Corporación Inmobiliaria Vesta, S.A.B. de C.V. (VTMX) Q4 2025 Earnings Report, Transcript and Summary

Greetings, ladies and gentlemen. Welcome to the Vesta Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. It is now my pleasure to introduce your host, Fernanda Bettinger, Investor Relations Officer. Please go ahead.

Good morning, everyone, and welcome to our review of the fourth quarter 2025 earnings results. Presenting today with me is Lorenzo Dominique Berho, Chief Executive Officer; and Juan Sottil, our Chief Financial Officer. The earnings release detailing our fourth quarter 2025 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 answers 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 were prepared in accordance with IFRS, which differs in certain significant respects from U.S. GAAP. 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 U.S. dollars, unless otherwise noted. I'll now turn the call over to Lorenzo Berho.

Good morning, everyone, and thank you for joining us. 2025 was a year of disciplined execution and strategic positioning for Vesta. We strengthened our platform advance, Route 2030 on schedule and made decisive decisions, which enabled Vesta to capture what we believe will be a powerful demand cycle beginning in 2026 and accelerating into 2027. Early in the year, uncertainty slowed decision-making, but we stayed focused on operational discipline. During the year, our conviction to opportunistically deepen Vesta's presence in Mexico's most dynamic markets, specifically Mexico City, Guadalajara and Monterrey has proven decisive. The strategic steps we implemented throughout 2025 have materially strengthened Vesta's portfolio and positioned us to outperform. Throughout this transition, our focus did not change. We remain disciplined in capital allocation, selective in development and stay close to our clients while adapting with agility to capture unique opportunities as market conditions evolve. This defines Vesta, long-term strategic clarity with the operational flexibility required to perform across cycles. We're not building for 1 quarter. We're building for the long term. And in 2025, we set our sights on the next cycle with improved visibility by the end of 2025. We're seeing momentum return, particularly in the second half when leasing activity accelerated. We saw roughly 1.4 million square feet in new leasing during the second half of the year compared to 0.5 million square feet during the first semester. This reinforces our view that the market has likely reached a turning point. Vesta also delivered solid financial results for the full year 2025, which Juan will touch upon in more detail. We exceeded guidance with rental revenues increasing 11.8% to reach $274 million, while adjusted full year 2025 NOI margin reached 94.8% and adjusted EBITDA margin reached 84.4%. Vesta FFO totaled $174.9 million in 2025, a 9.2% year-on-year increase. Let me share an overview of leasing and portfolio fundamentals in 2025. As I noted, leasing activity strengthened substantially in the second half of the year. Full year leasing activity reached 6.9 million square feet with a weighted average lease term of 7 years, which includes 1.9 million square feet in new leases and $5.0 million in lease renewals, representing the highest level of renewals recorded over the last 3 years. During 2025, renewals and re-leasing activity reached 5.4 million square feet with a trailing 12-month weighted average leasing spread of 10.8%. Importantly, manufacturing returned with conviction in 2025. 86% of Vesta's new leases were manufacturing-related with electronics leading this activity. I have commented previously that Mexico has overtaken China as the largest exporter of electrical and electronic equipment to the United States. And we are seeing that reflected directly in our leasing pipeline. This represents a notable shift from prior years when e-commerce was the dominant driver. Today, we're benefiting from dual engines of demand, the resilient logistics and e-commerce space, combined with a powerful resurgence in advanced manufacturing. AI-driven infrastructure is becoming an important structural demand driver for Vesta. Data center expansions in the U.S. has translated into real manufacturing demand for related peripheral equipment. This includes producers of HVAC systems, racking, tabling and microchip-related assembly. Guadalajara continues to benefit from these structural trends with sustained demand from global manufacturing tenants. Existing clients, including Foxconn, are actively expanding their footprint, reinforcing the market strategic importance within our portfolio. From a development standpoint, we invested approximately $330 million in projects during the year on a cash flow basis. These investments are directly aligned with our Route 2030 strategy and our focus on high conviction markets where we see sustained absorption. Turning to our fourth quarter results. Leasing activity reached 1.9 million square feet, including 770,000 square feet of new leases with both existing and new Vesta tenants across the electronics, aerospace and automotive sectors, reflecting the improving market dynamics I discussed. Lease renewals totaled 1.2 million square feet with a weighted average lease term of approximately 5 years. Total portfolio occupancy stood at 89.7% at quarter end, while stabilized and same-store occupancy reached 93.6% and 95%, respectively. We began construction on 2 new buildings during the quarter, one inventory building in Guadalajara and one build-to-suit in Queretaro. We ended the quarter with 800,000 square feet under construction with an estimated investment of approximately $60 million and an expected yield on cost of 9.9%. Let me walk you through leasing momentum and share insight on market dynamics across our regions. Occupancy moderated in certain submarkets due to normal tenant rotation and isolated shutdowns during the year. This is not a structural shift. It's part of the normal rotation of tenants in a dynamic market. Vacancy levels remain healthy, and we're already seeing strong backfill activity, including assets with multiple bidders. The Monterrey market continues to stand out with leasing momentum building in this high demand market, and we expect a continued increase during 2026. Vesta Park Apodaca, which was completed in the third quarter of this year, is now in active marketing. Three state-of-the-art buildings are drawing strong interest, particularly from advanced manufacturing and logistics tenants. And as a related update, the Vesta Park Apodaca Building 8 was awarded first place in the GRI Global Awards 2025 Industrial & Logistics Project of the Year category. The award is considered one of the global real estate industry's highest distinctions, recognizing the most visionary projects and companies worldwide for excellence in design, sustainability, innovation and contribution to the urban environment. Also in Monterrey, infrastructure is scheduled to begin in the first half of 2026 on the 330 acres we acquired in the high-demand Airport Highway corridor as announced in October. Ciudad Juarez reached what we described last quarter as an inflection point. Activity has strengthened, interest from electronics and supply chain integration tenants is robust. This market experienced the cyclical adjustments throughout 2025 that I described, but the fundamentals remain intact. Tijuana has stabilized, and we are seeing constructive tenant dialogue, including notable leasing activity with global companies during the fourth quarter. It's important to mention we continue seeing rents increasing across our markets, supported by disciplined supply. Guadalajara remains a structural leader for Vesta, and we are seeing a growing number of high-tech electronics companies seeking large-scale projects. Many are leveraging the strong ecosystem that has developed in the region, including specialized talent, established supply chains and existing industry clusters. This continued momentum reinforces Guadalajara's position as the leading technology and advanced manufacturing hub in Mexico, often referred to as the Silicon Valley of Mexico. Guadalajara also benefits from the manufacturing support data centers and AI demand, which I have described. Mexico City continues to benefit from its scale, consumption base and logistics importance. We're actively engaged in discussions with major players, particularly in the logistics sector. Our project in the Vesta Park Punta Norte ramp up to become the largest cross-docking operation in Latin America of all e-commerce players in the region. Turning to capital allocation. In 2025, we secured strategic land positions at attractive terms during periods of market uncertainty in 2025. These acquisitions will support the next 4 years of Route 2030 execution. We are 2 years into our 6-year Route 2030 plan and are ahead of schedule in terms of capital deployment. That said, Vesta's growth will continue to be prudent and measured. As always, our development pace in 2026 will be calibrated carefully to demand and absorption levels in each market. We're clearly optimistic, but we remain disciplined. Protecting long-term returns is not negotiable. Our balance sheet remains strong, liquidity is solid and leverage metrics are trending as expected. In closing, 2025 marked a transition year. While the environment required patience early on, the broader macro backdrop is increasingly constructive as we look toward a renewed acceleration in demand. Mexico's fundamentals remain compelling. According to preliminary data from INEGI, exports grew 7.6% year-over-year to approximately $664.8 billion, marking a second consecutive year in which trade served as a key engine of economic growth. Meanwhile, imports also reached record levels, rising 4.4% to over $664 billion. These figures underscore the scale, depth and resilience of Mexico's integration within North American supply chains. Despite uncertainty, this integration into North American trade flows supports sustained export momentum into the U.S., validating Mexico's role as a strategic manufacturing and logistics hub. Top-tier global companies continue to view Mexico as a critical platform for serving North American demand. Foreign direct investment and exports reached record levels in 2025, while cumulative foreign direct investment inflows through the third quarter running 10.9% above full year 2024, reinforcing the structural drivers of growth that underpin Mexico in general and Vesta's market in particular. Setting our Route 2030 strategy in 2024 and executing with precision in 2025 has been fundamental to positioning Vesta for 2026 and beyond. We're beginning to see the benefits of those decisions translate into stronger fundamentals, and we are confident that this momentum will continue to drive growth, underpinned by structural tailwinds, reinforcing our confidence in the long-term opportunity ahead. Our optimism is grounded in discipline. Even in the context of high occupancy and solid demand, we remain rigorous in how we allocate capital and underwrite new developments. We are closely monitoring supply pipelines and vacancy trends in each of our core markets, ensuring that growth remains balanced and value accretive. With that, let me pass the conversation to Juan.

Thank you, Lorenzo. Good day, everyone. Vesta closed the year with very solid financial results, as Lorenzo noted. Our total rental income increased to $283.2 million, while rental revenues reached $273.6 million, an 11.8% year-on-year increase and exceeding the upper end of our full year revenue guidance of 10% to 11%. Adjusted NOI margin exceeded our revised guidance of 94.5%, reaching 94.8%, while adjusted EBITDA margin was in line with our guidance at 84.4%. Vesta's FFO ended 2025 at $174.9 million, a 9.2% increase compared to $160.1 million in 2024. Now let me walk you through our fourth quarter results. Starting with our top line, total revenues were up 17.2% year-over-year, reaching $76.4 million, primarily driven by rental income from new leases and inflationary adjustments across our rental portfolio. As for our current mix, 89.9% of our fourth quarter 2025 rental revenues were denominated in U.S. dollars, up from 88.7% in the fourth quarter 2024. Turning to profitability. Adjusted net operating income increased 17.2% to $69.4 million. Our adjusted NOI margin remained strong at 94.6%, up 88 basis points from the prior year, reflecting higher revenue growth with stable cost. Adjusted EBITDA totaled $61.1 million, an 18.2% increase year-over-year with a margin expansion of 155 basis points to 83.3%, driven by a lower proportion of administrative expenses relative to revenue during the fourth quarter 2025. Vesta FFO excluding current tax was $39.3 million compared to $41.1 million in the fourth quarter 2024. The decrease was primarily due to higher interest expense in the fourth quarter of 2025 compared to the same period of 2024. We closed the quarter with pretax income of $98.5 million compared to $81.2 million in 2024. This increase was primarily due to higher gains on revaluation of investment properties as well as a positive variance in exchange gains and higher interest income. This was partially offset by higher interest expense, reflecting the increase in debt balance during the period. Turning to our capital structure and balance sheet. We ended the year with $337 million in cash and cash equivalents and total debt of $1.28 billion. Net debt-to-EBITDA was 4.4x, and our loan-to-value ratio was 28.1%. Subsequent to quarter's end on February, we prepaid the remaining Metlife III facility of $118 million. This repayment leaves us with no secured debt, enhancing our financial flexibility and completing our transition to a fully unsecured capital structure. In terms of capital allocation, during 2025, we strengthened our land reserves, positioning us well to capture future development opportunity, as Lauren discussed. Looking ahead, we will maintain our disciplined investment approach, deploying capital selectively in markets where we see strong demand fundamentals. Our share repurchase program also remains a key pillar of our capital allocation strategy. We will continue to execute opportunistically as we have done successfully in the past with the objective of maximizing long-term shareholder value. Moreover, consistent with our balanced capital allocation approach on January 15, 2026, we paid a cash dividend for the fourth quarter of $0.38 per ordinary share. Finally, I would like to discuss the outlook for the year. We are expecting to increase rental revenues between 10% to 11% year-on-year, while we expect to achieve 93.5% adjusted NOI margin and 83% adjusted EBITDA margin for the full year 2026. This concludes our fourth quarter 2025 review. Operator, could you please open the floor for questions.

[Operator Instructions] Your first question comes from the line of Juan Ponce of Bradesco BBI.

It was interesting to see that 86% of 2025 leases were manufacturing related, which seems to be imperative. So in a scenario where the USMCA review does not reach an agreement in 2026 and transitions into annual reviews, how resilient is your current development pipeline under that environment? And specifically, how confident are you in leasing ongoing projects in Guadalajara and Queretaro if trade visibility becomes more limited?

Juan, thank you very much for being on today's call. Well, we have experienced uncertainty regarding trade for the last years. And that has been not only seen in industries like -- in markets -- in industry like ours, but also other corporates, in other industries and even in other regions of the world are facing similar challenges, whereas the manufacturing footprint -- the global manufacturing footprint is adjusting and adapting. We believe that Mexico has invested for many years, maybe since NAFTA to establish a more integrated supply chain in North America together with U.S., Canada. But in the end, I think that, that will continue thriving on top of whatever negotiations might take place regarding revisions of the USMCA, different scenarios. I think it's more about the strong supplier base that Mexico has actually very -- for different manufacturing industries and how important and how well linked it is to the U.S. Guadalajara is an excellent example of how the electronics sector has evolved, has been growing rapidly, and it's actually a good signal how the global manufacturing footprint for electronics is moving. And I think for that reason, we are very optimistic. That's why we started new buildings. We have a strong pipeline building up in Guadalajara. And eventually, actually, we have acquired more land for future projects. So we're very optimistic. We think these are long-term investments. Many of these global companies continue to have strong bets on Mexico. And for that reason, we see a positive trend. Very similar to Queretaro where actually we have seen, in this case, the auto sector very active in renewals and also very active in looking for new space, pipeline building up. Aerospace sector, a similar case where many European companies have established long-term operations. We just expanded another operation with the Safran Group out of France. And this is another important case and good signal how committed global companies are to Mexico. Maybe just on the lease-up stage, we're confident that there's a stronger pipeline. We have available space that has been currently -- recently developed in Monterrey, for example, where we have -- where we developed the last buildings of the Apodaca project and pipeline is building up well in different industries, logistics, e-commerce, manufacturing. So I'm pretty sure that 2026 is going to be a very successful year and leasing will continue the same trend that we have seen, particularly in the last half of 2025.

Next question comes from the line of Andre Mazini. André Mazini: Two questions. The first one on leasing in recently completed development projects. How much was executed in the quarter and in the year? And how much is baked into 2026? So another way of asking, what's the occupancy of the stuff to deliver in 2025 you expect in 2026? Maybe that's another way of asking that. And the second one is about the huge land bank acquisition in Monterrey. Almost no land there last quarter. Now it's the biggest single region, right, in which you guys have land. Is that land all paid in cash? Is it paid in cash and land swaps as well in which the landowners end up having a portion of the project? So how is kind of the payment, the consideration there for this huge land bank acquisition that you guys had in Monterrey? And congrats for that acquisition.

[Foreign Language] Andre, and thank you very much for being on the call. I will start with your second question. Yes, last quarter, we were able to buy after a long negotiation, a strategic land parcel. This is in Apodaca corridor right next to the airport. The initial phase is 330 acres. So this matches perfectly to our long-term strategy in what we -- in the largest industrial market in Mexico where we will continue to grow. We will have -- the most part of the capital deployment towards 2030 will be Monterrey, and this is going to be a cornerstone project for the 2030 Route. The Apodaca corridor has been fantastic for companies in the e-commerce sector. It's a great logistic corridor, but also manufacturing continues to expand in the area. The area has good access to the main corridors towards the U.S., good access to the city. It actually has a good infrastructure in terms of energy, which is very helpful. And maybe just -- the only thing we can say about the transaction is that the payment was not done all at once. We got seller financing, which is helpful for a development project and for the whole -- for the development process. And eventually, we also have conditions to extend the land for a second phase. So we're very excited, and we will be more than happy to welcome you soon when we kick off the construction of this new site. Regarding your first question on leasing, well, current -- remember that our main focus is stabilized portfolio occupancy, which currently stands at 93.8%, I believe, a little bit lower than 95%. Definitely, the occupancy number is a little bit lower than before. We were coming from record high numbers. But what we feel confident is that most of our buildings are actually brand new, and we have seen that demand interest coming from outstanding companies. So we're very happy that the buildings are there and the demand is coming along. So I'm pretty sure that Queretaro and Monterrey will be very successful projects, and we're confident that this will lease up well throughout 2026. Remember that another important thing is that we grow with existing clients. So we're in close contact with them in order to be able to grow with them. So hopefully, we can continue expanding our relationships. But more importantly is that we will continue with the discipline of having outstanding companies. strong credit rating companies, long-term leases, well balanced between e-commerce, logistics, manufacturing sectors. So that discipline will prevail. And hopefully, we can start getting some good results soon. Thank you, Andre.

Question comes from the line of Jorel Guilloty of Goldman Sachs.

I have 2. So first one on your guidance. I just wanted to get a sense of what the occupancy expectations are embedded in this guidance. And also if it envisions any more development launches going forward? And then the second question, I'm sorry if you answered this earlier, I wanted to get a sense of the income tax expense for the quarter. It was around $36 million or so if I remember correctly. I wanted to understand what drove this and what we should expect tax-wise going forward?

Sure. Let me answer the second one briefly. It is related to the appreciation of the peso. As you know, that generates some significant profit from our debt, which is incurred in dollars, and that accounts for most of the income tax impact that we saw on the income statement. As the peso stabilizes, starting with a very low peso-dollar exchange rate closed at the end of the year, I think that will be eliminated in 2026. As for the first question?

Sure. We don't give any guidance on occupancy numbers, Jorel. However, if you see the trend on the occupancy towards the last quarter's years and having an understanding on the lease-up activity, we definitely think that even that it's a lower number, we are confident that, that number will somehow pick up throughout the year. We think it's a healthy number and understanding that we're a development company, we have a strong stabilized portfolio that generates important income. But also we have anticipated with good buildings on a spec basis that I'm pretty sure that we will continue to lease up throughout the year and that occupancy will improve. We have been in cycles like this one, and we have outperformed and benefited from anticipating through -- on the development front. So we're confident that being proactive on the asset management part is going to help us. Secondly, we think even that last year was started as a slower leasing activity, we have seen rents actually have increased in the year, some markets more than others. However, all of them with positive trends. So as long as we continue to see demand excelling throughout 2026, and we see that rents continue to be increasing, I think that we will benefit from that and take advantage and eventually be able to have better occupancy, better rental revenue and also have a positive impact in our -- eventually net asset value from having good tenants inside of our buildings.

And a quick follow-up on the guidance, does it envision more launches, more developments going forward? Or is it just envisioning your company as it is today?

That's a good point, Jorel, regarding development. Well, again, without the guidance, we don't give guidance specific on CapEx as well as development and other numbers. But what we can say is that we prepare -- we presented the 2030 Route in 2024, which we have been executing successfully. We -- 2025 was very important to secure land as the one I mentioned in Monterrey, but also in Mexico City, but also in Guadalajara and in other markets. So that land has to be still developed. We think that as long as we continue to see in a disciplined way, more demand in certain markets and where we can start leasing up, we will definitely like to start construction soon. So 2025 -- 2026 will be a year where we will start construction on the land that we have acquired and follow through our 2030 Route. And hopefully, we can be able to develop build-to-suit, spec buildings and eventually be able to replicate the success that we have had in Vesta Park projects such as the ones in Guadalajara, in Apodaca, Tijuana, Ciudad Juarez, Mexico City. So it's another cycle. We're entering a different stage. We're optimistic on 2026 and 2027. For that reason, I think that CapEx will continue to be important as well as development starts.

Your next question comes from the line of Enrique Cantu of GBM.

Congrats on the results. I just have one question on your revenue growth guidance. What are the main drivers behind that outlook? Is it primarily additional GLA from developments, rent increases or higher occupancy from leasing vacant space?

Look, the guidance -- as you know, guidance, we make the guidance very carefully. We are assuming taking into account the buildings that we leased up until December that will begin paying rent on the -- beginning in the first months of 2026 as well as the stabilization of the buildings that we have unoccupied where we have a strong pipeline, and I think there were significant tenants coming up on -- starting on the first quarter. So taking that into account, we feel confident to give you the guidance that we give you now. I think that 2026 is a promising year. I think that we have a strong pipeline. I think that we're well advanced in talking to potential clients, and we are very optimistic indeed.

Perfect.

I would add that we have also been able to renew leases and get mark-to-market rents that has been on the existing portfolio that has been -- we have been very successful. So the existing portfolio is not only the mark-to-market on renewals, but also year-over-year. Remember that our leases are indexed to inflation. So the combination of existing leases at each anniversary indexed to inflation plus mark-to-market on certain contracts, plus our ability to lease up vacant building together with new development, all combined is part of how we forecast revenue growth and therefore, guidance.

Your next question comes from line of Gordon Lee.

A question a little bit more on the operating side, Lorenzo. I was wondering, if you look at some of the northern markets, right, thinking of Tijuana, Ciudad Juarez, Monterrey, it's -- I've been surprised, I think it's been remarkable how stable rents have been even as vacancy numbers have increased for the market as a whole. I was wondering what do you attribute that to? And do you see any risk of that changing for the worse in the quarters to come?

Can you repeat the question, please just -- I think you broke up a bit.

Okay. No, I was just -- my question was, if you look at some -- if you look at Monterrey, Ciudad Juarez, what I think has been really interesting is market rents have stayed pretty stable even with rising vacancies. So I was wondering what do you attribute that to and whether you see a risk to that going forward?

That's -- okay. I got it. Thank you, Gordon. That's a good question. So we believe that what we experienced last year was a little bit somehow unexpected where we saw a slowdown at the beginning of the year. And you might remember January, U.S. President taking office, liberation date and the high uncertainty that we experienced made a lot of companies not making any decisions and not making any -- not leasing any space. Normally, in an environment where you have a slower demand, normally, you could see a reduction in rents. However, in this case, there was the market was just stout. So there was not even a need to reduce rents by any of our competitors. So for that reason, what we think is that demand started coming up back, and it was not a matter of supply and demand. It was just a matter that there were no leases at the beginning. And suddenly, when they came back, we think that vacancy is actually not that high. And that's why we continue to see that replacement costs of several buildings continue to be high and returns have to be expected. Developers have been disciplined and the vacancy and occupancy and vacancies among most of the markets are at healthy numbers, even that they are somehow higher than before, but we were at record low levels -- but if you look at a longer period of time, we are still in a good numbers. Going forward, I think that we will start to see more demand. We think that rents -- I don't see a major risk regarding rents, frankly. I think that rents will hold up well or maybe even increase. But in the end, I think that over the long term, we think that rents are still competitive. Companies are in Mexico for its competitive advantage, particularly on manufacturing. And in terms of logistics, these are cities that continue growing. Consumer habits are still changing and more consumers are adapting to e-commerce to logistics, more demand. So we're very optimistic and positive on most of the markets. So we don't see any potential risks on rents.

Your next question comes from the line of Pablo Ricalde of Itau.

I have a question on the development pipeline. So we finally see you like coming back into the build-to-suit projects with the Safran building. So maybe going forward, how should we think about the development pipeline of mix between build-to-suit and spec-to-suit building?

Great. Thank you, Pablo. So we will continue to see build-to-suits and spec buildings well balanced. We -- I think that what is more important is that now that we believe we are hitting a pivotal moment where we will continue to see more demand. We will continue our strategy on spec buildings. It has paid off well to have spec buildings and then turn them into somehow build-to-suit, we call them spec-to-suit because we're able to pre-lease the buildings and in the meantime, make final adjustments for the tenants. But importantly is that we are able to kick off or to start the buildings in advance and anticipate to potential demand. However, we currently have some buildings in the market. So we have -- we want to have discipline. So as long as we continue to see demand and leasing coming up, I'm pretty sure that we will start with some other spec buildings. And build-to-suits, we are constantly looking for them. We recently closed an expansion with Safran. That's a good example. So I think that being close to our clients, close in the markets with the real estate community and broker community, I think that we're going to be able to continue to do both, particularly because the land acquisitions that we recently did is so well located that I'm sure that there's going to be many companies that would like to establish their operations in high-quality parks with great infrastructure with access to energy. And I think that will be a huge benefit for companies going forward. This year will be very important to focus on the development execution, particularly to get all the infrastructure and organization of the land that we acquired in place and try to get ready so that when demand and projects continue to kick in, we have a -- we're already a step forward and take advantage of those opportunities. And I think that's what makes Vesta different. We are an institutional portfolio manager, asset manager of industrial assets, but also we like to take advantage and capture the growth opportunities on the development front where we can continue to see returns at 10% or even higher return on cost and that vis-a-vis acquisition cap rates in the 6% range are -- we think that there's a lot of spread that we can capture on the development front on new buildings. And I think that's a huge benefit for companies wanting to establish operations in Mexico.

Our next question comes from Pablo Monsivais of Barclays.

Just a question on Aguascalientes. There's been some news that Nissan is planning to sell the COMPAS plant in Aguascalientes. And since you have big operations there and a considerable land bank, what's your take in this? And that divestment could impact a little bit the dynamics in that region or probably not if the taker is a company that is growing? Just want to pick your brain on that news flow.

Thank you, Pablo, for being on the call, and thank you for your question. Yes, there's a lot of speculation on what might happen with that particular COMPASS plant. I think that whatever happens, it's going to be very positive for the sector, particularly because it's a -- that plant, it's, I would say, brand new or state-of-the-art. It was developed together between Mercedes-Benz and Nissan. So it has a combination on German technology and Japanese innovation. So I think it was a fantastic project, which for whatever reason, didn't work out. However, I think that, that's why it has a lot of interest from different players. So again, without getting too much into the speculation, we think that Aguascalientes is a fantastic city where companies have been successful. And I think that understanding that Mexico continues to be an attractive manufacturing front, I think that definitely somebody will benefit from that plant. And actually, we think that eventually that will bring new suppliers from a new company and Vesta will continue to be there. I think that for Vesta, Aguascalientes is becoming every time a less relevant market. However, we think -- we believe in long-term relationships. We have good relationships with several suppliers in the auto industry. And for that reason, we think that there could be some good upside to the new plant -- or I'm sorry, to a potential buyer of the new plant.

Okay. And if I can squeeze another question there. Just want to understand, it is my understanding that your guidance for 2026 has a slightly lower margin versus 2025. What's the reason for that?

Pablo, this is Juan Sottil. As you know, the peso-dollar exchange rate is -- well, it's a little bit punitive to the company given the fact that we sell everything in dollars and all of our expenses mostly are in pesos, basically our employee cost. So it's going to be a difficult year. It's a year where we will continue a very strong discipline on cost control. We're very successful doing that last year. And we will continue to focus on cost control and being very mindful of the operation needs in terms of people and the location of those people. So it is a challenging year in terms of operating costs, but we will keep the discipline.

Next question comes from the line of Abraham Fuentes of Santander.

So I wonder if -- are you considering any asset recycling during 2026? And the second 1 will be what could we expect in terms of dividends also for this year.

This is Juan Sottil again. Thank you for the question. Look, asset recycle is something that we will continue to do. It is an opportunity that we will garner in our portfolio. We'll keep on the lookout. We scope our portfolio. We believe that we are in the best regions in Mexico. We believe that we have very successful buildings. But we also believe that recycling older buildings or buildings that have accrued a good stabilization status they represent an opportunity to sell them. There's other players that like to buy those type of stabilized assets, and we will take advantage of that. So we will be on the lookout to sell buildings. That's an integral part of our development plan, of our growth plan, and we will be on the lookout. Regarding dividends, dividend is a part of our compensation to shareholders. We believe in total relative -- in total return. Total return implies our effort to grow the company so that the market recognizes that in terms of appreciation of the stock price. And dividends are just an integral part of that total return. We will continue to pay dividends. We will continue to grow judiciously the dividend flow for the incoming year. You will see our dividend policy as soon as we have our shareholder meeting in the next month or so. So that's very much. I think you should consider.

If I may add, I think it's consistency on what we have done in the past, and that consistency will continue to be there going forward for dividends as well as for asset recycling.

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

Just 2 quick ones. The first is related to your vacant buildings. Could you provide more detail about the marketing efforts and the current status of ongoing negotiations of those buildings? And what kind of tenants are interested on such assets? And the second question is related to your leasing spreads. During 2025, you reported double-digit leasing spreads. Is it reasonable to assume that this could be maintained during 2026 and which regions could have this double-digit leasing spreads?

Thank you, David, for your question. Maybe on the second one, I think that definitely, we will continue to see the upward trend on the leasing spreads, particularly because this is a bit of a -- it will continue to be an opportunity in the upcoming years as some of the leases continue to hit their maturities, and that's when we have the ability to catch up. So that's something that has happened last year, will continue this year and maybe even the upcoming years as long as some of these long-term leases that were done some years ago hit their maturity stages. And we think that, that's a great opportunity to -- and we've been very, very active on that front. And then on your second question -- on your first question regarding vacant buildings, well, we are very confident that the pipeline is building up. We are very happy with the projects that we have developed. Just as mentioned before, just to give you an example, we have been getting awards on the Vesta Park Apodaca project, particularly in one building, Building 8, we got awarded the GRI Global Award of Industrial & Logistics Project of the Year. And I think that competing with other countries, with other developers across the globe, this is a very, very nice recognition and award. And so we do our best to develop the best projects. And I think that eventually will turn out into having a higher benefit with companies that want to be in the best projects in the most dynamic markets. The buildings that we develop on top of the certain specifications on design, sustainability, innovation, these are very flexible buildings. So we can accommodate e-commerce clients as well as logistics as well as light manufacturing. So I think that strategy on spec buildings will be very helpful where we can be competitive in terms of cost in markets where we can have good access to labor, where we can have good infrastructure. So we -- for that reason, we are confident that the vacant buildings we have today are great buildings that will be leased up eventually.

Question comes from the line of Felipe Barragan.

So it's been a year -- a little over a year now that Claudia is in office. She announced an infrastructure program a few weeks ago. So I just want to get your sense if there's -- I mean comparing two years ago to where we're at today, what strides have you guys seen that are tangible on sort of getting permitting, electricity and whatnot for developments?

Great. Thank you for your question. We -- frankly, I think that there has been a lot of very proactiveness towards our industry and our business coming from the Claudia Sheinbaum administration. As you know, Claudia Sheinbaum has been the only President or the first President to include industrial parks as part of a long-term infrastructure plan. She has considered 100 projects to be developed. Well, many of those are actually Vesta's projects. And we have been having great access to some of their economic development councils as well as corresponding secretaries to have the best permitting and licensing and support in order to make these projects work. I think that she has a very good understanding on the opportunity that Mexico has to develop together with the private sector, good industrial infrastructure that creates better jobs, better paid jobs, which is very important for her as for the welfare and in terms of support for the people. So in the end, I think that there's a strong alignment, there's good support. And I think that for them having companies that are institutional and well organized like Vesta is also a good recognition to our sector. Through the Mexican Association of Industrial Parks which I happen to be at the Board, and I was previously a President, we have also a very close contact and very good access to the government agencies so that the presidency is successful, the country is successful and we developers contribute a lot to that success.

Your next question comes from the line of [indiscernible] of GBM.

Congratulations on your results. I just have one question. How are you thinking about the pace of developments in 2026, given the current occupancy levels and broader market uncertainty?

Thank you for your question, Pablo. Well, I think that Vesta will continue monitoring the markets and defining where we can start projects. I think a good example for that is Guadalajara, where we recently started 2 spec buildings end of last year. The reason of that being that we have leased up our existing buildings. We see -- we continue to see strong demand, and we want to anticipate to that particular demand. So we have -- in order to how do we -- the way we monitor it is through the real estate community, the broker community as well as our existing clients. So I think that, that same example will be used for the rest of the market. We think that there are some good success stories in Juarez, in Tijuana, where we were able to lease up the second half of last year. That's going to be helpful in order to eventually start new buildings. And the same for Monterrey. Well, Monterrey, we did that large acquisition on the Apodaca on the new land next to the airport in the Apodaca corridor. So we will kick start with the infrastructure. And eventually, when we see leasing -- some closings on the leasing front on the current project, we will pick up with new projects. So we are definitely going to be more active than 2025, but we would like to continue being cautious and disciplined and in line to whatever we see a potential demand and not being oversupplying the market. And actually, as you know, development front and development cycles are long. I think that being able to acquire land last year and this year focus on infrastructure and some new buildings will put us in a great spot for 2027 to start generating income on those projects. And eventually, our main focus will continue to be the 2030 Route. So we're optimistic. We see the market positively, and we think we have the capabilities to pick up some good development projects throughout the year.

Your next question comes from the line of Federico [indiscernible].

Congrats for the results. Two questions in particular. For [indiscernible] in capital allocation, you used the buyback last year. I assume that you will cancel that this year and extend the maturity of the debt, et cetera. But thinking in the long-term strategic book of 2030, what do you find in terms of acquisition of land development, et cetera, et cetera, not on consolidated basis, is thinking more in regional basis. That are the 2 questions. Sorry, and the last one, Juan, what is the Mexican peso that are using for the budget and the guidance for this year?

Well, look, the Mexican peso is surprisingly strong. So we made our forecast at MXN 17.50, but we have been -- that has been proving a little bit too short. Again, the theme of the year in terms of the administration is cost control. And we will be keen on continuing to do that as the peso is very strong compared to the previous years. Now in terms of capital allocation, look, I think that we have acquired about 90% of the land that the plan requires. So I don't think that this year, we will -- I mean, there's always opportunistic acquisitions. Mexico is one an important market where we will continue to look for important land. But the bulk of the land we have, this is a year of, as Lorenzo has said, infrastructure investments. These great plots of land need to be made shovel-ready, and we are prepared to do that. We have to be ready for the upcoming demand, which we can see on our pipeline. So capital allocation will be mostly focused on making the land shovel-ready, opportunistic investments in land in places like Mexico City. And as I said before, if there's opportunities to sell part of the portfolio, we will. So that's just keeping Vesta running as a smooth company and taking every opportunity to provide good results that the market will recognize.

Congrats again for the results.

Thank you.

There are no further questions. I'd now like to turn the call back over to Mr. Berho for his concluding remarks. Please go ahead, sir.

Thank you, everyone, for joining us today. As we look ahead, we are confident in the opportunity and equally confident in our ability to execute with prudence across cycles. If the next strong economic phase accelerates into 2027, as we believe it will, Vesta is uniquely positioned to capture that growth responsibly and at scale as supply has moderated and pipeline conversations point to improving visibility over the next 12 to 24 months. Thank you all, and have a nice day.

Thank you for attending today's call. You may now disconnect. Goodbye.