leases and inflationary adjustments on rental properties during the quarter. In terms of the current mix, .7% of our fourth quarter revenue was denominated in U.S. dollars, an increase from .8% from the fourth quarter 2023. Regarding our profitability, adjusted net operating income increased 11.7%, to $59.1 million, while the margin contracted 460 basis points to 93.5%. This was mainly due to higher costs related to rental income-generated properties, including real estate taxes, insurance costs, maintenance, and other property-related expenses. The adjusted EBITDA reached $52 million in the fourth quarter, an .5% increase compared to the prior year's quarter, and the margin increased 180 basis points to 82.7%, primarily due to lower administrative expenses, which benefited from the peso depreciation relative to the prior year quarter. We closed the quarter with a pre-tax income of $81.2 million compared to $99.8 million in 2023. This decrease was primarily due to lower gains in revolutions of investment properties, driven by a slower pace of development throughout the year, as well as an increase in discount rates. Best-sat FFO, excluding current tax, increased to $41.7 million this quarter from $32.6 million in fourth quarter 2023. Moving to our capital structure and balance sheet, as Lorenzo noted, we ended the year in a very strong financial position. Cash and cash equivalents stood at $484 million, and our total debt remained relatively stable at $847 million as of December 2024. Net debt to EBITDA was 3.2 times, and our loan to value was 21.4%, well below our guidance for prudent financial management. As we shared on our desk today, these are a loan to value of less than 30%, and a net debt to EBITDA lower than five times. Along these lines, in December we successfully closed a $545 million global syndicated sustainable credit facility, as Lorenz noted. This new financing is comprised of $345 million term loans structured in two tranches, with a period of three and five years, with an 18-month availability period, in addition to a $200 million revolving credit facility. This facility replaces our prior $200 million in-place and on-drawn revolving credit facility. We are very pleased to have secured this new financing, ensuring continued access to strategic liquidity at a competitive cost. This strengthens our financial flexibility as we execute key initiatives aligned with Vesta's Root 2030 strategy, driving sustainable value for our shareholders. Our share repurchase program is also a key pillar of our capital allocation strategy. In 2024, our program reached $42.3 million, or 16.5 million approximately 2% of total outstanding shares. We will continue to execute it opportunistically, as we have successfully done it in the past, to maximize long-term shareholders' returns. In addition, and subsequent to Quarters End, on January 15, 2025, we paid a cash dividend for the fourth quarter, equivalent to $0.38 in pesos per ordinary share. This concludes our fourth quarter 2024 review. Operator, could you please open the floor for questions?

Yes, thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking the question. Thank you. Your first question comes from the line of Pablo Monsivais with Barclays. Please go ahead.

Hi, good morning. Thanks for taking my question. I was wondering about Monterrey. In your development portfolio, you have a podaka 6, 7, and 8. It seems that you don't have it leased yet. We know that Monterrey has been in excess capacity probably in the fourth quarter of last year. So, I want to pick your brain on how are you seeing leasing activity for these three buildings? I see it correctly, it's 1.1 million square feet. So, it's perhaps quite a lot. So, I just wanted to hear your thoughts of what the clients are saying, how is the leasing activity there?

Thank you. Perfecto. Hola, Pablo. Good morning and thank you very much for being on the call and for your question. Monterrey has been a key market for Vesta. We currently have developed two projects, one of them in Guadalupe and the second one in a podaka. As you might know, we are fully leased in Monterrey with clients such as Amazon, Mercado Libre, Polaris, OXO, Walmart, among others. We have been very successful in the leasing in the last phase. Now, today what we have is three buildings from the construction which have been part of the development pipeline for the last quarters. And we feel confident that these buildings will be leased accordingly when we finish the projects. Currently, we have an estimated completion date for the second quarter of 2025. I was recently in Monterrey. The progress is well on the buildings. And actually, we have some minor delays on the projects. The reason being that we upgraded the specifications of the buildings, the characteristics considering better sustainable characteristics for the buildings. And therefore, we think that the best companies will for sure be looking carefully into our project in a podaka, into our buildings because of the quality of the project that we are currently developing. I'd like to invite all of you to make a visit to Monterrey. It is very well located in the podaka's main corridor with good access to infrastructure, good access to labor pool. And we have a local dedicated team focusing on the leasing of these projects even before they are done. So this is going to be an important year. And we have strong confidence in the Monterrey market and good confidence on the product that Vesta is able to deliver.

Thank you. Your next question comes from the line of Alan Macias with Bank of America. Please go ahead.

Hi. Good morning and thank you for the call. Just a follow-up question. I guess understabilized portfolio occupancy in the North region decreased. And I guess if it's Monterrey is stable, what other markets did you see pressure there? Thank you.

Hola Alan and thank you very much for your question. I already explained on Monterrey where we are fully leased and the market is still behaving quite well. We're not focused in all North of Mexico. There's actually markets where we're not into, but we have a strong focus and good presence in Tijuana and Ciudad Juarez. Tijuana and Ciudad Juarez have shown some sort of slowdown in the last quarters in terms of demand. And that is not only impacting Vesta's portfolio, but also the rest of the market. But still we think that vacancy rates are at a moderate level. And we think that as soon as demand picks up, there will be some interesting opportunities for the type of buildings that Vesta has. Vesta actually has only a couple brand new buildings in Juarez, which are on the leasing stage. And we are confident that the quality and the location is outstanding and will have an advantage to other projects. But it has taken a little longer in this new cycle. And pretty much the same with Juarez. Nevertheless, we have a good portfolio with good tenants, some of them requiring expansions, but at the same time, there is a shift towards demand in the last quarters. And we will be cautious to be patient on having been able to lease up to good tenants long-term leases in line to Vesta's existing portfolio. Thank you.

Your next question comes from the line of Alejandra Obergon with Morgan Stanley. Please go ahead.

Hi, good morning, Vesta team. Thank you for taking my question. I have a few on the Pajillo. So it looks like some KPIs are improving. You're doing some backfilling of vacancies, some pre-leasing, cash rents are holding up pretty well. So I just want to kind of like get a sense of what you're seeing on the ground. I mean, if you look at the tenant pool that you have for the available and for the coming development space in the Pajillo, is there any perhaps ecosystem that is taking the lead in your conversations, especially in Queretaro now that you brought up some four properties in Queretaro to the development pipeline? What's happening in Guadalajara? Any color here will be very material. Thank you.

Thank you, Alejandra. And yes, glad to share. Guadalajara, as many of you know, has been a very attractive market, particularly for the electronic sector as well as e-commerce. We were fortunate to be able to buy the land adjacent to our park. So we will soon start development and use the existing infrastructure of the park and expand it to the new site. It is not very large, but we think that it's a great continuation and a great opportunity to be able to keep on growing in a fantastic location where we have grown with clients such as Foxconn, DSB Logistics, Amazon, and I'm pretty sure that that particular success will expand with the current land that we have acquired. In Queretaro, we have seen some very positive signs too that there has been a recovery. Vacancy rates are still low because demand has picked up. We are fully leased in the Vesta Park Queretaro, and for that reason and for the pipeline that we have seen, we think it's a great opportunity to expand the space immediately. Just to give you again some names on the Queretaro, the projects we have in Queretaro, we have clients such as FedEx, Home Depot, Tesla, and recently companies in the electric manufacturing sector focusing on machinery and equipment for Mexico as well as export to the U.S. So we think that there's a good demand in the market, and that's why we would like to anticipate and have good space available for those tenants that require expansions. We just do the same for the aerospace industry. Nevertheless, many of these decisions, we take them with discipline. We know our markets and we validate each decision at our investment committee where we know that whenever there's an opportunity, when we have an advantage, we take that opportunity to start and anticipate the potential demand. The rest of the markets, I would say, in the Bajor region are still improving. However, we think that patience has to prevail as well as caution so that we understand better the uncertainties that have triggered current trade tensions between the U.S., Mexico, and the effects of the Paris imposed to many groups from all over the world from the U.S.

Gotcha. That was very clear. Thank you very much.

Your next question comes from the line of Corda Lee with BTG. Please go ahead.

Hi. Good morning. Thank you very much for the call. Two quick questions. The first one, in November or December, I can't remember exactly the date when you unveiled Route 2030, you had already adjusted your view, at least for the medium term, just to encompass this more uncertain scenario. I'm wondering three months later whether you think that that adjustment was enough or whether you're feeling a little bit more cautious. Then the second question is, in this uncertain environment, as you look to replenish your land bank, are you finding that uncertainty is either producing greater availability of land or land on better terms or have we not seen that adjustment yet? Thank you.

Gracias, Gordon. Thank you for your question. Well, I think we were, BESTA has always had the strategy to define a long-term plan and execute understanding that things might vary in the period. Level 3 strategy was very successful. We are happy to be able to close that particular cycle of the company and that gave us the opportunity to present another long-term plan, the Route 2030, back in November. We believe that BESTA has a clear vision on how it's heading towards 2030. We have a clear path and we feel confident that that plan will be well executed and will be very profitable. That plan incorporated the uncertainty for 2025. So where we are standing today in 2025, it's a little bit of a no surprise. We understand how clients behave, we understand how new demand behaves, and it's understandable that there will be some uncertainty through a period of time. Nevertheless, this is also not new and we have been over these times before. This is a great moment to position the company better, to be ready when there's a new economic cycle and we know that that will happen. This will probably take me to your second question, Gordon. Definitely BESTA has a strong discipline towards acquiring the best location, the best land with urban infill and high barriers of entry, land that we can add value to high quality projects. Definitely we have been analyzing different sites and we're in the best markets which are the ones that we operate. So it will be a very interesting year where we think that BESTA will be even better positioned for the long-term plan that we have unveiled.

Perfect, thank you very much.

Your next question comes from the line of Rodolfo Ramos with Bradesco PBI. Please go ahead.

Thank you, and good morning, Lauren, Juan, and thanks for taking my question. It's a little bit of a follow-up on the previous discussions, but we've seen this weakness in the northern markets and my question here is twofold. It doesn't seem to be the case, but in the future, how do you see this weakness in the northern markets impacting your vajillo markets? I don't know if these are substitutes or these are just completely different client bases that you're tapping. So that's the first question. And the second one, which is related as well, how does this change? Your answer to the first question, how does it change the pace and the focus of your development pipeline considering you have ambitious capex plans under your route 2030 in Monterrey, Tijuana, Juarez? So those will be my questions. Thank you.

Thank you very much for your question. Well, regarding the first one, I believe that all markets have very different dynamics and all of them, first of all, we violate first the real fundamentals on each of the markets. Then we analyze the trends of which the restrictions and the opportunities. And I believe that the industrial market in Mexico behaves differently from one to the other because some of them are more related to a consumption, logistics, e-commerce. And in a broad matter, I think that that's mostly on the metro areas, particularly Mexico City and even in the Bajio. Another market rely more on supply chains, manufacturing and export. I would probably say that the border region being more on that category. So with that, we analyze both things. And as you know, we focus on both industries, let's say both segments. And I think that as long as there is opportunity on both, there will eventually be opportunities in pretty much all of the markets that we operate. However, understanding real estate fundamentals, we know that there are cycles. There's moments where there's a limited supply, when there's strong demand, where there's moments that could get inverted. And today we think that the market is still at a pretty low level. However, we feel confident that vacancy rates are still at pretty low levels. I think that us and even other developers have been conservative on this approach. And that's why we think that the markets are on a still healthy stage. We see most of the markets being in the, let's say 5% vacancy rate, give or take. Some of the markets are even closer to 1%, like Mexico City. Bajio region even in some cases now lower than 5%. So we will follow carefully with the patient discipline. And I think that this is not the first time that we are in this situation. And as long as we have good quality product, that we understand the client needs, I think that we can take advantage of these particular situations. Maybe developers that do not meet the quality or do not have the right infrastructure or do not have the permits in place, those will probably struggle the most. But as long as we have good quality product, which is what we have been focusing on, I think that we have a better advantage. Just to use the example on Monterrey, one of the greatest decisions that we recently did is to improve the specifications on the buildings. It cost us a bit of a delay, but we think that we are in great shape and great moment to deliver what I would probably think are the best buildings in the Monterrey market, which is the largest one. So we have a great location, we have the best buildings, and actually we have a great tenant base already in Monterrey. So I do not see why we are not going to be able to continue that success even now with improved products.

Your next question comes from the line of Francisco Chavez with the VTA. Please go ahead.

Hi, thanks for the call and for taking my question. To the question regarding the acquisition of land in Juarez, every year and consider what you have mentioned of the softening of the VTA in Juarez, can you give us an idea on how opportunistic was this acquisition that was applied at a lower price? Than a few months ago. I am not sure if you can let us know if this land has access to the VTA and has all the infrastructure in place.

Gracias, Francisco. Thank you very much for your question. Yes, we are very happy that we were able to find this site in Juarez. And maybe to your last point, what is key about this land is that remember that land for us is raw material. And then the pace on the development, it depends more on how we see the demand coming. But one of the greatest things is that it has access to electricity. It is very close to the border crossing of Zaragoza, which is the major commercial border crossing in Ciudad Juarez. It is right next to the current project that we developed. So this gives continuity on what we think is the best sub market in the Ciudad Juarez region. So I think that this will put us in a great shape. Whenever we see that there is demand in the market, we will kick off with a project. But the size was also very important so that we can deliver a high quality industrial compound where there could be synergies among our tenants, where there could be higher quality of infrastructure, higher quality of security, and the accessibility to the border crossing, I think is going to be key. So we are happy to be able to close on that land and that will be a project that will be developed over time. Thank you.

Your next question comes from the line of Jor-El Gilodi with Goldman Sachs. Please go ahead. It seems that Mr. Gilodi has just dropped from the line. The next question comes from the line Jorge Vargas with GBM. Please go ahead.

Hi. Thank you for taking my questions and congratulations on the results. Only one quick question from my side. Regarding the CAPEX deployment throughout the year, what were the dynamics that influenced not meeting guidance and should we expect an acceleration in 2025?

Thank you Jorge for your question. We're not giving any guidance in terms of capital deployment as we have done in the past. The only thing that I can say is that we currently have a development pipeline that has been carefully selected with discipline by the investment committee. And whenever we continue, we have recently done land acquisitions and we will continue with that same dynamic following the path towards our let's call it mid long-term plan. And with that I think that Vesta will continue to have an active capital deployment strategy and maybe just to add a bit on the strategy, we're glad to be able to close on a credit facility that will help us in future to fund the capital requirements of the company. So we are in a very good shape in terms of our balance. We have a good credit facility and with that we have enough resources to have for the capital deployment strategy for the year.

Okay. Thank you very much.

And the next question comes from the line of Toriel Gilody with Goldman Sachs. Please go ahead.

Good morning everyone. Apologies for that. My line dropped. So I have two straightforward questions. So the first one is around your guidance. I just wanted to see would you be able to provide or give some color on what your occupancy and lease spread expectations are within that guidance? And then the second question is around essentially development pipeline. So I mean going back to the Vesta day back in November, you already gave an idea that there was going to be a downshift in the development pipeline at least for the next year or two. And we're clearly seeing it now. But I just wanted to ask you, in a sense, are you also seeing it from your competitors? Are they in general terms also downshifting development pipelines as well basically based on how the macro environment, the policy environment is developing? So those are my two questions. Thank you.

Thank you. Thank you, Jarell. Well, I think that Vesta's, when it comes to our peers, I think that we have different types of peers. And I think that some of them that you know very well, they are focusing right now on a major merger, which is going to have them very busy. And I think that for that reason, I think that they have been focusing mostly on that particular major merger. Other developers, I think other players did not have major development capabilities. So I think it's kind of hard to talk about frankly of our peers in terms of development. What I can say is that there has been, Vesta has had a well-defined strategy towards development. We understand whenever there's moments to put the gas pedal down, we know when there's moments that we need to push the brake pedals hard. And there's times when you just have to drive carefully using the gas pedal when needed and also using the brakes. And I think that's exactly the situation that Vesta might be facing, understanding very clearly what happens in each of the markets. Whenever there's an opportunity, you put the gas pedal down, but when you need to brake, you just drive carefully. And I think that has been the strategy in the past of Vesta, and it has played out well. And right now, maybe to your point on the forecast, yes, we think that Vesta having development of over 2 million square feet per year compared to maybe other years where we have close to 3, 4 million. Well, I think it's still a good number, but it's not about the current year. I think it's more about the combination of years that will help us to continue that discipline to develop at a major spread, returns of 10% when stabilized assets are close to 6% and focus on profitability more than the size, more than the amount of square feet, and continue our strategy to develop, to give profitability through net asset value per share increase as well as FFO per share increase. And that's what we have done in the past. And that has been a major driver of value, and we will continue with that particular discipline. In terms of occupancy, well, I think that we're in a great shape. There could be adjustments upwards or downwards, and we think that in general terms, in broad-based, we are in a great shape. We're way above the historical averages that we have held. So we're in a good position, and I think that will be a... We wouldn't be able to hold those averages quite well in the future.

Thank you. And a follow-up really quickly. I was just trying to understand, and I don't know if this is something you provide, but embedded in the guidance, what is the occupancy expectation, what is the lease spread expectation?

Sure. Well, I think we will continue the same trends as we have seen in the past, where as reported, we have had approximately an eight... The way we reported is approximately 8% increase towards in-line, towards in-place rents, and that has been pretty much sustained over the last four quarters. So I think that going forward, this is quite positive. This is way above inflation. Remember that many of our... All of our lease agreements have an adjustment at every anniversary, most of them to inflation, and we consider our rollovers being close to 8%. Well, that's way above inflation, and I think that over the quarters consistently over the years, we continue pushing hard our revenue growth, and we think that we're in a great shape on that too. Thank you.

Your next question comes from the line of Kiefer Kennedy with CD Bank. Please go ahead.

Yes, morning, Beza Team. Thanks for taking my question. Just a follow-up on previous question regarding projects under construction. You've explained the aspects regarding a podaka project in Monterrey. I'd like to get a better color on Vale de Mexico. Yes, Punta Norte 2 is a smaller project, but it seems to be delayed as well compared to a quarter expected termination date. I'm just wondering what would be the reasons here. Any color on that would be very helpful. Thank you.

Sure, absolutely, and thank you for your question. Well, Punta Norte, Mexico City, it's experienced a minor delay, and it's mostly coming from our client. So we ended up leasing the larger building to Mercado Libre, and they ended up taking the second building. It's a major project under construction. We are considering the tenant improvements already while we build, and sometimes when you lease up a building before construction, there could be some time adjustments. But we're very happy that those projects will be delivered next quarter, and not only that, they will be developed and leased to the largest e-commerce company in Latin America with long-term lease and, of course, in dollar terms, at a 10% return. So we are very happy with the tenant. We're very happy with the project, and those minor delays have pretty much no impact on the profitability of the project. On the Apodaca deal, actually, if you look carefully into the detail of each of the projects, we actually expanded one of the buildings just because we found out that we could take advantage of the floor area ratio. We also consider some sustainability features on the roofing, which is basically a membrane of TPO. We also consider some efficiencies on lighting, electricity, amenities. So a lot of aspects that we think add value to the project, and we did all that while not only maintaining but even increasing the return of the projects. So that's why the minor delays, which is only a few months, have no material implications. I was there last week, and I'm very happy to see how these projects are evolving. These are actually the last buildings on the Apodaca site, and with this, we will completely be fully leased in what we think is one of the most successful projects that we have recently developed.

Gracias.

And maybe just to add up on maybe a previous question, I'd like to also highlight how well the company has done in our discipline to get dollar-denominated leases. We're currently at 89%, almost 90% of our leases being in U.S. dollars. This is a historic high. I think that this reflects well our discipline, our approach to be on the right currency, and when talking about spreads and when talking about rents and talking about long-term leases, it's always better to there's an opportunity to do this in U.S. dollars, and we think it's a great advantage.

Your next question comes from the line of David Soto with Scotiabank.

Hi, good morning. Thanks for taking my questions. Two quick questions. The first one is related to the development pipeline. Did you see any major risks that could affect their development pipeline, such as tariffs, local regulation, energy regulation, or a potential increase in construction material? And the second would be, could you provide some color about the marketing efforts that you are having on the buildings that need to be leased in Guadalajara? Thanks.

Thank you. I don't see any effects on materials, remember? So our development approach is based on having third-party construction companies, third-party project managers, so we think that we have a very good grip on the development process. Minor development delays have to do with maybe other things, but I think that Mexico is very well-supplied in terms of materials and should not be a major effect for these type of projects. And we had actually a process for each of the buildings independently, which I think is an important aspect how we reduce risk on the development process, on the construction process. And then on the second question, Juanjo. Okay, so commercial efforts. Well, I think that another main differentiator of ESTA is that we are a vertical integrated company, totally managed, and we have local presence in each of the markets. And I think that is seen when it comes to commercializing and being able to market each of the regions. We have very professional real estate executives in Ciudad Juarez, in Monterrey, in Tijuana. We'll be glad to host you whenever you like, and not only visit our project, but meet the team, visit our offices, and understand how we have a local approach in each of the regions that we operate. We use, of course, we use third-party brokers when needed. We talk to local authorities. We actually market a lot with existing clients. A number that surprised me positively last year is that more than 70% of our leasing activity in the last year came from existing clients. Growth comes from existing clients, and 70% is a material number. That's why our focus in high-quality tenants is very important. We want to continue growing with good companies, and good companies tend to grow. And that's the opportunity that we see in Vesta.

Your next question comes from the line of Armando Rodriguez with Signum Research. Please go ahead.

Thank you, everyone. Lorenzo, Juan, for the call. Congratulations on the results. I think I have to do the mandatory question specifically about the automotive sector. As you know, we have heard some news about some major automakers that plan to move away the production to the United States to avoid this tariff problem. So, I don't know, as you have said, the growth comes from your existing clients. So, I don't know if Nissan, for example, is considering this scenario and maybe another important client, for example. That's my question. Thank you very much.

Thank you for your question, Armando. Well, one of them being the auto sector. And actually, regarding, for example, Nissan, Nissan recently announced and reaffirmed their commitments towards Mexico, towards the Guascailientes. So, sometimes we get negative news, but sometimes those get, they actually reaffirm that they have until we see how the final outcome will be regarding Paris. So, I think it's a little early to say. I think that most of the companies have been very profitable in Mexico, have been actually very profitable in North America, because as you know, the auto sector relies not only on Mexico, but it's Mexico and the U.S. combined and moving auto parts from one place to the other several times in order to have a competitive final product. So, I think that this is February. We had the early February, we saw the first issues regarding Paris. We will have to continue analyzing carefully what the outcome will be. But in the end, I think that most of the companies that are already in Mexico have long term plans in Mexico, have major investments. They have been profitable. Nearshoring is not new. Nearshoring has been here since, I would even say, NASPA 1994. It has been several years. And as long as companies are profitable, I think they're going to make the best efforts not only to maintain operations in Mexico, but maybe even expand. But of course, we'll have to figure out what the new rules in terms of trade will be and we'll have some information later in the year.

Thank you very much, Leland.

Your next question comes from the line of Alan Macias at Bank of America. Please go ahead.

Hi, just a follow up question. I guess your pipeline has an investment for $214 million. Can you give us the amount you have already deployed? And I guess, should we expect, I know you do not give guidance for CAPEX, but is 200 to 250 a conservative assumption? Thank you.

Thank you, Alan. So investment today out of the construction buildings is $140 million. Give me one second. We have investment today $140 million out of the $214 million, I think. This is the right number, right? Exactly. So the remainder is what we still have to complete these projects, which is construction. And I think in terms of capital deployment, well, we will start more buildings throughout the year. We will buy more land. We will invest in the urbanization and infrastructure in land like we are doing in Tijuana. So I think that this will be an active year still. Particularly, as you know, we kind of developed the land that we have. We're buying new land. That land has to get its infrastructure and to do with this improvement. So this will be a year where we will continue to be active on the construction side.

Thank you.

Thank you.

As there are no further questions, I would now like to turn the call back over to Mr. Berjo for his concluding remarks. Please go ahead,

sir. Thank you. And thank you, everyone, for joining today's call. We're pleased with our financial and operational results in the fourth quarter, including an exceptional year for our company. I want to thank our shareholders for your ongoing support and our Vesta colleagues who continue to enable us to outperform in any environment and our many new and long-term clients. Our future remains bright, and we look forward to updating you on our progress. Thank you for listening.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.