Corporacion Inmobiliaria (NYSE:VTMX) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below.

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Summary

Vesta reported strong Q2 2026 financial results with total revenues increasing 16.7% to $78.5 million, driven by rental income from new leases and inflationary adjustments.

The company achieved significant leasing activity, with 2.4 million square feet, including 900,000 square feet in new leases, leading to high occupancy rates in key markets.

Vesta's Route 2030 strategy is progressing, with disciplined development in markets with strong tenant interest and strategic land, supported by a secure land bank of 23 million square feet.

The company raised nearly $270 million from an equity offering to strengthen its balance sheet and support its development pipeline, focusing on infrastructure investments in Monterrey, Guadalajara, and Ciudad Juarez.

Management emphasized the resilience and demand for industrial real estate in Mexico due to North American supply chain integration and nearshoring trends, despite global trade uncertainties.

Vesta's financial performance was marked by a 15.6% increase in adjusted NOI and a 15.7% rise in adjusted EBITDA, with a net debt to EBITDA ratio of 3.1 times, indicating a strong financial position.

The company noted robust demand from sectors like AI, electronics, logistics, and automotive, reflecting broader market trends and tenant requirements for high-quality, infrastructure-ready properties.

Full Transcript

OPERATOR

Greetings ladies and gentlemen and welcome to the Vesta second quarter 2026 earnings conference call. All participants are currently 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, Fernanda Bettinger, Investor Relations Officer. Please go ahead.

Fernanda Bettinger, Investor Relations Officer

Good morning everyone and welcome to our review of Vesta's second quarter 2026 earnings results. Presenting today with me are Lorenzo Dominique Vero, our Chief Executive Officer, and Juan Zotil, our Chief Financial Officer. The earnings release detailing our second quarter 2026 results was released yesterday after market close 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, please note that all figures were prepared in accordance with IFRS, which differ 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, presented in U.S. dollars unless otherwise noted. I'll now turn the call over to Lorenzo Vero.

Lorenzo Dominique Vero, Chief Executive Officer

Thank you, Fernanda, and good morning to everyone. We're very pleased with our second quarter results. This was another strong quarter for Vesta, reflecting solid financial performance, excellent leasing activity, improved occupancy and, importantly, demonstrated progress in the execution of our Route 2030 strategy. Last quarter we spoke about the selective reactivation of development across high-conviction markets in second quarter. Our results demonstrate that execution is clearly underway.

Vesta is converting demand into leases, leases into occupancy, and our land bank into disciplined development. The strength of our performance this quarter reflects the quality of Vesta's platform and the confidence that global tenants continue to place in Mexico and in our company. Despite the ongoing uncertainty in the global trade environment, most recently due to tensions in the Middle East, our clients continue to make long-term decisions around Mexico as a strategic manufacturing and logistics platform.

The fundamentals supporting Mexico's industrial real estate sector remain firmly in place: North American supply chain integration, nearshoring, growing U.S.–Mexico trade flows, and increasing demand from higher-value industries. Regarding USMCA, without going into more detail that you're already likely aware, it's important to emphasize that the agreement remains in full force. In our view, even in a scenario where the agreement continues operating without a formal near-term extension, Mexico remains in a very strong position.

Trade continues, the U.S. market continues to grow, Mexico remains one of the most competitive locations for companies seeking resilient North American supply chains, and demand for premium industrial real estate is clearly evident. CBRE has noted that broader trade volumes between the U.S. and Mexico continue to grow and, according to U.S. Census statistics, in May Mexico was the United States' largest goods trading partner and accounted for 17.4% of U.S. goods imports compared with 7.5% for China, a remarkable shift. Export-driven demand for premium industrial leasing near the U.S. border and logistics demand in major population centers are enduring structural demand drivers despite trade policy uncertainty. Against this backdrop, Vesta delivered total second quarter leasing activity of approximately 2.4 million square feet, including approximately 900,000 square feet in new leases with new tenants.

This resulted in more than 80% occupancy in Monterrey and 100% in both Mexico City and the Central Southeast region, and 1.5 million square feet in renewals. Notably, these renewals had a weighted average lease term of approximately seven years and a quarterly spread of nearly 17%. This is a very strong indication of tenant commitment to our portfolio. Total portfolio occupancy reached 91.7% by quarter end, a 200 basis point improvement from 89.7% in the first quarter.

Stabilized occupancy reached 93.7% and same-store occupancy remains strong at 95%. We're also seeing continued pricing power. Renewals and re-leasing activity for the second quarter reached 1.5 million square feet with a trailing 12-month weighted average spread of 10.3%. During the quarter, renewals were particularly strong in northern markets for Vesta, where we achieved significant mark-to-market increases reflecting tenant demand for well-located, infrastructure-ready properties.

This is important because it reinforces a key point we have made previously: Even in markets where vacancy has increased, tenants continue to prioritize high-quality buildings, the right infrastructure, location, energy availability, and an experienced partner they know can support their long-term operations. For Vesta, the opportunity is not defined by broad market averages. It is determined asset by asset based on location, infrastructure, energy availability, tenant fit, and deep relationships.

And this is where our portfolio is exceptionally well positioned. Across the portfolio, demand is increasingly coming from light manufacturing, electronics, AI-related infrastructure, logistics, aerospace, automotive and other high-value sectors. This is consistent with broader market trends. CBRE has noted that tenant demand in Mexico is shifting toward diverse manufacturing and logistics, while technology-related activity tied to semiconductors, AI and data centers continues to gain momentum.

This trend is highly relevant for Vesta as our clients are not only looking for industrial space, they are looking for locations that can support highly complex, technology-enabled operations. As AI adoption accelerates and data center investment expands, demand is increasingly connected to the broader industrial ecosystem that supports these technologies, from electronics and components to cooling systems, power infrastructure, logistics and specialized manufacturing.

We're also living through a historic moment for advanced industries more broadly, including the growing visibility of the space economy and companies such as SpaceX, which underscores how rapidly aerospace, electronics, precision manufacturing, AI and supply chain requirements are converging. For Vesta, this reinforces the importance of developing assets with reliable energy connectivity, operational flexibility, dedicated tenant service and the support of an experienced owner-operator.

These requirements are becoming more important in our clients' long-term decisions, and Vesta is very well positioned to meet them and the strategy is working. Portfolio quality, infrastructure, energy availability and tenant alignments are translating into results. Let me now turn to development and capital allocation. As of quarter end, Vesta had approximately 1.8 million square feet under construction, representing an estimated investment of approximately 162 million.

This includes projects in Tijuana, Ciudad Juarez, Guadalajara, Queretaro and Mexico City. Our approach remains disciplined. We're activating development in markets where we have strong tenant interest, strategic land and the infrastructure needed to support long-term demand. Importantly, our development is supported by a secure land bank of approximately 23 million square feet, giving us the flexibility to grow in phases and allocate capital efficiently.

In the second half of the year, we expect to make significant infrastructure investments on land acquired last year, particularly in Monterrey, Guadalajara and Ciudad Juarez. These investments are an important step in preparing those platforms for future growth and allowing us to respond to a strong tenant pipeline. We also expect to begin new construction projects in Monterrey, Guadalajara and select northern markets as demand continues to materialize.

The follow-on equity offering completed earlier this year has further strengthened our balance sheet and positioned us to capture the growth opportunities we're now seeing. We raised capital not to chase size, but to support a visible development pipeline, invest in infrastructure and maintain financial flexibility. The decision to strengthen the balance sheet has proven to be the right one, particularly as demand is materializing across several of our core markets.

This is one of Vesta's key differentiators. We have the land, the balance sheet, the customer relationships, the local operating capabilities and the development expertise to execute in a market where many participants are focused on acquisitions and mergers or portfolio consolidation. Vesta is positioned to create value through development. From a financial perspective, our results were excellent. Total rental income increased to 78.5 million while rental revenue reached 76 million, a 16.2% year-over-year increase.

Adjusted NOI increased 15.6% to 71.5 million with a margin of 94%. Adjusted EBITDA increased 15.7% to 63.6 million with a margin of 83.7%. Vesta FFO totaled 46.1 million, increasing 6.8% year over year. We're very pleased with this performance. The first half of the year positions us strongly with our current expectations. We have said consistently that value creation in our sector is driven by portfolio quality, disciplined development and customer alignment.

This quarter provides clear evidence of that. Vesta is converting market demand into execution, and we are doing so with discipline, conviction and a long-term view. Most importantly, our performance continued to be driven by successful execution of our Vesta 2030 strategy. With that, let me turn the call over to Juan to review our financial results in more detail.

Juan

Thank you, Lorenzo, and good day, everyone. Let me start with a brief overview of our second quarter results. On the top line, we delivered another quarter of strong results, as Lorenzo mentioned, with total revenues increasing 16.7% to $78.5 million, while revenues excluding energy reached $76 million, a 16.2% increase year over year, primarily driven by rental income from new leases and inflationary adjustments across our portfolio. In terms of currency mix, 89.3% of second quarter 2026 rental revenues were US dollar-denominated compared to 89.4% in the same period last year.

Turning to profitability, adjusted net operating income increased 15.6% to $71.5 million. Our adjusted NOI margin decreased 51 basis points year on year to 94%, reflecting higher operating property costs relative to rental revenues. In the quarter, adjusted EBITDA totaled $63.6 million, up 15.7% year over year, while margin contracted by 41 basis points to 83.7%, primarily driven by higher costs and administrative expenses. During the quarter, Vesta's FFO excluding current tax was up 6.8% to $46.1 million compared to $43.1 million in the second quarter 2025.

This increase was primarily due to higher EBITDA and partially offset by higher interest expenses. We closed the quarter with pretax income of $98.8 million compared to $54.5 million in 2025. This increase was primarily due to higher gains in the revaluation of investment properties, higher interest income, and higher other income. This was partially offset by higher interest expense reflecting an increase in the debt balance during the period, along with lower foreign exchange gain and higher other expenses.

Turning to our balance sheet, we ended the quarter with $404 million in cash and cash equivalents and total debt of $1.2 billion. Net debt to EBITDA stood at 3.1 times, and our loan-to-value ratio was 24.3%. The increase in our cash position reflects the gross proceeds of nearly $270 million from our recent equity follow-on offer. This capital raise represents our proactive approach to strengthening the balance sheet ahead of anticipated demand, and it gives us the capital to fund the land and infrastructure investments that underpin our growth strategy.

Finally, and subsequent to quarter's end, on July 15, 2026, we paid a cash dividend for the second quarter-end equivalent to $0.38 per ordinary share. This concludes our second quarter 2026 review. Operator, could you please open the floor for questions?

OPERATOR

We are now opening the floor for the question-and-answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. Your first question comes from the line of Rodolfo Ramos of Bradesco BBI. Your line is now open.

Rodolfo Ramos, Analyst at Bradesco BBI

Thank you. Good morning, Vesta team. Thanks for taking my question and congratulations on the results. Two questions, if I may. I mean, we have seen this booming AI-related products in terms of exports from Mexico to the U.S. and wanted to get a little bit more granular feedback from your commercial talks with these clients in the data center infrastructure and electronics. I don't know if you can talk about which specific companies you have signed leases with and who you think might be interested in those properties that you're currently developing in Guadalajara and Ciudad Juarez, which probably sees interest from those sectors as Jalisco and Chihuahua are big exporters there in terms of market share. And second, if you can give us a little bit of your thinking on the auto sector and what it means for your growth and your current portfolio. I mean, we've seen some headlines of companies shifting production back to the U.S. However, we saw that you signed new leases in the automotive sector, so wanted to see your take specific to that sector.

Lorenzo Dominique Vero, Chief Executive Officer

Thank you. Thank you. Thank you very much, Rodolfo, for being on today's call. Definitely we are experiencing a great phenomenon related to AI, and this is driving strong demand for data centers being built pretty much all over the world, but particularly in North America. This has attracted huge investments in terms of capital, but also huge demand for manufactured goods that have to be supplied to data centers. And we have seen strong demand, particularly in markets like Guadalajara and Ciudad Juarez for electronics, as well as Tijuana.

Particularly in Guadalajara, we have seen players that are working with some of the largest hyperscalers to get all the servers and all the digital infrastructure ready so that the data centers can be built out. And we have seen that quickly ramping up. And that's going to continue for the foreseeable future as long as there's so much investment and capital going towards data centers. But also on the industrial manufacturing front, we are seeing clients or companies in, for example, the industrial sector, such as air conditioning units, fans, ventilators that are required to cool down all of these huge data centers, together with cabling equipment and electric equipment such as electric panels. And that has created a lot of demand in markets such as Monterrey, which is a big industrial market, as well as markets like Tijuana and Ciudad Juarez. And not only did we see that in the last few quarters, but we continue to see a very robust pipeline coming from these particular sectors. I will now shift with—and actually some of these companies, many of them were already established in Monterrey or Mexico, but there's also new companies that are opening up shop.

Secondly, shifting to the auto sector, yes, we continue to see demand. We did a few new leases in a few markets and not only are we seeing new demand, but also we see that existing supply chains in the auto sector continue to adapt to the new requirements and to the new supply chain in North America. We continue to see that Mexico is the most competitive place to manufacture and integrate to final OEMs in Mexico and in the U.S., and as long as we see those companies continue to be favorable in Mexico, we believe that demand will continue.

But of course there's many adjustments that the companies have been doing. But we also continue to see some of those adjustments somehow benefiting Mexico too, and maybe benefiting the whole North American region as a whole.

Rodolfo Ramos, Analyst at Bradesco BBI

Thank you, Lorenzo.

OPERATOR

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

Andre Mazzini, Analyst at Citigroup

Thanks, Lorenzo. Juan, great to have questions here. So, two questions. First, if you think the current status of the USMCA can be a dampener for tenant demand, or the fact that the deal, as you said in the prepared remarks, is still in place with annual renewals, is business as usual for the companies? And digging into the markets, San Luis Potosí remains the weakest market with occupancy at 65%, so thoughts on the softness behind that market in particular and, of course, the property delivery coming in the market, which is four and ten.

This is the first set of questions. The second one on leasing spreads—pretty strong, almost 17% in this quarter. This is higher than I think you guys were printing before. So, if this is probably sustainable going forward, or if there was some type of one-off in the quarter here for such high leasing spreads. Thank you so much.

Juan

Thank you, Andre, for being on today's call and for your questions. Let me address the questions in order. Well, we definitely have seen that tenants and companies are trying to understand what the new rules of the game are going to be in terms of trade, in terms of USMCA. And for that reason we believe that the few scenarios that are in place—and maybe the one being the one with annual revisions—could be one where companies will continue to invest in Mexico.

However, nowadays we still have no clarity on the new rules of the game, and I think that's what companies are expecting. And with that, companies will adjust. Maybe the most favorable outcome is that we might have some sort of result from the negotiations soon. It seems that there could be some tariffs—tariffs could come in different sectors. But I think that the companies and tenants, what they just want is to have a bit more clarity. Just looking at what has happened just this year or end of last year, we have definitely seen that what we consider a zombie NAFTA—we have been already there—and companies are making decisions very different to the start of last year. But in the last quarters we continue to see demand and we continue to see companies trying to set up shop in Mexico just because of how competitive the landscape will be and how competitive Mexico is in relative terms to all of the other countries. Look at just the numbers in terms of exports from Mexico to the U.S. and how other countries and other regions, particularly Asia, have dropped in terms of exports to the U.S. and trade with the U.S. So for that reason we even think that whatever outcome might be, Mexico will continue to be the best beneficiary of the new rules in terms of trade. Secondly, to your question on San Luis Potosí, yes, it has been a very slow market. Nevertheless, we can tell you that we started to see a stronger pipeline this particular quarter. So hopefully for the second semester things start to shift towards a stronger demand. We continue to see rents have actually maintained their actual levels.

There has not been any reduction in terms of rates. So I think it was just a matter of being patient and waiting until the demand will come back for an important industrial market. But yes, it was a slow couple of years, but we definitely are seeing a recovery. So hopefully we can get some better news quite soon. And then on your third question, Andre, on leasing spreads, I think that, yes, our bet is that this growth in terms of leasing spreads will continue to be sustainable—not only for this year, but maybe even for the next couple of years—since, again, we think that demand will continue to go up.

Supply for good quality buildings with infrastructure, with energy, is still constrained. So, as we have seen just this quarter, there's still demand, and demand is looking for better assets—flight to quality—and tenants are willing to pay rents, even the fair rents for fair market buildings.

Andre Mazzini, Analyst at Citigroup

That's great. Thank you, Lorenzo. Have a good day. Gracias.

OPERATOR

Andre, your next question comes from the line of Igor Machado of Goldman Sachs. Your line is now open.

Igor Machado, Analyst at Goldman Sachs

Thanks for taking my question. We have two questions here on our side. First one, we are trying to understand your expectations for lease-up today in Tijuana. In other words, how—

OPERATOR

I'm sorry, can you get a little closer to the microphone? I'm having a hard time hearing you. Thank you.

Igor Machado, Analyst at Goldman Sachs

Can you hear me?

OPERATOR

Yes, better. Thank you.

Igor Machado, Analyst at Goldman Sachs

Yep, thanks. So the first question is on the lease-up in Monterrey and Tijuana. How quick can you see the lease-up for those markets, and what sort of tenants are you looking for space in these markets? And my second question, if you can, you can talk about what sort of tenants you are targeting for your recent projects in the north. This would help us.

Lorenzo Dominique Vero, Chief Executive Officer

Excellent. Thank you, Gore. That was very clear and happy to elaborate on your questions. We have seen major lease-up in Monterrey this particular quarter. As you might remember, we developed the last buildings for the Apodaca project last year, and this year we signed two leases related with equipment for data centers and AI related for two of the three buildings. And actually the pipeline is quite strong. So we are very optimistic about the second semester that we're going to be close to being able to fully lease those buildings.

And that maybe takes me to your second question which is regarding recent projects. So we are very excited that soon we're going to kick off with construction for the new Vesta Park Monterrey, which is the one next to the airport. It's probably one of the best sites in whole Mexico in terms of being well positioned with good infrastructure in the right corridors, where there's labor, where there's accessibility of energy. So hopefully very soon we will kick off, we will start new buildings for this project and actually demand that we are seeing in sub-markets like Apodaca or Monterrey is well diversified between logistics—actually e-commerce continues to grow and continues to require more space of high-quality buildings. We're seeing clearly again industries related to data centers. As mentioned before, we continue to see strong demand on that and also third-party logistics as well as other industrials. So we were excited about these new startup projects that we're going to be developing over this year and having available for next year. So we're starting to build up the pipeline for those particular projects.

Related to your question in Tijuana. Tijuana is interesting because some, I would say that some market reports show that Tijuana has a higher vacancy. However, if you analyze in detail, a lot of this vacancy is related to regions, sub-regions of Tijuana that actually has low accessibility to labor pools, low accessibility to logistic corridors and energy. So that's why we will continue to focus in the right sub-markets such as Pacifico, where we continue to see strong demand with companies continuing to expand in sectors such as aerospace, electronics, logistics and medical devices.

So those numbers have to be analyzed in detail and that's what we continue to do because that's how we make the right decisions when we start a building. And actually in many cases we do start buildings knowing that there's a client or vista that will require space at some point.

Igor Machado, Analyst at Goldman Sachs

Very clear. Thank you. Gracias.

OPERATOR

Your next question comes from the line of Francisco Chavez of BBVA. Your line is now open.

Francisco Chavez, Analyst at BBVA

Hi, thanks for the call and congrats on the results. Looking at your development pipeline, most of the buildings are inventory. What kind of lease-up should we assume considering the current market conditions?

Lorenzo Dominique Vero, Chief Executive Officer

Thank you. Gracias. Francisco, thank you very much for being on today's call. Well, normally we start buildings when we identify some potential demand, and that demand could come in a range of between zero to, let's say, 12 months. So the numbers that we underwrite at is considering that there is some downtime for income to be generated. But we aim to make these deals become spec-to-suit buildings, which basically is being able to pre-lease the buildings while they are under construction.

So yes, we were able to start some buildings this particular quarter. I think that the last quarters we were very successful being able to lease up the buildings for pre-lease while we were under construction. But even in some cases like Monterrey that I recently mentioned, sometimes it takes us a little bit longer to lease. But we are able to lease to the right client, the right lease agreements and at the right rates so that we continue to create value for our shareholders by being disciplined on our approach on how to lease up.

And actually, if so, maybe considering or elaborating a bit more on the question. I think that Vesta has been very successful with this strategy. That's why we have been able to, organically through development, be able to increase revenues year over year and even quarter over quarter, as we have done this particular quarter. Having revenue increases of 15% is because at some point we had the opportunity to start a building. We were able to lease and eventually generate income.

So it all rolls up together with lease-up and leasing spreads. And having that particular proactiveness in our portfolio generates these major revenue increases year over year in a sustained manner. Thanks so much.

OPERATOR

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

David Soto, Analyst at Scotiabank

Hi, thanks for taking my question. Just a quick one related to your follow-on proceeds. Could you please provide an update on the intended allocation for the proceed between non-acquisition and development activity?

Lorenzo Dominique Vero, Chief Executive Officer

Sure. Maybe Fernandez, you can help me out with the table that we recently presented. So basically, David, thank you. First, thank you for being on the call and for your question. Yes, we were able to raise equity in May in order to be able to support part of the growth plan that we have identified as part of our Route 2030 strategy, which is a major investment plan where we will invest in attractive markets and markets that Vesta has not only identified, but been able to acquire land and secure land so that we can continue to develop successful projects.

So the investment that we identify is basically we raised approximately $300 million. And we identified $1.3 billion investments where we are going to be investing—I'm sorry, $1.7 billion. We're going to be investing in Monterrey. Give me one second. Just quickly. Fernanda, I think that's... it's the other table I need, not the one Route 2030, but the one we recently presented, which is basically we will invest $1.3 billion in projects such as the first one being Monterrey, with the Vesta Park Monterrey project, which will require the majority of the investment.

We will also invest in Guadalajara in Vesta Park Guadalajara 1 and 2. We will invest in Mexico City in a few projects. We will invest in Tijuana, Ciudad Juarez, and those will be the major projects that we're going to be investing not only this year where we're starting, but over the next years to finalize the Vesta Route 2030 plan. So basically out of the almost $300 million, the rest of the capital needed for the growth plan is going to come via debt and retained earnings that the company has been able to generate.

David Soto, Analyst at Scotiabank

Just a follow-up question, do you expect this capital to be deployed in the next months?

Lorenzo Dominique Vero, Chief Executive Officer

Yeah. So we don't give any particular guidance on capex and speed of investment. However, we have basically been investing at a rhythm of approximately $300 million per year in the past, and I think that's something that, in order to be able to achieve this plan, we will have to be investing approximately a similar level. Perfect. Thank you. Gracias.

OPERATOR

And your next question comes from the line of Elisa Gomez of BTG Pactual. Your line is now open.

Elisa Gomez, Analyst at BTG Pactual

Hi, good morning. Thanks for taking my question. So first half results are tracking ahead of your full-year guidance. What has been the main surprise relative to your original assumption and do you expect this outperformance to continue in the second half? Thanks.

Lorenzo Dominique Vero, Chief Executive Officer

Thank you, Lisa. I had a little hard time taking your question. I don't know. Fernando, you're able to listen?

Juan

I can. First on the guidance, look, we have had very good results for the first half of this year. For the second half of this year we continue to expect very good results. But please bear in mind that on the second half of last year we had a good leasing activity as well. The market began to pick up. That was one of the basics of the decision of getting more funding—more funding in the balance sheet, more equity funding in the balance sheet. We see continued leasing activity.

But by the same token, our strong leasing activity of the second half of this year will be compared to a strong leasing activity on the second half of last year. So I feel comfortable with the guidance. So far there's expectations of positive optimism, but I have to see more data to come in our hands. So we have a strong leasing activity. I'm optimistic about the guidance. We'll just have to wait and see. So that covers the guidance. You had another question.

Can you repeat the second one that you had?

Elisa Gomez, Analyst at BTG Pactual

Regarding what has been the positive surprises you have seen? But I think you kind of answered that.

Juan

Yeah, well, I mean pricing, as Lauren has mentioned, prices have not adjusted at all since last year. I mean we had a strong pricing activity in all of our leases since last year. And on this first half you can see that in the re-leasing activity, we are re-leasing existing leases with very strong pricing increases to our existing tenants. So we continue to see strong markets and we feel comfortable that the market trends are going to continue over the second half and beyond of the year.

So we are very comfortable with the way the markets are behaving and we're very comfortable with our ability to find new tenants.

OPERATOR

Perfect. Thank you. Thank you. If you'd like to ask a question, please press star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. Your next question comes from the line of Felipe Baragan of JP Morgan. Your line is now open.

Felipe Baragan, Analyst at J.P. Morgan

Hey, good morning guys. Thanks for taking my question. So I have a question on the costs. So today we saw oil rise 6.7% this morning. So I just want to get a refresher on what you guys saw. Given the recent volatility in oil, if you guys saw an uptick in the construction cost. So thank you.

Juan

Thank you, Felipe. On your question, look, construction costs—we continue to see our development spread solid as we put out on the development pipeline. We don't see any particular increments on cost that worries us. We underwrite very carefully our new buildings and we continue to have very good development companies that are bidding for the project. So we feel comfortable to see spreads on development on the usual ranges. If construction costs go up, in particular I will take a look at cement prices.

Given that cement is heavily influenced by energy, I think that given the market that we operate and the demand that we have and the firming up of the leasing spreads, I do think that we can adjust the pricing accordingly, but we just have to wait and see. So far so good, I would say.

Felipe Baragan, Analyst at J.P. Morgan

Got it. Thank you, Juan. Appreciate the color.

OPERATOR

Your next question comes from the line of Anton Morten Cotter of GBM. Your line is now open.

Anton Morten Cotter, Analyst at GBM

Hi guys. Thank you for taking my question and congrats on your results. Look, we are seeing somewhat divergent signals across the economy. Construction consumption trends remain relatively soft in several sectors, while real estate and construction activity shows some signs of resilience or growth. I mean, how do you reconcile these dynamics and more specifically, what are your clients seeing or how are they deciding to act on these trends? Thank you.

Lorenzo Dominique Vero, Chief Executive Officer

Let me take it, Juan. Look, the Mexican economy has mixed results. On some parts we have seen softness, as you point out, but on some other parts we see quite optimistic signals. Take a look at the import of capital equipment. Those continue to rise and usually when that happens it implies that the import of capital equipment will translate into more demand for space. So, yes, these are divergent signals, but at least in our sector, we are optimistic. And this is what we see on the results of Vesta.

We have a very strong pipeline, we have clients that are demanding space, and we see very firm prices on leasing activity. So hopefully that would translate into a broader strengthening of the Mexican economy. But at least in our sector, we are very encouraged. I agree, Juan. And maybe to elaborate further, I think that we're looking. We cannot just look at the general numbers, because there are some, I would say, mixed results in the economy. We have to have a closer analysis on what's going on in our particular sectors and our industries. And actually, there has been a lot of disruption, and I think we're benefiting from being a company that anticipates the demand coming from certain sectors. We're talking about AI, and Vesta is benefiting from it; electronics sector; adjustments in global supply chains; regionalization of supply chains; even e-commerce that continues to expand in Mexico. So, for that reason, I think that Vesta is a good example that has to be analyzed differently than the general economy. And I think in that regard, Vesta will continue to look into the opportunities and look at what could make our company not only very resilient, because we have shown that the structure of our lease agreements, the type of tenants that we have, the tenure of our leases, makes our company—or the investment—very resilient, but also, every now and then, when there's an opportunity, take advantage of those. And I think for that reason we have to analyze carefully what are the right signals and how Vesta can adapt and react to those opportunities. Anton.

Anton Morten Cotter, Analyst at GBM

Very useful. Thank you. Lorenzo and Juan, gracias.

OPERATOR

Your next question comes from the line of Alan Marcias of Bank of America. Your line is now open.

Alan Marcias, Analyst at Bank of America

Hi, good morning and thank you for the call. Just. Just a quick question on if you have seen any positive measures taken by the federal government towards supporting the industrial real estate market in Mexico, perhaps updating electricity or, or anything you have seen. Thank you.

Lorenzo Dominique Vero, Chief Executive Officer

Hi. Thank you. Thank you, Alan. Well, I really think that maybe the most important effort that the Mexican government is doing is focusing on USMCA, and that's going to be critical and that's incredibly important. Of course, the USMCA is not only related to economic and commercial matters. It now has a more complex situation where they need to deal with different, even political issues related to migration, related to drugs, related to COVID, crime, and many other political issues.

However, they know exactly how important the manufacturing sector and the export sector is to the Mexican economy. And they also know that our sector is very strong in terms of being able to attract private investment. So that doesn't necessarily require much—it's not very intensive on public spending—which is also very important. So for that reason, we have seen a strong support in our sector coming from the different instances from the government, from Foreign Affairs, from the Secretary of Economy, from the Ministry of Finance, and even the President understanding quite well the importance of industrial parks and the industrial sector for the overall economy. So hopefully we continue to get that support and with that, Mexico will continue to be a strong and a winning formula in terms of establishing new manufacturing operations, logistics, and continue to integrate in the North America supply chain.

OPERATOR

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

Lorenzo Dominique Vero, Chief Executive Officer

Thank you. Thank you everyone for your questions and for your continued support. We're very pleased with Vesta's performance in the second quarter. The results demonstrate the strength of our portfolio, the quality of our tenant relationships and the value of our disciplined development platform. The market environment remains dynamic, but Vesta is in a strong position. Mexico continues to be a strategic destination for global manufacturing and logistics.

Tenant demand remains active, particularly from higher value industries that require quality, infrastructure, energy availability and long term scalability. These are precisely the areas where Vesta is differentiated. We enter the second half of the year with confidence. Our balance sheet is strong, our land bank is secure, our development pipeline is active and our team continues to execute. As always, thank you for your continuous interest in Vesta.

We look forward to updating you on our progress in the quarter ahead, including at our 2026 Vesta Day in New York on November 11th. Thank you and have a great day.

OPERATOR

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

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