VGP NV: Half year results 2018: VGP enters into new markets and develops at record pace

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Half year results 2018: VGP enters into new markets and develops at record pace

23 August 2018 - 6.00 p.m. CET, Diegem (Belgium): VGP NV ('VGP' or 'the Group') today announced results for the six months ending 30 June 2018.

• Record profit of € 74.8 million (+ € 12.3 million compared to 1H 2017).
• Signed and renewed annualised rental income of € 18.5 million driven by 264,000 m² of new lease agreements signed corresponding to € 15.0 million of new annualised rental income combined with 68,000 m² of lease agreements renewed corresponding to € 3.5 million of annualised rental income - the signed annualised committed leases represent € 96.8 million, equivalent to 1.90 million m² of lettable area, a 14.7% increase since December 2017.
• New development land of nearly 654,000 m² acquired and an additional 1,439,000 m² of new land plots under option, subject to receiving permits expected to be acquired during the next 12 months which adds to a total remaining development land bank as of 30 June 2018 of 3,335,000 m² (compared to 3,261,000 as at the end of December 2017).
• A total of 12 projects delivered representing 307,000 m² of lettable area, with an additional 22 projects under construction representing 455,000 m² of future lettable area.
• Closed the fourth transaction with our VGP European Logistics joint venture with a transaction value in excess of € 400 million generating net proceeds of € 289.7 million.
• Because of the current geographic expansion and the accelerated growth of the development activities, VGP is currently reviewing its financing strategy, in order to assess how best to finance its future development pipeline. The different alternatives which are being investigated include amongst others the potential issuance of new bonds.
• The earlier announced dividend distribution of € 35.3 million (€ 1.90 per share) representing a gross dividend yield of 3.1%^[1]  was paid out on 16 May 2018.

Jan Van Geet, CEO of VGP Group, said: "We are very pleased with these results. Our future project pipeline remains robust, and good progress has been made to identify, secure and acquire additional land plots which should continue to support our development activities in the medium and longer term.  At the end of July 2018, we acquired our first land plots in the Netherlands and in Italy we are due to acquire a number of land plots on top locations during the second half of 2018."

Jan Van Geet added: "The successful sourcing of new land plots, the fuel of our developments, the strong market fundamentals and the new geographies, should result in the pace of development activities gaining momentum during the next 12-18 months. Our team structure has been adapted and enlarged accordingly and I believe the entire team to be ready and motivated to achieve the new targets ahead."

Highlights
The Group experienced strong growth in all its active markets, with profits for the period up to € 74.8 million, an increase of 19.7% on the same period last year, and net valuation gain on the portfolio amounting to € 61.7 million.

The Group's portfolio has continued to make strong progress during the first half, growing both in value and physical size. The value of annualised committed leases is now € 96.8 million^[2], while the signed annualised committed leases at the end of June 2018 represent a total of 1,901,597 m² of lettable area, a 14.7% increase since 31 December 2017. Of this total space 566,474 m² belong to the own portfolio (648,474 m² as at 31 December 2017) and 1,335,123 m² to the VGP European Logistics joint venture (1,009,940 m² at 31 December 2017).

Successful roll-out in the Benelux and Italy
The Group expanded its geographic footprint into Western Europe with the set-up of new offices in the Benelux and in Italy. In the Netherlands first land plots totalling 267,013 m² were acquired at the end of July 2018 and in Italy, letters of intent have been signed for the acquisition of a 247,000 m² land plot in Milan, a 179,000 m² land plot located in Verona and a 130,000 m² land plot located in the region of Bergamo.

Significant amount of invested equity recycled through the fourth closing with VGP European Logistics joint venture
The transaction with VGP European Logistics joint venture at the end of April had a transaction value in excess of € 400 million and generated net proceeds of € 289.7 million. These net proceeds were applied towards the repayment of short term bank loans and pay-out of the dividend (totalling € 108.6 million). The remaining balance is currently being reinvested in VGP's development pipeline to continue to grow the business.

Group's gearing remains at conservative level
Gearing level of the Group decreased to 33.8% as at 30 June 2018 (42.3% at 31 December 2017) mainly driven by the net cash proceeds of the fourth closing with the VGP European Logistics joint venture, which had a positive effect on the Group's net debt. Net debt as at 30 June 2018 reached € 352.8 million compared to € 436.6 million as at 31 December 2017.

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VGP (www.vgpparks.eu) constructs and develops high-end logistic real estate and ancillary offices for its own account and for the account of its VGP European Logistics joint venture (50:50 joint venture between Allianz Real Estate and VGP), which are subsequently rented out to reputable clients on long term lease contracts. VGP has an in-house team which manages all activities of the fully integrated business model: from identification and acquisition of land, to the conceptualisation and design of the project, the supervision of the construction works, contracts with potential tenants and the facility management.

VGP is quoted on Euronext Brussels and the Main Market of the Prague Stock Exchange.

^[1]    Based on the closing share price of € 62.20 as at 20 February 2018.

^[2]    Including VGP European Logistics (joint venture with Allianz Real Estate). As at 30 June 2018 the annualised committed leases for VGP European Logistics stood at € 68.9 million compared to € 52.5 million as at 31 December 2017.

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