Earnings Call Transcript - VTMX Q2 2024

Operator, Operator

Greetings, ladies and gentlemen. Welcome to the Vesta's Second Quarter 2024 Earnings Conference Call. At this time, all participants are in 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, Mariana Dominguez, with Vesta's Investors Relations Team. Please go ahead.

Mariana Dominguez, IRO

Good morning, everyone, and welcome to our second quarter earnings call. Presenting today with me is Lorenzo Dominique Berho, Chief Executive Officer, and Juan Sottil, our Chief Financial Officer. The earnings released detailing our second quarter 2024 results was released yesterday after market closed and is available on the company’s 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 risk and uncertainties that may cause actual results to differ. For more information on these risk factors, please review our public filings. Vesta assumes no obligations to update any forward-looking statements in the future. Additionally, note that all figures included herein 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 and is entirely by reference to our financial statements, including the notes thereto and are stated in U.S. dollars unless otherwise noted. I will now turn the call over to Lorenzo Berho.

Lorenzo Berho, CEO

Thanks, Mariana. Vesta delivered solid second quarter results driven by the sustained strength of our high-quality portfolio and great execution by our professional team. Leasing activity reached 2.8 million square feet, with 1 million square feet in new leases, nearly half of which were buildings under construction led by the e-commerce and consumer logistics sector as a result of strong demand we're seeing in the market. 1.8 million square feet of our leasing activity was in renewals, and real leasing spread reached 7.1% during the quarter. Consistent with last quarter and reflecting stable growth in rent in the overall market with low vacancy levels. We reached 42.5 million square feet of GLA, including buildings under construction, and continue to see portfolio occupancy levels increasing during the quarter. Stabilized occupancy reached a record 97.5%. Vesta's construction pipeline also continues to strengthen, ensuring we meet the demand we're seeing in the market. Our pipeline reached 4.7 million square feet during the quarter, of which 38.6% has been leased to-date. Along these lines, 100% of the existing buildings within our Vesta Park Apodaca in Monterrey have been leased by the second quarter. We also pre-leased a spec building in Monterrey during the quarter and began construction on the only 730,000 square foot large format spec building to have been built in Monterrey to date, anticipating the considerable demand we're seeing in Mexico's largest industrial market. Our business is led by two important drivers. First, Mexico's internal consumption and local and regional market demand. Deloitte estimates Mexico's GDP will grow 2.2% in 2024, then at a 2.1% average rate annually from 2025 to 2030, continuing the country's current macroeconomic direction of this low and stable growth we've seen post-pandemic. According to the World Bank, remittances accounted for 4.2% of Mexico's entire GDP in 2023, a number that is certainly higher now. Mexico's purchasing power is therefore strengthening. New shoring remains an important growth driver for Mexico. Last week, Pitch Ratings upgraded Mexico's sovereign rating to BBB minus with a stable outlook. Pitch cited a prudent macroeconomic policy framework, sound and robust external finances, and steady debt levels. The agency noted that new shoring could continue to offer future opportunities for the country. Foreign direct investment into Mexico reached over $38 billion from January through May, according to Mexico's economic ministry, a 35% year-on-year increase with the heaviest investment during the period in the manufacturing industry, accounting for 21.8 billion or 56% of FDI. Vesta’s second quarter revenues reached $63 million, while adjusted NOI and EBITDA margins were 94.7% and 82.3% respectively. Vesta FFO reached $37.9 million, a 23.2% year-on-year increase. As our results for the quarter therefore reflect, Vesta is well-positioned to capture related opportunities. We're focused on the right markets, Mexico's most strategically relevant manufacturing hubs, and our site remains on the long-term. As I have noted in the past, we're highly selective regarding the markets and projects where we'll continue to invest and grow. I'd like to reiterate Vesta's important differentiators. Our outstanding asset quality is second to none. We have a long track record of leveraging close client relationships to identify unique and accretive opportunities and a long history of exceptional execution with a deep understanding of industry dynamics and our market nuances and challenges. Our capital allocation decisions have been and will continue to be measured and prudent. Finally, and importantly, we have proven our success in quickly and nimbly adapting to react and anticipate with well-grounded decision-making. We will therefore continue to focus on delivering strong and consistent results with both hands firmly at the helm and the wisdom and confidence built through more than 26 years as Mexico's leading industrial real estate developer. As a final comment, we released our sixth audited integrated annual report during the second quarter, about which we are extremely proud. Please find it on our Investor Relations site. With that, let me pass our conversation to Juan, and I'll return for some brief closing remarks.

Juan Sottil, CFO

Thank you, Lorenzo, and good day, everyone. Let me begin with a summary of our second quarter results. Starting with our top line, total revenues increased 22.4% to $63 million, mainly due to rental revenue coming from new leases and inflationary adjustments and rental properties during the quarter. In terms of current mix, 88% of our second quarter revenue was denominated in U.S. dollars, up from 86% in the second quarter 2023. Turning to our profitability, adjusted net operating income increased 19.6% to $57.8 million, while the margin decreased 77 basis points to 94.7%. Higher rental revenue from our rental properties was partially offset by an increase in insurance, property tax, and other property costs, resulting in a lower margin. Adjusted EBITDA reached $50.2 million in the second quarter, a 20% increase compared to the same quarter last year, while the margin decreased by 188 basis points to 82.3%, primarily due to higher costs and expenses. Administrative expenses during the quarter were impacted by the peso appreciation relative to the same period last year, and the increase in auditing, legal, and consulting expenses driven by our equity transactions. We closed the second quarter of 2024 with a pre-tax income of $132 million compared to $108 million in 2023, which again, this quarter benefited from higher gains on revaluation of investment properties and higher interest income. Vesta's FFO increased 23.2%, reaching $37.9 million as Lorenzo described. Turning to our capital structure and balance sheets, cash and equivalents stood at $377 million, and our total debt remained unchanged at $914 million at the end of the quarter. Net debt to EBITDA was 2.8 times, and our loan-to-value was 22.9%. On the back of our disciplined and prudent approach, we continue to maintain a strong financial position that enables us to keep on executing Vesta's strategic plan while delivering sustainable results. Finally, subsequent to the quarter's end on July 16, we paid a cash dividend of $16.2 million for the second quarter. This concludes our second quarter 2024 review. Operator, could you please open the floor for questions?

Operator, Operator

And we'll pause for just a moment to compile the Q&A roster. Thank you. Your first question comes from the line of Pablo Ricalde from Santander. Your line is open.

Pablo Ricalde, Analyst

Hi, good morning, Vesta team. I have two questions. The first one is about the expense line. You mentioned that significant expenses were due to audit costs, and I'm trying to understand how we should view this line moving forward. My second question is regarding the construction project. We noticed that the project was delayed, and I would like to understand the reasons for this delay.

Juan Sottil, CFO

Pablo, good morning. I'm going to break the first part of the question. On the auditing expenses, indeed, they have come up. As you know, we listed on the New York Stock Exchange, and auditing expenses, in fact, a couple of other lines as well, have become more expensive as our obligations under the PCAOB numbers require a more expensive auditing review. So that's kind of the explanation. So that's basically what happened on that line.

Pablo Ricalde, Analyst

But should we expect it to remain at this level going forward or is this more like just a one-off audit expense?

Juan Sottil, CFO

No, the auditing expenses will continue to be as stated because of the expensive review that we have to comply with on the New York Stock Exchange.

Lorenzo Berho, CEO

Thank you. If I may add, can you hear me well, Juan? If I may add, we did experience a couple of delays in a couple of buildings, nothing material. I think that it just took us a couple more months for one of the buildings to be delivered, which was supposed to be delivered in the quarter. But now we are aiming for that final project to be delivered in October, with minor construction delays. I think another important part of the expense side is that we also experienced some maintenance expenses and energy expenses that we believe might be one-off for the quarter. At some point, that particular cost will stabilize and improve our margins too. Thank you, Pablo, for your question.

Operator, Operator

Thank you. Your next question comes from the line of Gordon Lee from BTG. Your line is open.

Gordon Lee, Analyst

Hi, good morning. Thank you very much for the call. Just a quick question on your land bank. If I look at the land bank, it looks like at this point, you only have land in the La Jolla region. So I was wondering how quickly you think you'll be able to refill land either in the Northern regions or in the Central region, in the Mexico City region? Thank you.

Lorenzo Berho, CEO

Good morning. Thank you for being on today's call. Definitely, land acquisition is a key part of our strategy. We have a very strong pipeline of land that is building up. We select very carefully. Besides, we acquire urban infill, which is one of the most important attributes with locations where we can have good access to infrastructure, labor, and differentiate ourselves as we have done in the past. Sometimes it takes a bit longer, but we have a strong pipeline and we aim to refill our land reserves in the North and Central Mexico in the upcoming quarters. That's going to be very helpful for the strategy going forward, which is based on development. We will continue to do the same as we have done in the past. Fortunately, the reason why we, let's call it, ran out of land in some of the markets, is because our development pipeline accelerated even more than we estimated. That's the case of, for example, Monterrey. As you could see, we just started our final building in the Apodaca project. With that, basically, which will take some months to be developed, but we are out of land. Now, what we have now is buildings under construction that we still have to market and lease. Nevertheless, with the strong market performance that we see, we think that these types of projects will be very well absorbed. But definitely part of our strategy is to continue buying land in great locations in the markets where we have a presence and continue to grow in these sites in the next stage of the company.

Gordon Lee, Analyst

And would you say, in terms of land prices and how they're developed and looking at that pipeline of land bank that you've built, would you still think that when you look at that versus rents in the market today, that you would still be underwriting projects that sort of 10% development yields?

Lorenzo Berho, CEO

Yes, absolutely. So more than getting into detail into each of the markets, Gordon, because all of the markets have different land cost bases, I think that the main driver of Vesta is to continue focusing on spread investment. Spread investment where we can have a higher margin to acquisitions mainly 300 basis points. So yes, we can still achieve returns of around 10%. If you look at the construction pipeline that we have right now, we have a yield on cost in average of 10.4%. So that will continue to be our main driver, our discipline, and our main differentiator compared to other players that focus their strategies on acquisitions and low yield acquisitions.

Gordon Lee, Analyst

Perfect, thank you very much.

Operator, Operator

Your next question comes from the line of Alejandra Obregon from Morgan Stanley. Your line is open.

Alejandra Obregon, Analyst

Hi, good morning, Vesta team. Thank you for taking my question. I was just hoping to get some insights on the buildings that you currently have under construction. So you mentioned close to 5 million square feet is under construction in Aguascalientes and Puebla. I was just hoping you could comment on the dynamics that you're seeing in these key markets, and more specifically, if you have received specific interest from potential tenants for these buildings, anything on the speed and dynamics of the market where you expect to drop these assets would be very good. Thank you.

Lorenzo Berho, CEO

Hola, Alejandra, and thank you very much for being on the call. Definitely, I think that one of the main attributes of Vesta is our ability to develop. As we have stated in the past, we will continue to find opportunities that drive profitability. I think we think that the current construction pipeline is counted as probably the highest number we've seen at 4.7 million square feet, with a total investment of above $400 million in projects that we have just under construction. We have pretty much projects in most of the markets where we operate. Talking about the north, we continue to see strong demand in Ciudad Juarez. Out of the projects that we have under construction, one of them is leased, and the other one is still under development and has a good list of potential clients in the electronic sector, as well as the auto sector. In Monterrey, we have now four projects under construction. We did an important lease to a major e-commerce player while we had the building under construction; we managed to pre-lease it. This will help us continue to grow in this particular market and enable us to start other projects. Actually, Monterrey is well diversified between consumer goods, e-commerce, and manufacturing, showing a good example of how diverse our projects might be. The Bajio has also seen good demand with rent increases, particularly in markets like Queretaro and Aguascalientes, where we were able to sign a couple of leases for the auto industry with some Japanese firms. Additionally, in Aguascalientes, we've been able to renew several of our leases that were post-expiration, which shows another significant commitment from companies that want to extend their presence in Mexico. And talking about the central region, of course, Mexico City is very strong. We were able to lease last quarter to a major e-commerce player, but we see a good pipeline and particularly rents going up quickly. We're benefiting from that by anticipating the market. That’s why we will continue to acquire land and develop, as long as we continue to see rents going up, we believe that will continue to be the main driver of growth. So this pipeline is a good example of what we will continue to see in our pipeline, where we have not only spec buildings but also buildings that are pre-leased. Almost one-third of the products are pre-leased, and the markets are still strong. We feel comfortable that as long as we continue delivering inventory buildings, the demand coming from good quality companies will continue to be there.

Alejandra Obregon, Analyst

Got you, that was very clear. Thank you very much.

Operator, Operator

Your next question comes from the line of Rodolfo Ramos from Bradesco BBI. Your line is open.

Rodolfo Ramos, Analyst

Thank you. Good morning, everyone. I just wanted a little bit of a follow-up on the previous question from Alejandra. I wanted to get a sense of your commercial conversations. Have you seen a shift at all after Tesla's announcement in Monterrey, and whether this has had any impact on clients potentially that were looking at Monterrey or at Bajio? If there is any type of cannibalization going on, you know, if we were to see more slack in the Monterrey market, if the Bajio region could suffer as a result, or do you see completely different dynamics? That's the first one. And just secondly, if you could give us an idea of whether you have any exposure to EV suppliers in the EV market currently? Thank you.

Lorenzo Berho, CEO

Thank you, Rodolfo, for your question. I think it's worth talking a little bit about the announcement from Tesla. The announcement that the plant will be put on pause is not necessarily a positive signal. However, it's interesting to see the drivers of that particular decision, which happens every now and then. Clearly, some of you follow the results from Tesla. Their sales volume has dropped dramatically. They have entered other industry sectors on robo-taxis and automated driverless systems and whatever. So definitely, using the political statement to pause the plant is something that some of us actually were kind of expecting. The Tesla project is a major project. And many of the type of clients that we have are not necessarily related to Tesla in Mexico. I think that most of the type of clients we have are well diversified among different industry players in the EV, electric vehicle industry, as well as internal combustion, which is still happening. Therefore, we think that this should not have a major implication for other industries. Even for the auto industry, which is already part of the supply chain in Mexico and the U.S., this should not have any effect. Bear in mind that in order to manufacture cars, whether it's EV or internal combustion, production has to be in a region where companies can be profitable and can have reduced costs and integrated suppliers. That's why even in the toughest times, companies where they most expand in Mexico are during tougher times. So we actually think that we will see more suppliers in the industry coming to Mexico. Many of them are already here and they're just expanding operations. Particularly in Monterrey, Monterrey is the largest industrial market and has a very low vacancy. I would say that very few companies that were established in the last period in Monterrey were related to Tesla. Actually, the largest portion of them are related to entirely different industries and supply chains of other sectors. Our project is in Apodaca, which is contrary to the site of Tesla. So it will be interesting to see the evolution after the news, but I think that Monterrey is a thriving city. We had our last Board meeting in Monterrey and we were able to see the strong dynamic that particular market has, not only because of the industrial sector but also its services, quality of life, education, and its location closer to the U.S. So we feel very comfortable continuing to invest in Monterrey and other markets like Bajio, where the auto industry has had a strong presence.

Rodolfo Ramos, Analyst

Thank you.

Operator, Operator

Thank you. Our next question comes from Jorel Guilloty from Goldman Sachs. Your line is open.

Jorel Guilloty, Analyst

Thank you for taking my questions. I have two. The first one is on the leasing spread. I noticed that your trailing 12-month leasing spread came at 7.1% this quarter, which was 8% in 1Q '24. I was just wondering what sort of leasing spread trends you are seeing. Are you seeing a leveling off to a lower level? Is it accelerating? What happened in 2Q? Was that just a one-off situation? And then the second question is around your pipeline. You have a pretty extensive development pipeline, nearly 12% of current GLA, and about all of it is on spec. So what I wondered is when you are thinking about the potential lease up for this pipeline and what you've been seeing so far in the last six months, are there any changes in expectations on how quickly you can lease up those properties? Are you seeing that window of leasing up becoming shorter? Are you seeing it become longer? How are the negotiations for these new assets expected to go? Those are my two questions. Thank you.

Lorenzo Berho, CEO

Thank you, Jorel, for being on the call. I will begin with the second question. We see no changes in our expectations regarding the underwriting of each speculative project. The process involves starting with market analysis to understand demand and supply dynamics. We initiate speculative building and have a period to lease up, which could be around six to twelve months. It's during this time that we underwrite a project based on expected returns. Sometimes, we manage to pre-lease buildings, which is advantageous because while under construction, especially in strong markets, we can secure tenants. Currently, this situation applies to approximately one-third of our projects. For the remainder, we are confident about the market dynamics, as there is a limited supply of quality assets like those developed by Vesta in our target locations. Therefore, even if we complete a project without a lease agreement in place, we have ample time for marketing, allowing us to adjust prices and rents to our advantage. We can leverage the availability of strong projects in the market and attract clients who often need buildings urgently. Regarding your first question, we anticipate that rent increases and net effective rent increases will continue in leasing spreads. Each quarter varies based on the volume of leases signed. However, if U.S. inflation remains around 3%, we expect the spread to approach high single digits in terms of overall rent. This expectation is driven by a mix of existing and expiring leases adjusted with CPI increases, along with some that we can transition to market rates. In certain markets, we have observed rent increases ranging from 20% to 50%. This trend is likely to persist in the coming years, particularly when leases expire, enabling us to bring new releases to market.

Operator, Operator

Your next question comes from Isabella Salazar from GBM. Your line is open.

Isabela Salazar, Analyst

Hello, thank you for taking my question. I was wondering what your general feeling of the new administration is regarding their willingness to facilitate access to infrastructure and energy and water that is crucial for development. Thank you.

Lorenzo Berho, CEO

Hola, Isabella, thank you for your question. We have high hopes that the new administration will take action on what matters most for the industrial sector and manufacturing sector, which is a great opportunity for Mexico with new sourcing opportunities. They have identified the importance of industrial parks very well. In fact, Claudia Sheinbaum is the first candidate now President that has had a plan in place even before taking office. She commands to have more than a hundred industrial park projects, so she knows how important this is to attract investments and generate well-paid jobs. We have high hopes that the energy sector will show a shift from what we have seen previously, as well as some other infrastructure requirements. In that regard, we have been in very close contact with the new administration and some of their key officials to ensure that we can support growth opportunities for the country and that the industrial and manufacturing platforms are strategic for this new administration. Therefore, we think that they understand and know what Mexico has to do, and hopefully we can support them in facilitating improvements, particularly on energy and logistics infrastructure.

Isabela Salazar, Analyst

Okay, thank you very much.

Operator, Operator

Your next question comes from the line of Andre Mazini from Citigroup. Your line is open.

Andre Mazini, Analyst

Yes, thanks Loren and Juan. So actually my question would be a follow-up on this statement from the government that they want us to support the construction of 100 industrial parks. What exactly do you think they mean here? I don't think it would be like government money for industrial parks themselves, right? It would just mean better regulation, maybe lower taxes. What are the concrete measures they could take for this so-called 100 parks construction, would you say? And on the other measures, in terms of energy, do you think they could open up the monopoly in transmission and distribution away from the CFE to allow for private investment? Because I think this would be the measures that would really benefit the government.

Lorenzo Berho, CEO

Thank you, Andre. You broke a little bit at the end, but I think I got your question as well. Mexico needs heavy investment in energy, mainly on distribution and also in some ways in transmission and generation. Definitely, the government has its limits in terms of spending. That's why the private sector will have to play a role in energy. I don't know the exact details on how they want to open up, but hopefully they can generate a plan that is helpful for the private sector. I don't think that the government will be supplying money directly to the parks. I think that it's more about giving support to whoever develops the parks in different regions of the country, maximizing good interaction so that the parks can overcome certain challenges on infrastructure and energy, also working in close connection with local governments and authorities, because this does not come solely from the federal government. I think this is a good plan. It's essential for them to understand what park developers need. The other part of the opportunity is attracting foreign direct investment. I think the Secretary of Economy understands this well, as does the office linking business leaders to the government led by Altagracia Gomez, who is doing a fantastic job. It's critical to determine how far we can take the country and how far we can build this important plan. Interestingly, we don’t need government funding to establish opportunities; we just want them to support and recognize the opportunities. We can find ways to invest, and hopefully, this could be an excellent year to continue attracting investment in the manufacturing sector.

Operator, Operator

Thank you. Our next question comes from the line of Andres Aguirre from GBM. Your line is open.

Andres Aguirre, Analyst

Hi, thanks for the call and congrats on the results. After the recent election and financial volatility, have you seen any changes in customer demand for space? Are customers more cautious or is the demand the same? Also, are you exposed to any Chinese tenants? Thank you.

Lorenzo Berho, CEO

Are we exposed to what, sorry?

Andres Aguirre, Analyst

Any Chinese tenants.

Lorenzo Berho, CEO

Okay, great. Thank you for your question. Well, the election's result was something that international investors and companies established in Mexico were looking to establish. It was kind of a default scenario that Carrier Chairman would win. For that reason, many of the projects did not have a significant impact before or after the election. However, maybe the only change is that some companies might be a bit more cautious due to elections in the U.S., which is understandable. Many companies understand well how Trump plays since he has been President in the past. Now with a new candidate, potential candidate from the Democrats, it feels a bit like familiarity. Importantly, the revision of the USMCA in 2026 is critical. There's good expectancy that the negotiations will be tough, but the outcome is likely to be positive since it's a great agreement that may need tweaks. All in all, I think no other place is better than North America; the integration of the three countries has produced great results in helping the U.S. reduce deficits to other parts of the world. That has been demonstrated by Chinese companies, where the U.S. has significantly reduced its deficits. Regarding Chinese companies in Mexico, we proceed cautiously, regardless of nationality. We ensure our companies have solid credit ratings, strong finances, and good reputations within the industries where we operate, regardless of nationality. Few Chinese players are in Mexico; mostly larger corporations that operate like global companies. For example, TCL in Tijuana, producing flat screens and electronics. We have a few others with German roots owned by Chinese capital, but they have respected track records in their sectors. Therefore, we will see a very well-diversified portfolio and will continue ensuring a strong discipline in how Vesta selects our clients. Chinese companies might be coming and may go to other developers, and that's fine; our focus is on maintaining quality for our portfolio.

Operator, Operator

And your next question comes from the line of Natalia Leo from JPMorgan. Your line is open.

Natalia Leo, Analyst

Thank you. Good morning, everyone. Thank you for taking my question. Mine is related to the cost per square meter of your development pipeline. It increased around 7% sequentially and about 41% year-on-year. Especially in one of your developments in Mexico City, I think it was the impact. I wanted to understand if this is more related to construction costs or land, and how do you consider land to determine the yield?

Lorenzo Berho, CEO

Great, thank you for your question. Yes, definitely Mexico City is where land is most expensive, which leads overall holding costs per square foot or per square meter to be the highest, particularly compared to other markets in Mexico. However, construction costs have also increased, particularly materials that have gone up about 10%. Additionally, the exchange rate, which was below 17, now over 18, has affected some of these costs. Our underwriting is on the conservative side and does not comply with current exchange rates. Thus, we see higher costs. However, particularly in Mexico City, we're seeing rents now in the $11, $12, $13 per square meter range. This is much higher than any other market throughout Mexico, particularly for high-quality buildings like the ones we're developing. Therefore, the increase in rent offsets the increase in costs we have seen. If you look at projects we have in Mexico City, Punta Norte for example, we have returns around 10%, which is excellent, particularly in a market with greater barriers to entry. We have urban infill locations that are highly challenging to replicate and replace. That's why sometimes we prefer to pay more for land, knowing that there will be long-term value. It may result in a higher cost per square foot or per square meter, but as long as it’s justified in terms of returns, we believe that spread investment on returns will continue to be key in our capital allocation strategy.

Natalia Leo, Analyst

Perfect, thank you. Just to clarify, your leases in Mexico are in dollars or pesos in Mexico City?

Lorenzo Berho, CEO

Thank you for the question. Definitely, our leases in Mexico City are in U.S. dollars. So you're seeing returns at 10% in U.S. dollars. I think that clearly explains the discipline that Vesta has in dealing with quality companies, making leases in U.S. dollars, and continuing to drive long-term value for our portfolio.

Natalia Leo, Analyst

Perfect, thank you so much.

Operator, Operator

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

Lorenzo Berho, CEO

Thanks, operator. And thank you everyone for joining us today. Vesta's second quarter results are consistent with our long-term strategy and focus on continued value creation. Today, we're in a position of strength and forward momentum. We'll maintain our strong financial position, which enables us to further execute on Vesta's strategic plan, sustaining results strength and leveraging our company's ability to create value. I'd again like to thank the entire Vesta team for their important contribution to our performance.

Operator, Operator

Thank you. This does conclude today's conference. You may now disconnect your lines. Thank you for your participation.