EX-99.2 3 dp201607_ex9902.htm EXHIBIT 99.2

Exhibit 99.2

Corporación Inmobiliaria Vesta, S. A. B. de C. V. and Subsidiaries

Condensed Consolidated Interim Financial Statements as of September 30, 2023 and December 31, 2022 and for the nine and three-month periods ended September 30, 2023 and 2022 (unaudited)

Corporación Inmobiliaria Vesta, S. A. B. de C. V. and Subsidiaries

Unaudited Condensed Consolidated Interim Financial Statements as of September 30, 2023 and December 31, 2022 and for the nine and three-month periods ended September 30, 2023 and 2022 (unaudited)

Table of contents	Page



Condensed Consolidated Interim Statements of Financial Position	1

Condensed Consolidated Interim Statements of Profit and Other Comprehensive Income	2

Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity	3

Condensed Consolidated Interim Statements of Cash Flows	4

Notes to Condensed Consolidated Interim Financial Statements	6

Corporación Inmobiliaria Vesta, S. A. B. de C. V. and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position

As of September 30, 2023 and December 31, 2022

(In US dollars)

Assets	Notes		September 30, 2023 (Unaudited)			December 31, 2022
Current assets:
Cash, cash equivalents and restricted cash		5	$	408,182,657		$	139,147,085
Recoverable taxes		6		31,264,979			30,088,473
Operating lease receivables		7		8,906,561			7,690,195
Prepaid expenses and advance payments		7.vi		21,433,597			25,308,351
Total current assets				469,787,794			202,234,104

Non-current assets:
Investment property		8		3,112,803,904			2,738,465,276
Office furniture – Net				1,063,465			1,437,981
Right-of-use asset - Net of depreciation		9		977,323			1,417,945
Security deposits made, restricted cash and others				9,790,900			9,601,094
Total non-current assets				3,124,635,592			2,750,922,296

Total assets			$	3,594,423,386		$	2,953,156,400

Liabilities and stockholders’ equity

Current liabilities:
Current portion of long-term debt		10	$	4,754,756		$	4,627,154
Lease liabilities – short-term		9		608,140			606,281
Accrued interest				7,549,703			3,847,752
Accounts payable				16,985,635			16,628,788
Income taxes payable				42,443,745			14,824,658
Accrued expenses and taxes				5,729,315			5,154,626
Dividends payable		11.4		30,232,072			14,358,194
Total current liabilities				108,303,366			60,047,453

Non-current liabilities:
Long-term debt		10		923,389,058			925,872,432
Lease liabilities - long-term		9		441,141			897,658
Guarantee deposits received				22,687,764			18,333,119
Long-term accounts payable				7,706,451			7,889,937
Employee benefits				1,309,566			348,280
Deferred income taxes				309,905,581			299,979,693
Total non-current liabilities				1,265,439,561			1,253,321,119
Total liabilities				1,373,742,927			1,313,368,572
Litigation and commitments		19

Stockholders’ equity:
Capital stock		11.1		567,130,950			480,623,919
Additional paid-in capital		11.3		807,101,571			460,677,234
Retained earnings				875,906,418			733,405,749
Share-based payments reserve		17		2,010,911			5,984,051
Foreign currency translation				(31,469,391	)		(40,903,125	)
Total stockholders’ equity				2,220,680,459			1,639,787,828

Total liabilities and stockholders’ equity			$	3,594,423,386		$	2,953,156,400

See accompanying notes to unaudited condensed consolidated interim financial statements.

Corporación Inmobiliaria Vesta, S. A. B. de C. V. and Subsidiaries

Condensed Consolidated Interim Statements of Profit or
Loss and Comprehensive Income

For the nine and three-month periods ended September 30, 2023 and 2022

(In US dollars)

			For the nine-month period ended						For the three-month period ended
	Notes		September 30, 2023 (Unaudited)			September 30, 2022 (Unaudited)			September 30, 2023 (Unaudited)			September 30, 2022 (Unaudited)
Revenues:
Rental income		12	$	157,555,332		$	130,601,341		$	55,760,097		$	45,508,043
Management fees				967,551			—			639,933			—
				158,522,883			130,601,341			56,400,030			45,508,043

Property operating costs related to properties that generated rental income		13.1		(10,325,669	)		(6,120,112	)		(4,444,822	)		(2,342,554	)
Property operating costs related to properties that did not generate rental income		13.1		(3,046,433	)		(1,547,058	)		(1,400,458	)		(591,547	)
General and administrative expenses		13.2		(22,340,322	)		(18,467,192	)		(7,320,445	)		(5,935,594	)

Interest income				5,527,899			1,545,587			4,423,263			1,375,039
Other income – Net				2,440,371			638,167			1,707,807			257,563
Finance cost		14		(34,748,522	)		(34,118,391	)		(11,395,892	)		(11,783,272	)
Exchange gain (loss) – Net				6,194,010			(316,264	)		(2,149,240	)		(754,543	)
Gain on sale of investment property				—			5,027,826			—			—
Gain on revaluation of investment property		8		179,549,769			139,780,947			95,162,184			62,985,726

Profit before income taxes				281,773,986			217,024,851			130,982,427			88,718,861

Income tax expense				(78,966,274	)		(52,093,615	)		(54,764,299	)		(26,744,384	)

Profit for the period				202,807,712			164,931,236			76,218,128			61,974,477

Other comprehensive gain - Net of tax:
Items that may be reclassified subsequently to profit and loss:
- Exchange differences on translating other functional currency operations				9,433,734			3,022,647			2,761,939			289,027
Total other comprehensive income				9,433,734			3,022,647			2,761,939			289,027

Total comprehensive income for the period			$	212,241,446		$	167,953,883		$	78,980,067		$	62,263,504

Basic earnings per share		11.5	$	0.2777		$	0.2413		$	0.0928		$	0.0912
Diluted earnings per share		11.5	$	0.2734		$	0.2373		$	0.0914		$	0.0896

See accompanying notes to unaudited condensed consolidated interim financial statements.

Corporación Inmobiliaria Vesta, S. A. B. de C. V. and Subsidiaries

Condensed Consolidated Interim
Statements of Changes in Stockholders’ Equity

For the nine-month periods ended September 30, 2023 and 2022

(In US dollars)

		Capital stock			Additional paid-in capital			Retained earnings			Share-based payments reserve			Foreign currency translation			Total stockholders’ equity

Balances as of January 1, 2022	$	482,858,389		$	466,230,183		$	547,213,771		$	7,149,453		$	(49,826,389	)	$	1,453,625,407

Dividends declared		—			—			(57,432,777	)		—			—			(57,432,777	)
Vested shares		2,014,895			5,800,994			—			(7,815,889	)		—			—
Share-based payments		—			—			—			4,971,602			—			4,971,602
Repurchase of shares		(4,249,365	)		(11,353,943	)		—			—			—			(15,603,308	)
Comprehensive income		—			—			164,931,236			—			3,022,647			167,953,883

Balances as of September 30, 2022 (Unaudited)	$	480,623,919		$	460,677,234		$	654,712,230		$	4,305,166		$	(46,803,742	)	$	1,553,514,807

Balances as of January 1, 2023	$	480,623,919		$	460,677,234		$	733,405,749		$	5,984,051		$	(40,903,125	)	$	1,639,787,828

Equity issuance		84,302,445			338,375,392			—			—			—			422,677,837
Dividends declared		—			—			(60,307,043	)		—			—			(60,307,043	)
Vested shares		2,204,586			8,048,945			—			(10,253,531	)		—			—
Share-based payments		—			—			—			6,280,391			—			6,280,391
Comprehensive income		—			—			202,807,712			—			9,433,734			212,241,446

Balances as of September 30, 2023 (Unaudited)	$	567,130,950		$	807,101,571		$	875,906,418		$	2,010,911		$	(31,469,391	)	$	2,220,680,459

See accompanying notes to unaudited condensed consolidated interim financial statements.

Corporación Inmobiliaria Vesta, S. A. B. de C. V. and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows

For the nine-months period ended September 30, 2023 and 2022

(In US dollars)

	September 30, 2023 (Unaudited)			September 30, 2022 (Unaudited)
Cash flows from operating activities:
Profit before income taxes	$	281,773,986		$	217,024,851
Adjustments:
Depreciation		570,332			949,230
Right-of-use asset depreciation		440,622			358,560
Gain on revaluation of investment property		(179,549,769	)		(139,780,947	)
Unrealized effect of foreign exchange rates		3,239,724			316,264
Interest income		(5,527,899	)		(1,545,587	)
Interest expense		33,379,051			32,948,226
Amortization of debt issuance costs		1,369,471			1,170,165
Expense recognized in respect of share-based payments		6,280,391			4,971,602
Employee benefits and pension costs		961,286			—
Gain on sale of investment property		—			(5,027,826	)

Working capital adjustments:
(Increase) decrease in:
Operating lease receivables – Net		(1,216,366	)		1,736,636
Recoverable taxes		(1,176,506	)		4,879,666
Guarantee deposits paid		(437,122	)		4,950,174
Prepaid expenses		3,874,754			(18,241,521	)
Increase (decrease) in:
Accounts payable and client advances		15,933,767			33,723,994
Accrued expenses and taxes		570,771			(10,660,994	)
Security deposits collected		4,354,645			2,058,410
Interest received		5,527,899			1,545,587
Income taxes paid		(41,421,299	)		(55,871,027	)
Net cash generated by operating activities		128,947,738			75,505,463

Cash flows from investing activities:
Purchases of investment property		(195,666,429	)		(182,641,651	)
Sale of investment property		—			14,771,388
Purchases of office furniture and vehicles		(109,674	)		(442,500	)
Net cash used in investing activities		(195,776,103	)		(168,312,763	)

Cash flows from financing activities:
Interest paid		(29,677,100	)		(29,168,137	)
Loans paid		(3,477,928	)		(2,072,334	)
Dividends paid		(44,433,165	)		(42,660,621	)
Equity issuance proceeds		444,018,137			—
Equity issuance costs paid		(21,340,300	)		—
Repurchase of treasury shares		—			(15,603,308	)
Payment of lease liabilities		(536,880	)		(413,761	)
Debt issuance costs paid		—			(1,092,916	)
Net cash from (used) in financing activities		344,552,764			(91,011,077	)

	September 30, 2023 (Unaudited)			September 30, 2022 (Unaudited)

Effects of exchange rates changes on cash		(8,688,827	)		1,692,381

Net increase (decrease) in cash, cash equivalents and restricted cash		269,035,572			(182,125,996	)

Cash, cash equivalents and restricted cash at the beginning of year		139,147,085			453,556,444

Cash, cash equivalents and restricted cash at the end of the period - Note 5	$	408,182,657		$	271,430,448

See accompanying notes to unaudited condensed consolidated interim financial statements.

Corporación Inmobiliaria Vesta, S. A. B. de C. V. and Subsidiaries

Notes to Condensed Consolidated Interim Financial Statements

As of September 30, 2023 and December 31, 2022 and for the nine and three-month periods ended September 30, 2023 and 2022

(In US dollars)

General information

Corporación Inmobiliaria Vesta, S. A. B. de C. V. (“Vesta”) is an entity incorporated in Mexico. The address of its registered office and principal place of business is Paseo de los Tamarindos 90, 28th floor, Mexico City.

Vesta and subsidiaries (collectively, the “Entity”) are engaged in the development, acquisition and operation of industrial buildings and distribution facilities that are rented to corporations in eleven states throughout Mexico.

1.1 Significant event

On June 29, 2023, Vesta entered into an underwriting agreement (the “Underwriting Agreement”) with Citigroup Global Markets Inc., BofA Securities, Inc. and Barclays Capital Inc., as representative of the underwriters, relating to Vesta’s initial public offering (the “Offering”) of 125,000,000 Common Shares in the form of American Depositary Shares (the “ADS”) each ADS representing 10 Common Shares of Vesta’s common stock (“common stock”), which included the exercise by the underwriters in full of the over-allotment option to purchase an additional 18,750,000 shares of Vesta’s common stock, at an Offering price of $31.00 US dollars per ADS.

The closing of the Offering for the ADS’s took place on July 5, 2023, raising gross proceeds of approximately $445,000,000, which included 18,750,000 shares sold by Vesta upon the exercise by the underwriters of the over-allotment option in full. Issuance expenses were approximately $21,340,300. Vesta intends to use the net proceeds from the Offering to fund growth strategy including the acquisition of land or properties and related infrastructure investments, and for the development of industrial buildings.

On September 1, 2022 Vesta announced a new $200,000,000 sustainability linked revolving credit facility with various financial institutions. As a part of such revolving credit, Vesta paid debt issuance costs in an amount of $1,092,316. As of September 30, 2023 no amount has been drawn from this revolving credit facility.

Application of new and revised International Financial Reporting Standards (IFRS)

New and amended IFRS Accounting Standards that are effective for the current period

There are no accounting pronouncements which have become effective from January 1, 2023 that have a significant impact on the Group’s interim condensed consolidated financial statements.

Significant accounting policies

Basis of preparation

The unaudited condensed consolidated interim financial statements have been prepared on the historical cost basis except for investment properties and financial instruments that are measured at fair value at the end of each reporting period, as explained in the accounting policies below.

Historical cost

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

ii.

Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Entity takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these unaudited condensed consolidated interim financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of International Financial Reporting Standard (“IFRS”) 2, Share-based Payments.

In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

Level 3 inputs are unobservable inputs for the asset or liability.

iii.

Going concern

The unaudited condensed consolidated interim financial statements have been prepared by Management assuming that the Entity will continue to operate as a going concern.

Interim financial condensed statements

The accompanying condensed consolidated interim financial statements as of September 30, 2023 have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting, and have not been audited. In the opinion of Entity management, all adjustments (consisting mainly of ordinary, recurring adjustments) necessary for a fair presentation of the accompanying condensed consolidated interim financial statements are included. The results of the periods are not necessarily indicative of the results for the full year. These condensed consolidated interim financial statements should be read in conjunction with the audited annual consolidated financial statements of the Entity and their respective notes for the year ended December 31, 2022.

The accounting policies and methods of computation are consistent with the audited consolidated financial statements for the year ended December 31, 2022, except as mentioned in the preceding paragraph.

Segment

The Entity’s primary business is the acquisition, development, and management of industrial and distribution center real estate. Vesta manages its operations on an aggregated, single segment basis for purposes of assessing performance and making operating decisions and, accordingly, has only one reporting and operating segment. As of September 30, 2023 and December 31, 2022, all of our assets and operations are derived from assets located within Mexico.

Critical accounting judgments and key sources of estimation uncertainty

In preparing these interim financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The significant judgements made by management in applying the Entity’s accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual consolidated financial statements.

Cash, cash equivalents and restricted cash

For purposes of the condensed consolidated interim statement of cash flows, cash and cash equivalents include cash on hand and in banks, including restricted cash. Cash and cash equivalents at the end of the reporting period as shown in the condensed consolidated interim statement of cash flows can be reconciled to the related items in the condensed consolidated interim statements of financial position as follows:

	September 30, 2023 (Unaudited)		December 31, 2022

Cash and bank balances	$	407,919,630	$	139,056,863
Restricted cash		263,027		90,222
		408,182,657		139,147,085
Non-current restricted cash		735,312		735,312
Total	$	408,917,969	$	139,882,397

Restricted cash represents balances held by the Entity that are only available for use under certain conditions pursuant to the loan agreements entered into by the Entity. Such conditions include payment of monthly debt service fee and compliance with certain covenants set forth in the loan agreement. These restrictions are classified according to their restriction period: less than 12 months and over one year, considering the period of time in which such restrictions are fulfilled. Non-current restricted cash was classified within guaranteed deposits made, restricted cash and others in the accompanying consolidated statements of financial position.

Non-cash transactions

Changes in liabilities arising from financing activities not requiring cash relate to a decrease for the amortization of debt issuance costs for $1,122,156 and $1,170,165 in the nine-month periods ended September 30, 2023 and 2022, respectively. Unpaid dividends are included in Note 11.4. Other non-cash investing activities related to investment properties are included in Note 8.

Recoverable taxes

	September 30, 2023 (Unaudited)		December 31, 2022

Recoverable value-added tax (“VAT”)	$	30,119,624	$	18,440,884
Recoverable income taxes		—		9,531,645
Recoverable dividend tax		421,209		1,818,971
Other receivables		724,146		296,973

	$	31,264,979	$	30,088,473

Operating lease receivables, prepaid expenses and advance payments

The aging profile of operating lease receivables as of the dates indicated below are as follows:

	September 30, 2023 (Unaudited)		December 31, 2022

0-30 days	$	7,438,650	$	6,732,985
30-60 days		498,021		260,832
60-90 days		309,711		610,770
Over 90 days		325,275		85,608

Total	$	8,571,657	$	7,690,195

Pursuant to the lease agreements, rental payments should be received within 30 days following their due date; thereafter the payment is considered past due. As shown in the table above, 87% and 88% of all operating lease receivables are current as of September 30, 2023 and December 31, 2022, respectively.

All rental payments past due are monitored by the Entity; for receivables outstanding from 30 to 90 days, efforts are made to collect payment from the respective client. Operating lease receivables outstanding for more than 30 days but less than 60 days represent 6% and 3% of all operating lease receivables as of September 30, 2023 and December 31, 2022, respectively. Operating lease receivables outstanding for more than 60 and less than 90 days represent 4% and 8% of all operating lease receivable as of September 30, 2023 and December 31, 2022, respectively. Operating lease receivables outstanding greater than 90 days represent 4% and 1% of all operating lease receivable as of September 30, 2023 and December 31, 2022, respectively.

ii.

Movement in the allowance for doubtful accounts receivable

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of the operating lease receivable.

The following table shows the movement in expected credit losses that has been recognized for the lease receivable:

	Amounts

Balance as of January 1, 2022	$	1,957,935
Increase in loss allowance recognized in the period		180,609
Decrease in loss allowance from derecognition of financial assets in the period		(477,802	)
Balance as of September 30, 2022 (Unaudited)	$	1,660,742

Balance as of January 1, 2023	$	1,916,124
Increase in loss allowance recognized in the period		684,174
Decrease in loss allowance from derecognition of financial assets in the period		(333,523	)
Balance as of September 30, 2023 (Unaudited)	$	2,266,775

iii.

Client concentration risk

As of September 30, 2023 and December 31, 2022, one of the Entity’s client accounts for 38% or $3,239,063 (Unaudited) and 42% or $3,249,692 respectively, of the operating lease receivables balance. The same client accounted for 5.5% and 5.4% (Unaudited) of the total rental income of Entity for the nine-months period ended September 30, 2023 and 2022, respectively. No other client accounted for more than 10% of the total rental income of the Entity for the nine-month periods ended September 30, 2023 and 2022.

iv.

Leasing agreements

Operating leases relate to non-cancellable lease agreements over the investment properties owned by the Entity, which generally have terms ranging between 5 to 15 years, with options to extend the term up to a total term of 20 years. Rents are customarily payable on a monthly basis and are adjusted annually according to applicable inflation indices (US and Mexican inflation indices). Security deposits are typically equal to one or two months’ rent. Obtaining property insurance (third party liability) and operating maintenance are obligations of the tenants.

All lease agreements include a rescission clause that entitles the Entity to collect all unpaid rents during the remaining term of the lease agreement in the event that the client defaults in its rental payments, vacates the properties, terminates the lease agreement or enters into bankruptcy or insolvency proceedings. All lease agreements are classified as operating leases and do not include purchase options.

Non-cancellable operating lease receivables

Future minimum lease payments receivable under non-cancellable operating lease agreements are as follows:

	September 30, 2023 (Unaudited)		December 31, 2022

Not later than 1 year	$	198,044,817	$	155,267,112
Later than 1 year and not later than 3 years		326,887,221		250,043,235
Later than 3 year and not later than 5 years		306,239,134		209,592,871
Later than 5 years		195,524,025		154,909,895

	$	1,026,695,197	$	769,813,113

vi.

Prepaid expenses and advance payments

	September 30, 2023 (Unaudited)		December 31, 2022

Advance payments ⁽¹⁾	$	19,630,091	$	17,201,933
Other accounts receivables ⁽²⁾		737,227		7,486,147
Property expenses		822,012		543,804
Prepaid expenses		244,267		76,467

	$	21,433,597	$	25,308,351

(1)

During the second quarter of 2022 the Entity entered into an agreement for the procurement, permissioning and other condition of several plots of land; if the conditions are met within a period of 18 months, or an additional 18-month extension, the advance deposit will be considered part of the final transaction price, otherwise approximately $1 million will be forfeited to the counterparty and expensed; the remainder amount will be reimbursed to the Entity.

(2)

As state in Note 8 the Entity sold land reserves located in Queretaro, the outstanding balance as of December 31, 2022 was received in the first quarter of 2023.

Investment property

The Entity uses external appraisers in order to determine the fair value for all of its investment properties. The independent appraisers, who hold recognized and relevant professional qualifications and have vast experience in the types of investment properties, owned by the Entity, use valuation techniques such as the discounted cash flows approach, replacement cost approach and income cap rate approach. The techniques used include assumptions, the majority of which are not directly observable in the market, to estimate the fair value of the Entity’s investment property such as discount rates, long-term NOI, inflation rates, absorption periods and market rents.

The values, determined by the external appraisers quarterly, are recognized as the fair value of the Entity’s investment property at the end of each reporting period. The appraisers use a discounted cash flow approach to determine the fair value of land and buildings (using the expected net operating income (“NOI”) of the investment property) and a market approach to determine the fair value of land reserves. Gains or losses arising from changes in the fair values are included in the consolidated statements of profit or loss and other comprehensive (loss) income in the period in which they arise.

The Entity’s investment properties are located in Mexico and they are classified as Level 3 in the IFRS fair value hierarchy. The following table provides information about how the fair values of the investment properties are determined (in particular, the valuation technique and inputs used).

Property	Fair value hierarchy	Valuation techniques	Significant unobservable inputs	Value/range	Relationship of unobservable inputs to fair value

Buildings and land	Level 3	Discounted cash flows	Discount rate	Q3 2023: 7.00% to12.21% 2022: 7.50% to 12.24%	The higher the discount rate, the lower the fair value.

			Exit cap rate	Q3 2023: 6.50% to 8.75% 2022 : 6.50% to 8.99%	The higher the exit cap rate, the lower the fair value

			Long-term NOI	Based on contractual rent and then on market related rents	The higher the NOI, the higher the fair value.

			Inflation rates	Mexico: Q3 2023: 3.6% to 5.0% 2022: 3.4% to 5.0% U.S.: Q3 2023: 2.2% to 3.5% 2022: 2.1% to 3.5%	The higher the inflation rate, the higher the fair value.

			Absorption period	12 months on average	The shorter the absorption period, the higher the fair value.

			Market Related rents	Depending on the park/state	The higher the market rent, the higher the fair value

Land reserves	Level 3	Market value	Price per acre	Weighted average price per acre Q3 2023: $190,573 2022: $239,266	The higher the price, the higher the fair value.

The table below sets forth the aggregate values of the Entity’s investment properties for the years indicated:

	September 30, 2023 (Unaudited)			December 31, 2022

Buildings and land	$	3,101,690,000		$	2,657,513,766
Land improvements		13,794,975			7,562,174
Land reserves		140,100,000			208,910,000
		3,255,584,975			2,873,985,940

Less: Cost to conclude construction in-progress		(142,781,071	)		(135,520,664	)

Balance at end of period	$	3,112,803,904		$	2,738,465,276

The reconciliation of investment property is as follows:

	September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)

Balance at beginning of year	$	2,738,465,276	$	2,263,170,941
Additions		179,906,022		182,641,651
Foreign currency translation effect		14,882,837		1,404,973
Disposal of investment property		—		(9,743,562	)
Gain on revaluation of investment property		179,549,769		139,780,947

Balance at end of period	$	3,112,803,904	$	2,577,254,950

A total of $16,116,659 and $26,206,543 additions to investment property related to land reserves and new buildings that were acquired from third parties were not paid as of September 30, 2023 and 2022, respectively, and were therefore excluded from the condensed consolidated statements of cash flows for those periods. Additionally, proceeds of $7,486,147 were received during the nine-month period ended September 30, 2023 related to a land reserve sale that closed in 2022.

Some of the Entity’s investment properties have been pledged as collateral to secure its long-term debt.

Entity as lessee

Right-of-use:

Right-of-use	January 1, 2023		Additions		Disposals		September 30, 2023 (Unaudited)

Property	$	2,552,121	$	—	$	—	$	2,552,121
Vehicles and office equipment		791,773		—		—		791,773

Cost of right-of-use	$	3,343,894	$	—	$	—	$	3,343,894

Depreciation of right-of-use

Property	$	(1,508,871	)	$	(341,928	)	$	—	$	(1,850,799	)
Vehicles and office equipment		(417,078	)		(98,694	)		—		(515,772	)
Accumulated depreciation		(1,925,949	)		(440,622	)		—		(2,366,571	)

Total	$	1,417,945		$	(440,622	)	$	—	$	977,323

Rights to use	January 1, 2022		Additions		Disposals		September 30, 2022 (Unaudited)

Property	$	2,296,581	$	—	$	—	$	2,296,581
Vehicles and office equipment		411,357		—		—		411,357

Cost of rights to use		2,707,938		—		—		2,707,938

Rights to use	January 1, 2022			Additions			Disposals		September 30, 2022 (Unaudited)

Depreciation of rights to use

Property	$	(1,078,035	)		(294,759	)	$	—	$	(1,372,794	)
Vehicles and office equipment		(285,486	)		(63,801	)		—		(349,287	)
Accumulated depreciation		(1,363,521	)		(358,560	)		—		(1,722,081	)

Total	$	1,344,417			(358,560	)	$	—		985,857

Lease obligations:

January 1, 2023

Additions

Disposals

Interests accrued

Repayments

September 30, 2023

(Unaudited)

Lease liabilities

1,503,939

—

82,222

(536,871

)

1,049,290

	January 1, 2022		Additions		Disposals		Interests accrued		Repayments			September 30, 2022 (Unaudited)

Lease liabilities	$	1,380,413	$	—	$	—	$	46,728	$	(413,761	)	$	1,013,380

Analysis of maturity of liabilities by lease:

Finance lease liabilities	September 30, 2023 (Unaudited)			December 31, 2022

Not later than 1 year	$	675,318		$	709,901
Later than 1 year and not later than 5 years		461,197			963,487
		1,136,515			1,673,388
Less: future finance cost		(87,234	)		(169,449	)

Total lease liability	$	1,049,281		$	1,503,939

Finance lease – short-term		608,140			606,281
Finance lease – long-term		441,141			897,658

Total lease liability	$	1,049,281		$	1,503,939

10.

Long-term debt

In September 1, 2022, the Entity obtained a three-year unsecured sustainability-linked revolving credit facility for $200 million. This loan bears interest at a rate of SOFR plus 1.60 percentage points. As of September 30, 2023, no provisions have been made for this line. The Entity incurred prepaid direct expenses related to opening the $1.34 million credit facility.

On May 13, 2021, the Entity offered $350,000,000 of Senior Notes (“Vesta ESG Global bond 35/8 05/31”) with mature on May 13, 2031. The notes bear annual interest at a rate of 3.625%.

On August 2, 2019, the Entity entered into a new five-year unsecured credit agreement with various financial institutions for an aggregated amount of $80,000,000, and a revolving credit line of $125,000,000. This loan bears quarterly interest at a rate of LIBOR plus 2.15 percentage points. The proceeds were received on the same date, as of December 31, 2019 the revolving credit line have not been used. (“Syndicated Loan”). On March 23, 2020 and April 7, 2020, the Entity disposed $85,000,000 and $40,000,000, respectively, out of the revolving credit line, bearing quarterly interest at a rate of LIBOR plus 1.85 percentage points.

On June 25, 2019, the Entity entered into a 10-year senior notes series RC and 12-year senior notes series RD with various financial institutions, for and aggregated amounts of $70,000,000 and $15,000,000, respectively. Each Series RC notes and Series RD notes bear interest on the unpaid balance at the rates of 5.18% and 5.28%, respectively.

On May 31, 2018, the Entity entered into an agreement for the issuance and sale of Series A Senior Notes of $45,000,000 due on May 31, 2025, and Series B Senior Notes of $45,000,000 due on May 31, 2028. Each Series A Note and Series B Note bear interest on the unpaid balance at the rates of 5.50% and 5.85%, respectively.

On November 1, 2017, the Entity entered into a loan agreement with Metropolitan Life Insurance Company for $118,000,000 due on December 1, 2027. This loan bears monthly interest at a rate of 4.75%.

On September 22, 2017, the Entity entered into an agreement for an issuance and sale Series A Senior Notes of $65,000,000 due on September 22, 2024, and Series B Senior Notes of $60,000,000 due on September 22, 2027. Each Series A Note and Series B Note bear interest on the unpaid balance of such Series A Note and Series B Note at the rates of 5.03% and 5.31%, respectively, per annum payable semiannually on the September 22 and March 22 of each year.

On July 27, 2016, the Entity entered into a 10-year loan agreement with Metropolitan Life Insurance Company (“MetLife”) for a total amount of $150,000,000 due on August 2026. The proceeds of both of the aforementioned credit facilities were used to settle the Entity’s debt with Blackstone which matured on August 1, 2016.

The long-term debt is comprised by the following notes:

Loan	Amount		Annual interest rate		Monthly amortization		Maturity		September 30, 2023 (Unaudited)			December 31, 2022

MetLife 10-year		150,000,000		4.55%		(1)		August 2026	$	144,877,457		$	146,723,915
Series A Senior Note		65,000,000		5.03%		(3)		September 2024		65,000,000			65,000,000
Series B Senior Note		60,000,000		5.31%		(3)		September 2027		60,000,000			60,000,000
Series A Senior Note		45,000,000		5.50%		(3)		May 2025		45,000,000			45,000,000
Series B Senior Note		45,000,000		5.85%		(3)		May 2028		45,000,000			45,000,000
MetLife 10-year		118,000,000		4.75%		(2)		December 2027		116,551,550			117,867,109
MetLife 8-year		26,600,000		4.75%		(1)		August 2026		25,725,410			26,041,321
Series RC Senior Note		70,000,000		5.18%		(4)		June 2029		70,000,000			70,000,000
Series RD Senior Note		15,000,000		5.28%		(5)		June 2031		15,000,000			15,000,000
Vesta ESG Global bond 35/8 05/31		350,000,000		3.63%		(6)		May 2031		350,000,000			350,000,000
										937,154,417			940,632,345

Less: Current portion										(4,754,756	)		(4,627,154	)
Less: Direct issuance cost										(9,010,603	)		(10,132,759	)

Total Long-term debt									$	923,389,058		$	925,872,432

(1)

On July 22, 2016 the Entity entered into a 10-year loan agreement with MetLife, interest on this loan is paid on a monthly basis. On March 2021, under this credit facility, an additional loan was contracted for $26,600,000 bearing interest on a monthly basis at a fixed interest rate of 4.75%. Principal amortization over the two loans will commence on September 1, 2023. This credit facility is guaranteed with 48 of the Entity’s properties.

(2)

On November 1, 2017, the Entity entered into a 10-year loan agreement with Metlife, interest on this loan is paid on a monthly basis. The loan bears monthly interest only for 60 months and thereafter monthly amortizations of principal and interest until it matures on December 1, 2027. This loan is secured by 21 of the Entity’s investment properties under a Guarantee Trust.

(3)

Series A Senior Notes and Series B Senior Notes are not secured by investment properties of the Entity. The interest on these notes is paid on a monthly basis.

(4)

On June 25, 2019, the Entity entered into a 10-year senior notes series RC to financial institutions, interest on these loans is paid on a semiannual basis December 14, 2019. The note payable matures on June 14, 2029. Five of its subsidiaries are joint obligators under these notes payable.

(5)

On June 25, 2019, the Entity entered into a 12-year note payable to financial institutions, interest on these loans is are paid on a semiannual basis beginning December 14, 2019. The note payable matures on June 14, 2031. Five of its subsidiaries are joint obligators under these notes payable.

(6)

On May 13, 2021, the Entity offered $350,000,000 Senior Notes, Vesta ESG Global bond 35/8 05/31 with maturity on May 13, 2031. Interest is paid on a semiannual basis. The cost incurred for this issuance was $7,746,222.

These credit agreements require the Entity to maintain certain financial ratios (such as Cash-on-Cash and debt

Service coverage ratios) and to comply with certain affirmative and negative covenants. The Entity is in compliance with these covenants as of September 30, 2023.

The credit agreements also entitle MetLife to withhold certain amounts deposited by the Entity in a separate fund as guarantee deposits for the debt service and tenants guarantee deposits of the Entity’s investment properties pledged as collateral. Such amounts are presented as guaranteed deposit assets in the condensed consolidated interim statement of financial position.

11.

Capital stock

Capital stock as of September 30, 2023 and December 31, 2022 is as follows:

	September 30, 2023 (Unaudited )				December 31, 2022
	Number of shares		Amount		Number of shares		Amount

Fixed capital
Series A		5,000	$	3,696		5,000	$	3,696
Variable capital
Series B		827,604,128		567,127,254		679,697,740		480,620,223

Total		827,609,128	$	567,130,950		679,702,740	$	480,623,919

Shares in treasury

As of September 30, 2023 and December 31, 2022 total shares in treasury area as follows:

	September 30, 2023 (Unaudited)		December 31, 2022

Shares in treasury (1)		5,721,638		10,077,405
Shares in long term incentive plan trust (2)		8,665,670		8,456,290

Total share in treasury		14,377,308		18,533,695

(1)

Treasury shares are not included in the Total Capital Stock of the Entity, they represent the total stock outstanding under the repurchase program approved by the resolution of the general ordinary stockholders meeting on March 13, 2020.

(2)

Shares in long-term incentive plan trust are not included in the Total Capital Stock of the Entity. The trust was established in 2018 in accordance with the resolution of the general ordinary stockholders meeting on January 6, 2015 as the 20-20 Long Term Incentive Plan, this compensation plan was extended for the period 2021 to 2025, “Long Term Incentive Plan” by a resolution of the general ordinary stockholders meeting on March 13, 2020. Such trust was created by the Entity as a vehicle to distribute shares to employees under the mentioned incentive plan (see Note 17) and is consolidated by the Entity. The shares granted to the eligible executives and deposited in the trust accrue dividends for the employee any time the ordinary shareholders receive dividends and those dividends do not need to be returned to the Entity if the executive forfeits the granted shares.

Fully paid ordinary shares

	Number of shares			Capital stock			Additional paid-in capital

Balance as of January 1, 2022		684,252,628		$	482,858,389		$	466,230,183

Vested shares		4,161,111			2,014,895			5,800,995
Repurchase of shares		(8,710,999	)		(4,249,365	)		(11,353,944	)

Balance as of December 31, 2022		679,702,740		$	480,623,919		$	460,677,234

Vested shares		4,156,388			2,204,586			8,048,945
Equity issuance		143,750,000			84,302,445			338,375,392

Balance as of September 30, 2023 (unaudited)		827,609,128		$	567,130,950		$	807,101,571

Dividend payments

Pursuant to a resolution of the general ordinary stockholders meeting on March 30, 2023, the Entity declared a dividend of $60,307,042, approximately $0.08782 per share. The dividend will be paid in four equal installments of $15,076,761 due on April 17, 2023, July 15, 2023, October 15, 2023 and January 15, 2024. As of September 30, 2023, the unpaid dividends are $30,153,522.

The first installment of the 2023 declared dividends, paid on April 17, 2023, was approximately $0.0218 per share, for a total dividend of $15,076,761.

The second installment of the 2023 declared dividends, paid on July 17, 2023, was approximately $0.0180 per share, for a total dividend of $15,076,761.

Pursuant to a resolution of the general ordinary stockholders meeting on March 24, 2022, the Entity declared a dividend of $57,432,777, approximately $0.08306 per share. The dividend was paid in four equal installments of $14,358,194 due on April 15, 2022, July 15, 2022, October 15, 2022 and January 15, 2023. As of December 31, 2022, the unpaid dividends were $14,358,194.

The first installment of the 2022 declared dividends, paid on April 15, 2022, was approximately $0.0207 per share, for a total dividend of $14,358,194.

The second installment of the 2022 declared dividends, paid on July 15, 2022, was approximately $0.02086 per share, for a total dividend of $14,358,194.

The third installment of the 2022 declared dividends, paid on October 15, 2022, was approximately $0.02086 per share, for a total dividend of $14,358,194.

The fourth and last installment of the 2022 declared dividends, paid on January 15, 2023, was approximately $0.02086 per share, for a total dividend of $14,358,194.

Earnings per share

	For the nine-month period ended				For the three-month period ended
	September 30, 2023 (Unaudited)		September 30, 2022 (unaudited)		September 30, 2023 (Unaudited)		September 30, 2022 (unaudited)

Basic earnings per share:
Earnings attributable to ordinary share to outstanding	$	202,807,712	$	164,931,236	$	76,218,128	$	61,974,477

Weighted average number of ordinary shares outstanding		730,196,124		683,633,759		821,359,128		679,745,465

Basic earnings per share	$	0.2777	$	0.2413	$	0.0928	$	0.0912

	For the nine-month period ended				For the three-month period ended
	September 30, 2023 (Unaudited)		September 30, 2022 (unaudited)		September 30, 2023 (Unaudited)		September 30, 2022 (unaudited)

Diluted earnings per share:
Earnings attributable to ordinary shares outstanding and shares in Incentive Plan Trust	$	202,807,712	$	164,931,236	$	76,218,128	$	61,974,477

Weighted average number of ordinary shares plus shares in Incentive Plan trust		741,922,679		695,063,086		833,707,935		691,894,891

Diluted earnings per share	$	0.2734	$	0.2373	$	0.0914	$	0.0896

12.

Rental income

	For the nine-month period ended				For the three-month period ended
	September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)		September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)

Rents	$	147,287,405	$	123,997,898	$	51,613,071	$	42,809,466
Reimbursable building services		10,267,927		6,603,443		4,147,026		2,698,577

Total rental income	$	157,555,332	$	130,601,341	$	55,760,097	$	45,508,043

13.

Property operating costs and administration expenses

Property operating costs consist of the following:

Direct property operating costs from investment properties that generate rental income during the period:

	For the nine-month period ended				For the three-month period ended
	September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)		September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)

Real estate tax	$	1,888,429	$	1,334,014	$	712,580	$	446,788
Insurance		712,438		521,948		316,808		175,710
Maintenance		1,366,211		1,018,868		539,544		404,779
Structural maintenance accrual		83,632		85,239		28,929		30,777
Other property related expenses		6,274,959		3,160,043		2,846,962		1,284,500

	$	10,325,669	$	6,120,112	$	4,444,823	$	2,342,554

Direct property operating costs from investment property that do not generate rental income during the period:

	For the nine-month period ended				For the three-month period ended
	September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)		September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)

Real estate tax	$	440,326	$	224,950	$	172,233	$	70,548
Insurance		19,849		23,963		10,531		7,615
Maintenance		357,757		272,554		173,384		119,704
Other property related expenses		2,228,501		1,025,591		1,044,310		393,680

		3,046,433		1,547,058		1,400,458		591,547

Total property operating costs	$	13,372,102	$	7,667,170	$	5,845,280	$	2,934,101

General and administrative expenses consist of the following:

	For the nine-month period ended				For the three-month period ended
	September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)		September 30, 2023 (Unaudited)			September 30, 2022 (Unaudited)

Employee annual salary plus short-terms benefits	$	12,436,861	$	10,347,765	$	4,241,595		$	3,264,076
Auditing, legal and consulting expenses		1,543,483		708,426		897,584			242,004
Property appraisal and other fees		426,232		508,761		148,440			172,680
Marketing expenses		564,959		699,252		277,065			212,246
Other		77,442		146,213		(296,812	)		3,740
		15,048,977		12,410,417		5,267,872			3,894,746

Depreciation		1,010,954		1,085,173		265,962			405,601
Long-term incentive plan and Equity plus - Note 17.4		6,280,391		4,971,602		1,786,611			1,635,247

Total general and administrative expenses	$	22,340,322	$	18,467,192	$	7,320,445		$	5,935,594

14.

Finance Cost

	For the nine-month period ended				For the three-month period ended
	September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)		September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)

Interest on loans and others	$	33,626,366	$	32,948,226	$	11,283,518	$	11,328,934
Loan prepayment fees		1,122,156		1,170,165		112,374		454,338

Total	$	34,748,522	$	34,118,391	$	11,395,892	$	11,783,272

15.

Income taxes

The Entity is subject to Current Income Tax (“ISR”). The rate of ISR was 30%.

Income tax expense is recognized at an amount determined by multiplying the profit before tax for the interim reporting period by management’s best estimate of the weighted-average annual income tax rate expected for the full financial year, adjusted for the tax effect of certain items recognized in full in the interim period. As such, the effective tax rate in the interim financial statements may differ from management’s estimate of the effective tax rate for the annual financial statements.

The Entity’s consolidated effective tax rate for the nine-month period and the three-month period ended September 30, 2023 was 28% and 41.8%, respectively(nine-month period and three-month period ended September 30, 2022 was 24% and 30.1%, respectively). The change in effective tax rate was caused mainly by the difference in exchange rates used in for the conversion of tax balances and foreign operation into US dollar.

16.

Transactions and balances with related parties

Compensation of key management personnel

The remuneration of Entity’s management and key executives is determined by the remuneration committee taking in to account the individual performance of the officer and market trends. The performance bonus elected into share-based compensation includes a 20% premium (Equity plus).

The following table details the general and administrative expense of the annual salary plus short-term benefits as well as the Long-term incentive plan and Equity plus that are reflected in the general and administrative expense of the Entity:

	For the nine-month period ended				For the three-month period ended
	September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)		September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)

Short-term benefits	$	5,058,489	$	4,561,286	$	1,665,982	$	1,348,314
Share-based compensation expense		6,280,391		4,971,602		1,786,611		1,635,247

	$	11,338,880	$	9,532,888	$	3,442,594	$	2,983,561
Number of key executives		23		22		23		22

17.

Share-based payment

17.1

Share units granted during the period

Vesta Long Term Incentive Plan - a total of 3,763,449 and 3,760,851 shares were granted during the nine-month periods ended September 30, 2023 and 2022, respectively.

17.2

Share units vested during the period

A total of 4,156,388 and 4,157,024 shares vested during the nine-month periods ended September 30, 2023 and 2022, respectively under the Vesta Long Term Incentive Plan and the short-term incentive plan.

17.3

Share awards outstanding at the end of the period

As of September 30, 2023 and December 31, 2022, there are 8,655,670 (unaudited) and 8,456,290 shares outstanding with a weighted average remaining contractual life of 24 months.

17.4

Compensation expense recognized

The long-term incentive expense for the Nine Months ended September 30, 2023 and 2022 was as follows:

	For the nine-month period ended				For the three-month period ended
	September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)		September 30, 2023 (Unaudited)		September 30, 2022 (Unaudited)

Vesta 20-20 Incentive Plan	$	6,280,391	$	4,971,602	$	1,786,611	$	1,635,247

Compensation expense related to these plans will continue to be accrued through the end of the service period.

18.

Interest rate risk management

The Entity minimizes its exposure to interest rate risk by borrowing funds at fixed rates or entering into interest rate swap contracts where funds are borrowed at floating rates. This minimizes interest rate risk together with the fact that properties owned by the Entity generate a fixed income in the form of rental income which is indexed to inflation.

19.

Litigation and commitments

Litigation

In the ordinary course of business, the Entity is party to various legal proceedings. The Entity is not involved in any litigation or arbitration proceeding for which the Entity believes it is not adequately insured or indemnified, or which, if determined adversely, would have a material adverse effect on the Entity or its financial position, results of operations or cash flows.

Commitments

All rights to construction, improvements and infrastructure built by the Entity in the Queretaro Aerospace Park and in the DSP Park automatically revert back to the government of the State of Queretaro and to Nissan at the end of the concessions, which is approximately in 42 and 35 years, respectively.

20.

Events after the reporting period

The third installment of the 2023 declared dividends was paid on October 16, 2023, was approximately $0.0182 per share, for a total dividend of $15,076,761.

21.

Condensed consolidated interim financial statements issuance authorization

The accompanying condensed consolidated interim financial statements were approved by the Board of Directors on October 19, 2023.

* * * *