Wilfredo Jorel Guilloty

Jorel Guilloty inquired about the occupancy expectations embedded in Vesta's guidance, potential for more development launches, and the drivers behind the $36 million income tax expense for the quarter.

Answer

Lorenzo Dominique Berho Carranza, Vesta's CEO, stated that while no specific occupancy guidance is given, the company expects improvement, driven by proactive development and increasing rents. Juan Felipe Sottil Achutegui, Vesta's CFO, clarified that the income tax expense was primarily due to the appreciation of the Mexican peso impacting USD-denominated debt, anticipating stabilization in 2026. Lorenzo added that 2025-2026 will focus on construction on recently acquired land, aligning with the Route 2030 strategy.

Jorel Guilloty of Goldman Sachs asked about the occupancy expectations embedded in Vesta's 2026 guidance and whether it envisions additional development launches. He also inquired about the drivers behind the $36 million income tax expense for the quarter and future tax expectations.

Answer

Lorenzo Dominique Berho Carranza, CEO of Vesta, stated that Vesta does not provide specific occupancy guidance but expects improvement throughout 2026, noting the health of current numbers and the company's proactive development strategy. He also mentioned that the guidance does not include specific CapEx numbers but anticipates construction starts on acquired land in 2026, following the Route 2030 plan. Regarding the income tax, Lorenzo explained it was primarily due to significant profits from U.S. dollar-denominated debt appreciation against the peso, expecting this impact to diminish in 2026 as the peso stabilizes.

Wilfredo Jorel Guilloty sought clarification on the quantitative indicators Vesta uses to decide on new development launches, such as occupancy trends or leads. He also asked about the slight decline in LTM leasing spreads from 13.7% in Q2 2025 to 12.4% in Q3 2025 and if it implies lower rents. He followed up by asking if future launches are primarily for existing tenant expansions or if demand insights drive new developments.

Answer

CEO Lorenzo Dominique Berho explained that Vesta's unique investment approach relies on internal data, firsthand client information, and local leadership from its 43 million sq ft portfolio and 25 years of experience. He cited the Guadalajara expansion, driven by insights from major clients like Amazon and Foxconn, as an example of successful development. Regarding leasing spreads, he noted the 12.4% LTM spread is not a material drop and the trend is upward, significantly above inflation. He confirmed that over 60% of Vesta's growth comes from existing tenants, emphasizing the strategy of growing with outstanding companies and becoming their real estate partner.

Wilfredo Jorel Guilloty asked about the quantitative indicators Vesta uses to decide on new development launches and the reasons behind the slight decline in the last twelve months' (LTM) weighted average leasing spread from 13.7% in Q2 2025 to 12.4% in Q3 2025. He also asked if growth from existing tenants implies future launches are for their expansion.

Answer

CEO Lorenzo Dominique Berho explained Vesta's unique investment approach relies on internal data, local leadership, and close client relationships. He noted the LTM leasing spread decline was not material, expecting sustained double-digit growth above inflation. He confirmed that over 60% of Vesta's growth comes from existing tenants, indicating both expansion and confidence for new developments.

Jorel Guilloty of Goldman Sachs asked about expectations for leasing spreads going forward and the framework for initiating new development starts, as none were added this quarter.

Answer

CEO Lorenzo Dominique Berho Carranza stated that the strong renewal rent spreads of 20-30% are expected to continue as legacy leases are marked to market, unlocking significant value. Regarding development, he explained that Vesta will be disciplined, starting new projects only after leasing up existing inventory in a given market. An exception is a market like Guadalajara, where Vesta is fully leased and has a strong pipeline, justifying new starts on recently acquired land.

Jorel Guilloty from Goldman Sachs asked about expectations for leasing spreads going forward and the strategic framework for initiating new developments, particularly what would trigger new starts.

Answer

CEO Lorenzo Dominique Berho Carranza responded that the strong renewal rent spreads of 20-30% are expected to persist as legacy leases are marked to market, supported by a high tenant retention rate. On development, he outlined a disciplined approach: new projects will start in fully leased markets with strong demand, like Guadalajara, while in other areas, the focus is on leasing up existing new properties before launching further construction.

Asked two questions: one about the outlook for leasing spreads following a recent acceleration, and another about the company's framework and triggers for initiating new development starts.

Answer

The company expects the trend of strong leasing spreads, with renewal rent increases of 20-30%, to continue. Regarding development, new starts will be initiated in fully leased markets with strong demand, like Guadalajara. In other markets with existing inventory, they will prudently wait to lease up current buildings before starting new ones, maintaining their disciplined approach.

Wilfredo Jorel Guilloty asked about Vesta's target tenant mix for its development pipeline and for an assessment of the construction pipeline at an industry level in Northern Mexico.

Answer

CEO Lorenzo Dominique Berho Carranza outlined a target portfolio mix of ~25% auto, up to 50-55% logistics/e-commerce, and the rest diversified. He noted that while the northern markets have slowed, fundamentals like rents and vacancy rates remain healthy.

Wilfredo Jorel Guilloty from Goldman Sachs Group Inc. inquired about Vesta's target tenant mix for its development pipeline and asked for Vesta's perspective on the overall development pipeline trends in Northern Mexico.

Answer

CEO Lorenzo Dominique Berho Carranza stated that Vesta aims to maintain a diversified portfolio, with the auto industry at ~25% and logistics/e-commerce having room to grow from its current ~45% level. He observed a development slowdown in the North but noted that fundamentals remain balanced with stable rents and low vacancy.

Asked for color on the occupancy and lease spread expectations embedded in guidance, and whether competitors are also slowing down their development pipelines.

Answer

The executive did not provide a specific occupancy target but stated they are in great shape, above historical averages. He expects lease spreads on renewals to continue the recent trend of approximately 8%, well above inflation. Regarding competitors, he noted some are distracted by a merger while others lack development scale. He described Vesta's approach as carefully managing development pace based on market opportunities, focusing on profitability over volume.

Wilfredo Jorel Guilloty from Goldman Sachs asked for color on the occupancy and lease spread expectations embedded within Vesta's guidance. He also inquired if competitors are similarly downshifting their development pipelines in the current macro environment.

Answer

CEO Lorenzo Dominique Berho Carranza noted that some peers are occupied with a major merger, while others lack significant development capabilities. He described Vesta's strategy as driving carefully, using the 'gas pedal' on opportunities and the 'brake' when necessary. Regarding guidance, he stated that Vesta is in great shape on occupancy and expects to maintain current levels. For lease spreads, he anticipates continuing the recent trend of approximately 8% increases on renewals over in-place rents, which is well above inflation.

Jorel Guilloty asked about CEMEX's outlook on potential changes in Mexico volumes contingent on USMCA outcomes, specifically what a review completion this year or a delay to 2027 could mean for volumes.

Answer

CEO Jaime Muguiro stated that a very positive outcome from USMCA negotiations is not incorporated into their 2026 volume guidance for Mexico. He sees it as an upside risk for volumes, likely materializing in 2027 and beyond, as investor uncertainty around negotiations affects manufacturing industrial projects.

Jorel Guilloty from Goldman Sachs inquired about the potential implications for CEMEX's Mexico volumes based on different outcomes of the USMCA review, specifically if it concludes this year or extends into 2027.

Answer

CEO Jaime Muguiro stated that CEMEX's 2026 Mexico volume guidance does not incorporate a positive outcome from the USMCA negotiation. He sees a positive resolution as an upside risk to volumes, likely materializing in 2027 and beyond, as investor uncertainty around the negotiation currently affects manufacturing and industrial projects. He expects that if a resolution occurs this year, some projects might break ground late in 2026, but the main impact would be in 2027.

Wilfredo Jorel Guilloty posed a big-picture question about CEMEX's capacity and structure after Project Cutting Edge is completed in 2027, asking if it envisions lower but more profitable volumes or a larger company growing through acquisitions with a leaner base.

Answer

CEO Jaime Muguiro described the future CEMEX as a company achieving operational excellence and best-in-class shareholder returns, with significant operational leverage as volumes grow. He emphasized responsible capital allocation, maintaining an investment-grade rating, returning cash to shareholders, and focusing on bolt-on acquisitions in the U.S. and Europe, aiming for ROIC above WACC + 100 basis points midterm and free cash flow conversion of no less than 50%.

Jorel Guilloty posed a big-picture question about Cemex's capacity and strategic direction after Project Cutting Edge is completed in 2027, asking if it envisions lower but more profitable volumes or a larger company growing through acquisitions with a leaner base.

Answer

CEO Jaime Muguiro described the future Cemex as a company achieving operational excellence and best-in-class shareholder returns, leveraging significant operational leverage as markets recover. He emphasized responsible capital allocation with strict parameters (investment-grade rating, accretive free cash flow per share in year one, ROIC over WACC +100bps midterm), and a commitment to returning cash to shareholders. He confirmed a focus on bolt-on acquisitions in the U.S. (aggregates, mortars, renders) and Europe, continuously reviewing its portfolio for businesses delivering ROIC above cost of capital and consolidated FCF conversion of no less than 50%.

Jorel Guilloty of Goldman Sachs asked for an update on the pricing outlook for the remainder of the year in Mexico and the U.S., specifically for cement, ready-mix, and aggregates, noting that year-to-date hikes were below initial expectations.

Answer

CEO Jaime Muguiro stated that a July price increase in Mexico is expected to yield an 8-10% gain. For the U.S., he does not expect further cement price increases this year, with ready-mix prices likely flat and aggregates holding a 5-6% sequential gain. He added that the pricing strategy remains focused on offsetting input cost inflation.

Wilfredo Jorel Guilloty from Goldman Sachs asked about the near-term impact of potential U.S. cement import tariffs on import flows and CEMEX's ability to flex its Mexican supply.

Answer

CEO Jaime Dominguez stated that CEMEX is prepared to implement price surcharges to pass on tariff costs. He detailed a strategy to leverage the company's flexible Mexican supply network, via both rail and sea, to replace tariff-impacted imports in both the Western and Eastern U.S. He also noted that improving operational efficiency in U.S. plants will further reduce reliance on imports.

Wilfredo Jorel Guilloty of Goldman Sachs asked about the potential impact of rebuilding efforts in Los Angeles following recent wildfires and also sought clarification on the reason for the forecasted decline in 2025 U.S. aggregate volumes.

Answer

Executive Lucy Rodriguez clarified that the U.S. aggregates volume decline is due to a couple of quarries reaching their end-of-life, a supply issue. Regarding the L.A. wildfires, she stated the immediate focus is on the crisis and community aid. While the destruction of 12,000 homes will be impactful for future demand, it is too early to discuss specific rebuilding plans.

Wilfredo Jorel Guilloty requested a breakdown of end-market performance in Mexico, asking which sector was strongest and which is expected to outperform going forward.

Answer

Executive Maher Al-Haffar described record performance across all sectors in Mexico, with infrastructure being particularly positive and housing picking up. Executive Lucy Rodriguez provided a key data point, highlighting a 50% increase in industrial contracts for ready-mix. This surge, driven by companies already operating in Mexico, serves as strong evidence of nearshoring-related manufacturing activity and points to the industrial sector as a key driver of future outperformance.