Corporacion Inmobiliaria Vesta NYSE: VTMX reported what management described as a “strong start” to 2026, citing solid leasing momentum, stable portfolio performance, and a selective restart of development activity tied to its Route 2030 strategy.
During Vesta’s first-quarter 2026 earnings call, CEO Lorenzo Dominique Berho said the quarter showed “growing conviction from our tenants,” reflected in new leases and expansions with existing clients, along with new customer wins. CFO Juan Sottil added that revenue growth was driven primarily by new leasing and inflationary adjustments.
Leasing activity and occupancy trends
Berho said first-quarter leasing totaled approximately 1.6 million square feet, including 1 million square feet in new leases. Vesta’s portfolio occupancy finished the quarter at 89.7%, while stabilized occupancy reached 93.4% and same-store occupancy reached 95%.
Management highlighted demand from electronics and aerospace tenants and pointed to “AI-related data center infrastructure” as an increasingly relevant driver. Berho also characterized reported vacancy increases in parts of northern Mexico as “a correction, not a structural slowdown,” arguing that uneven performance in some markets has been tied to supply brought online by less experienced developers.
Asked about occupancy expectations for the year, Sottil said Vesta does not provide forward-looking occupancy guidance, but he and Berho expressed optimism regarding absorption in coming quarters. Berho pointed to momentum in Monterrey, where the company is marketing its Apodaca project, as well as continued resilience in parts of the Bajío region, particularly Querétaro.
Development pipeline resumes selectively
Berho said Vesta “selectively resumed development” as leasing visibility improved. The company launched two new projects in Mexico City and one in Tijuana during the quarter, bringing its total development pipeline to approximately 1.6 million square feet. He said the approach remains “disciplined and demand driven,” prioritizing “tenant-backed projects in high conviction markets.”
On Mexico City, Berho cited CBRE data indicating gross absorption of approximately 6.7 million square feet during the quarter, with activity largely driven by pre-leasing and more than half of new supply delivered already pre-leased. In Guadalajara, he said Vesta successfully pre-leased “the two Vesta buildings under construction,” supported by demand from electronics and technology-related tenants.
In response to a question from Citibank’s Piero Trotta about why Vesta moved forward with development in Tijuana despite elevated vacancy, Berho said the project is the first building of a second phase tied to an adjacent land acquisition and prior land improvements. He emphasized Vesta’s location and infrastructure advantages—“good access to labor, good access logistically, and very importantly, good access to energy”—and argued some competing vacant buildings lack those attributes.
Trotta also asked about leasing spreads. Berho said he expects spreads to remain in a “10%–13% range” over time and noted Vesta has seen some re-leasing spreads in the “20%–50% range,” with some new leases also signed at rents “30%, 40%, 50%” higher depending on the market.
Financial results: revenue growth, margin pressure, and revaluation gains
Sottil said total revenues increased 14.4% to $76.7 million. Rental revenues were $74.0 million, which Berho described as a 14.1% sequential increase. Sottil said 88.9% of first-quarter rental revenues were denominated in U.S. dollars, compared with 89.7% in the prior-year period.
On profitability, Sottil reported:
- Adjusted NOI increased 13.4% to $74.7 million, while the adjusted NOI margin declined 52 basis points year over year to 95.1%, reflecting higher property operating costs.
- Adjusted EBITDA rose 12.4% to $62.1 million, but the margin contracted 130 basis points to 83.9%, driven mainly by higher operating and administrative expenses.
- FFO excluding current tax totaled $43.1 million, down from $45.1 million in the first quarter of 2025, primarily due to higher interest expense.
Vesta posted pretax income of $97.9 million, compared with $28.6 million a year earlier. Sottil attributed the increase mainly to higher gains from the revaluation of investment properties, higher interest income, and higher other income, partially offset by higher interest expense, increased foreign exchange losses, and other expenses.
Balance sheet, dividend approval, and capital allocation flexibility
Vesta ended the quarter with $206 million in cash and cash equivalents and $1.2 billion in total debt. Sottil said net debt to EBITDA was 4.1x and the loan-to-value ratio was 26%, down from 28.1% at year-end following the prepayment of the remaining $180 million MetLife III facilities.
Sottil said the company had no secured debt at quarter-end, with 100% of debt denominated in U.S. dollars and 87.2% of interest rate exposure on a fixed-rate basis.
He also noted that on April 22, 2026, shareholders approved a $74.8 million dividend for 2026, representing a 7.5% year-over-year increase. Sottil said the company plans to pay a first-quarter cash dividend on May 5.
Addressing questions about funding capacity, Sottil said Vesta intends to remain flexible, pointing to its cash position and “low leverage,” and said the company could tap debt or equity markets or sell properties depending on what is most attractive.
On asset recycling, Sottil said the company remains open to selective sales, adding that Vesta primarily “develop[s] to hold” but may sell opportunistically. Berho added that Vesta aims to sell assets above appraised value, citing past transactions “10%–20% above appraised value.”
Costs, yields, and market commentary
JPMorgan’s Adrian Huerta asked about yield on cost. Berho said yields remain attractive “in the 10% range,” citing opportunistic land acquisitions “at $0.70 to the dollar,” competitive construction costs, and current rent levels. He cited deals in Mexico City at approximately 9.8% yield on cost and yields of 10.5%–11% in markets including Querétaro and Tijuana.
Goldman Sachs’ Igor Machado asked whether Middle East conflict-related disruptions were affecting construction inputs. Berho said Vesta was monitoring the situation but had not seen major adjustments. He added that the company also watches foreign exchange moves, and said some projects are built under guaranteed maximum price arrangements, limiting cost variability during construction.
On the sector’s consolidation trend, Berho said some global players may be more focused on capital markets than local development execution, and argued consolidation activity can help establish transaction pricing benchmarks. He also said many consolidators lack development capabilities, and he did not expect their strategies to materially change Vesta’s day-to-day development discipline.
In closing remarks, Berho said Vesta remains confident in its outlook, pointing to strong tenant activity, continued foreign direct investment momentum, and record manufacturing exports. He also said Vesta expects “a more favorable interest rate environment” and greater clarity around the USMCA to support activity in coming quarters. Berho said the company plans to provide updates on its Route 2030 progress at its 2026 Vesta Day in New York on November 11.
About Corporacion Inmobiliaria Vesta NYSE: VTMX
Corporación Inmobiliaria Vesta, trading as VTMX on the New York Stock Exchange, is a Mexico-based real estate investment trust (REIT) specializing in the development, acquisition and management of industrial properties. The company's portfolio primarily consists of warehouses, distribution centers and manufacturing facilities tailored to multinational corporations, logistics operators and other businesses seeking modern, well-connected industrial space in Mexico.
Vesta's core business activities include the design and construction of build-to-suit projects, the leasing of speculative and multi-tenant properties, and sale-leaseback transactions that convert existing facilities into long-term lease arrangements.
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