Corporación Inmobiliaria Vesta B de C : Financial Statements Q1 2024

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

Condensed Consolidated Interim Financial Statements for the three Months Period Ended March 31, 2024 and 2023 (unaudited)

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

Unaudited Condensed Consolidated Interim Financial Statements as of as of March 31, 2024 and 2023 (unaudited)

Table of contents	Page
Unaudited Condensed Consolidated Interim Statements of Financial Position	1
Unaudited Condensed Consolidated Interim Statements of Profit and Other Comprehensive
Income	2
Unaudited Condensed Consolidated Interim Statements of Changes in Stockholders' Equity	3
Unaudited Condensed Consolidated Interim Statements of Cash Flows	4
Notes to Unaudited Condensed Consolidated Interim Financial Statements	6

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

Unaudited Condensed Consolidated Interim Statements of Financial Position

As of March 31, 2024 and December 31, 2023 (In US dollars)

Assets			March 31, 2024
Notes		(Unaudited)		December 31, 2023
Current assets:
Cash, cash equivalents and restricted cash	5		$	445,061,349					$	501,166,136
Recoverable taxes	6			32,758,441						33,864,821
Operating lease receivables	7			14,838,239						10,100,832
Prepaid expenses and advance payments	7.vi		35,766,128							21,299,392
Total current assets				528,424,157						566,431,181
Non-current assets:
Investment property	8			3,353,858,113						3,212,164,164
Office furniture - Net				2,365,408						2,541,990
Right-of-use asset - Net of depreciation	9			693,583						834,199
Security deposits made, restricted cash and others				10,229,983							10,244,759
Total non-current assets				3,367,147,087							3,225,785,112
Total assets			$	3,895,571,244						$	3,792,216,293
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt	10		$	69,688,381					$	69,613,002
Lease liabilities - short-term	9			606,339					607,481
Accrued interest				6,070,395						3,148,767
Accounts payable				20,233,994						13,188,966
Income taxes payable				4,862,866						38,773,726
Accrued expenses and taxes				4,649,514						7,078,988
Dividends payable	11.4			64,686,486						15,155,311
Total current liabilities				170,797,975						147,566,241
Non-current liabilities:
Long-term debt	10			844,723,820						845,573,752
Lease liabilities - long-term	9			139,564						290,170
Guarantee deposits received				25,595,943						25,680,958
Long-term accounts payable				7,889,938					7,706,450
Employee benefits				1,835,252					1,519,790
Deferred income taxes	17			296,152,318						276,910,507
Total non-current liabilities				1,176,336,835					1,157,681,627
Total liabilities				1,347,134,810						1,305,247,868
Litigation and commitments	21
Stockholders' equity:
Capital stock	11.1			593,977,760						591,600,113
Additional paid-in capital	11.3			948,599,276						934,944,456
Retained earnings				1,049,917,308						989,736,218
Share-based payments reserve	19			(10,153,203)			3,732,350
Foreign currency translation				(33,904,707)				(33,044,712)
Total stockholders' equity				2,548,436,434					2,486,968,425
Total liabilities and stockholders' equity			$	3,895,571,244					$	3,792,216,293

See accompanying notes to unaudited condensed consolidated interim financial statements.

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

Unaudited Condensed Consolidated Interim Statements of Profit and Other Comprehensive Income

For the Three-month periods ended March 31, 2024, and 2023 (In US dollars)

			For the three-month period ended
			March 31, 2024		March 31, 2023
	Notes		(Unaudited)		(Unaudited)
Revenues:
Rental income	12	$	60,176,393			$	49,610,889
Management fees			413,263				327,618
			60,589,656				49,938,507
Property operating costs related to
properties that generated rental income	13.1		(3,786,225)		(2,238,569)
Property operating costs related to
properties that did not generate rental
income	13.1		(717,030)		(666,089)
General and administrative expenses	13.2		(8,556,795)		(8,205,943)
Interest income			5,068,364				566,836
Other income	14		895,669				256,351
Other expenses	15		(1,110,553)		(330,286)
Finance cost	16		(10,212,525)		(11,580,977)
Exchange gain - Net			854,082				4,602,489
Gain on sale of investment property			250,000				-
Gain on revaluation of investment
property	8		107,326,025			10,759,462
Profit before income taxes			150,600,668				43,101,781
Income tax expense	17		(25,733,091)			12,224,884
Profit for the period			124,867,577				55,326,665
Other comprehensive gain - Net of tax:
Items that may be reclassified
subsequently to profit and loss:
- Exchange differences on translating
other functional currency operations			(859,995)				3,792,865
Total other comprehensive
income			(859,995)				3,792,865
Total comprehensive income for the period		$	124,007,582			$	59,119,530
Basic earnings per share	11.5	$	0.1428			$	0.0809
Diluted earnings per share	11.5	$	0.1411				$	0.0797

See accompanying notes to unaudited condensed consolidated interim financial statements.

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

Unaudited Condensed Consolidated Interim

Statements of Changes in Stockholders' Equity

For the Three-month periods ended March 31, 2024, and 2023 (In US dollars)

																									Foreign				Total
				Capital				Additional			Retained			Share-based			currency		stockholders'
				stock			paid-in capital			earnings	payments reserve			translation				equity
Balances as of January 1, 2023	$	480,623,919		$	460,677,234		$	733,405,748			$	5,984,051			$	(40,903,125)			$	1,639,787,827
Dividends declared				-						-				(60,307,043)			-					-						(60,307,043)
Vested shares				2,204,586					8,048,945			-						(10,253,531)			-						-
Share-based payments				-						-				-						2,792,918			-						2,792,918
Comprehensive income				-						-				55,326,665				-					3,792,865						59,119,530
Balances as of March31, 2023
(Unaudited)		$	482,828,505		$	468,726,179			$	728,425,370				$	(1,476,562)			$	(37,110,260)	$			1,641,393,232
Balances as of January 1, 2024	$	591,600,113		$	934,944,456		$	989,736,218				$	3,732,350			$	(33,044,712)		$	2,486,968,425
Dividends declared				-						-				(64,686,487)				-					-						(64,686,487)
Vested shares				2,377,647						13,654,820				-						(16,032,466)			-						-
Share-based payments				-						-				-						2,146,913					-						2,146,913
Comprehensive income				-						-				124,867,577						-					(859,995)				124,007,582
Balances as of March 31, 2024
(Unaudited)	$	593,977,760			$	948,599,276		$	1,049,917,308				$	(10,153,203)	$	(33,904,707)	$	2,548,436,434

See accompanying notes to unaudited condensed consolidated interim financial statements.

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

Unaudited Condensed Consolidated Interim Statements of Cash Flows

For the Three-month periods ended March 31, 2024, and 2023 (In US dollars)

			March 31, 2024		March 31, 2023
			(Unaudited)		(Unaudited)
Cash flows from operating activities:
Profit before income taxes	$	150,600,668			$	43,101,781
Adjustments:
Depreciation			187,023				222,001
Right-of-use asset depreciation			140,616				146,874
Gain on revaluation of investment property			(107,326,025)			(10,759,462)
Unrealized effect of foreign exchange rates			(1,714,077)			(4,602,489)
Interest income			(5,068,364)			(566,836)
Interest expense			9,348,664				11,211,746
Amortization of debt issuance costs			863,861				369,231
Expense recognized in respect of share-based payments			2,146,914				2,792,918
Employee benefits and pension costs			315,462				-
Gain on sale of investment property			(250,000)			-
Working capital adjustments:
(Increase) decrease in:
Operating lease receivables - Net			(4,737,407)			(3,391,723)
Recoverable taxes			1,106,380				4,339,883
Guarantee deposits paid			(479,854)			1,512,522
Prepaid expenses and other receivables			(14,466,736)			2,056,570
Increase (decrease) in:
Accounts payable and client advances			7,228,516				9,012,106
Accrued expenses and taxes			(2,429,474)			(1,613,735)
Guarantee deposits collected			(85,015)			(186,324)
Interest received			5,068,364				566,836
Income taxes paid			(40,402,140)				(22,492,445)
Net cash generated by operating activities			47,376				31,719,453
Cash flows from investing activities:
Purchases of investment property			(47,625,125)			(54,236,948)
Non-tenant Reembursments			14,367,041				-
Sale of investment property			780,000				-
Purchases of office furniture and vehicles			(10,441)				(85,660)
Net cash used in investing activities			(32,488,525)			(54,322,608)
Cash flows from financing activities:
Interest paid			(6,427,036)			(7,098,240)
Loans paid			(1,143,784)			(1,183,062)
Dividends paid			(15,155,312)			(14,358,194)
Payment of lease liabilities			(151,748)				(181,707)
Net cash used in financing activities			(22,877,880)			(22,821,203)
			March 31, 2024		March 31, 2023
			(Unaudited)		(Unaudited)
Effects of exchange rates changes on cash			(785,758)			4,490,012
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Net decrease in cash, cash equivalents and restricted cash		(56,104,787)			(40,934,346)
Cash, cash equivalents and restricted cash at the beginning of year		501,901,448				139,882,397
Cash, cash equivalents and restricted cash at the end of the period -
Note 5	$	445,796,661		$	98,948,051

See accompanying notes to unaudited condensed consolidated interim financial statements.

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

Unaudited Notes to Condensed Consolidated Interim Financial Statements

As of March 31, 2024 and December 31, 2023 and for the Three-month periods ended March 31, 2024, and 2023

(In US dollars)

1. 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.
2. 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, 2024 that have a significant impact on the Group's interim condensed consolidated financial statements.
3. Significant accounting policies
4. 1. 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.
   2. 1. Historical cost
         Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
      2. 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-basedPayments.
         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:

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1. 1. 1. • 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.
      2. 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.
   2. Interim financial condensed statements
      The accompanying condensed consolidated interim financial statements as of March 31, 2024 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, 2023.
      The accounting policies and methods of computation are consistent with the audited consolidated financial statements for the year ended December 31, 2023, except as mentioned in the preceding paragraph.
   3. 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 March 31, 2024 and December 31, 2023, all of our assets and operations are derived from assets located within Mexico.
2. 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.
3. 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:

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			March 31, 2024
			(Unaudited)	December 31, 2023
Cash and bank balances	$	444,802,321		$	501,093,921
Restricted cash			259,028			72,215
			445,061,349			501,166,136
Non-current restricted cash			735,312			735,312
Total	$	445,796,661		$	501,901,448

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 $369,230 and $369,231 in the three-month periods ended March 31, 2024 and 2023, respectively. Unpaid dividends are included in Note 11.4. Other non-cash investing activities related to investment properties are included in Note 8.

Additionally, the Entity recognized amortization of opening cost of a credit line for $123,658 and $123,658 in the three-month periods ended March 31, 2024 and 2023, respectively; included in Security deposits made, restricted cash and others balance change.

6.	Recoverable taxes
			March 31, 2024
			(Unaudited)	December 31, 2023
	Recoverable value-added tax ("VAT")	$	32,758,441		$	33,733,662
	Other receivables		-				131,159
		$	32,758,441		$	33,864,821

7. Operating lease receivables, prepaid expenses and advance payments

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

		March 31, 2024
		(Unaudited)	December 31, 2023
0-30 days	$	12,762,743			$	9,338,540
30-60 days		955,685				335,498
60-90 days		573,634				146,708
Over 90 days		546,177				280,086
Total	$	14,838,239		$	10,100,832

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, 86% and 92% of all operating lease receivables are current as of March 31, 2024 and December 31, 2023, 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 March 31, 2024 and December 31, 2023, respectively. Operating lease receivables

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