VGP SA (VGPBF) (H1 2026) Earnings Call Highlights: Record Rent Growth and Strategic Expansion ...

• Warning! GuruFocus has detected 6 Warning Signs with VGPBF.

• Is VGPBF fairly valued? Test your thesis with our free DCF calculator.

Release Date: August 20, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript .

Positive Points

• Net profit before tax of EUR140.9 million and EPS of EUR4.26, with recurring EBITDA of EUR130.5 million from the investment segment.

• Net rental and renewable income grew 17.9% year-on-year to EUR128.2 million, with committed annualized rent up 11% to EUR489 million, nearing the EUR0.5 billion milestone.

• Strong development pipeline with 314,000 sqm initiated and 236,000 sqm delivered in H1, 86% let, and an average yield on cost of 8.7% versus a 6.5% valuation yield, indicating robust margins.

• Proactive balance sheet management: proportional LTV reduced to 49.3%, consolidated gearing at 35.5%, and liquidity above EUR1 billion, with limited refinancing needs until 2029.

• JV performance solid: EPRA earnings up 16.4%, vacancy down to 1.2%, LTV down to 31.5%, and Rheingold JV achieved a 12%+ track record, triggering an EUR18.4 million promote.

• Renewable energy segment growing, with solar output up 10% and battery storage projects starting to contribute, adding a second revenue leg.

• High occupancy at 98% with 84% tenant retention, and relettings achieved a 6% average rent increase, supported by strong demand from e-commerce and defense sectors.

• Multiple growth catalysts: Saga I JV 60% deployed, Saga II JV in preparation targeting EUR600 million equity, and East Capital fund for 2027, plus data center development plans with a reputable partner.

Negative Points

• Development EBITDA decreased significantly from EUR118 million to EUR52 million year-over-year, due to a lack of JV transactions and lower revaluation gains in H1 2026.

• Net cash from operating activities fell from EUR28 million to EUR4 million, impacted by working capital buildup and the late receipt of the Rheingold promote (July 1).

• Interest costs rose from 2.7% to 3.0% due to the higher interest rate environment, increasing financing expenses.

• Leasing activity in H1 was subdued, with only EUR24 million of new leases signed (though later increased to EUR31 million), and the company faced EUR11.3 million in terminations.

• The East Capital fund launch has been pushed to 2027, later than previously expected, due to timing and due diligence processes.

• Market challenges persist in Austria, which is described as 'very silent,' and land acquisition remains difficult in the Netherlands due to regulatory issues.

• The company remains cautious on development starts, prioritizing pre-lets, which may limit growth pace in the near term.

• Data center development is progressing slower than expected, with only two sites (Paderno and Russelsheim) currently feasible, and details are still under wraps.

Q & A Highlights

Q: Can you provide color on the reversion capture on relettings, comparing the 6% captured in H1 to the 14% in 2025 and 18.5% in early 2026? Did you accept concessions in Q2, and can you quantify the reversion potential on the standing portfolio? A: Jan Van Geet (CEO) explained that the 6% figure is heavily dependent on the mix of buildings being re-let and is not directly comparable period-over-period. He noted that many leases have renewal clauses, limiting market reversion opportunities to actual lease expiries. While he couldn't quantify the total reversion potential, he highlighted that the average asset value of EUR1,250 per square meter remains low versus the market, indicating significant embedded rental growth potential. The portfolio has a 7.7-year average lease term and an 84% retention rate, which limits immediate reversion capture.

Q: What is the expected quantum of project deliveries for 2026, and should we expect a ramp-up in development starts in H2 if MOU-driven leases are agreed? A: Jan Van Geet (CEO) stated that development starts in H2 will depend on market conditions and the speed of finalizing lease negotiations. He revealed that the combined "DOI 3" (accepted heads of terms) and "DOI 4" (lease exchanged) categories represent over EUR50 million of rental income, with high confidence in signing a significant portion within the next two to three months. Piet Van Geet (CFO) added that completions for the full year are estimated between 300,000 and 400,000 square meters, which would be higher than the 236,000 square meters delivered in H1.

Q: Is the pushback of the East Capital fund first closing to 2027 due to a shift in investor appetite or return requirements in Central and Eastern Europe, or is it purely timing? A: Jan Van Geet (CEO) clarified that the delay is purely a matter of timing and process, not a shift in investor sentiment. The process began in March/April 2026, and due diligence plus portfolio seeding takes time. He noted positive feedback from investors but stated that a closing before year-end is unlikely, with the transaction now expected in H1 2027. In contrast, the Saga I joint venture is still aiming for a transaction in H2 2026, with a second closing in H1 2027.

Q: H1 leasing metrics appear weak. What can we expect for H2 in terms of pre-letting levels, rent uplifts, and committed annualized rental income growth? Is a 15% year-end growth target realistic? A: Jan Van Geet (CEO) declined to provide specific numerical guidance, citing market uncertainty. However, he emphasized that demand has picked up in Q3, with EUR7.2 million of new leases already signed despite the summer holiday period. He highlighted advanced negotiations on very large transactions, particularly in Germany, France, and Spain, and expressed confidence in a strong H2 leasing performance. He noted that more details would be shared at the Capital Markets Day in September.

Q: When should we expect the first closings for the second Saga joint venture? A: Piet Van Geet (CFO) indicated that the second Saga JV is expected to launch in the second half of 2027, following the completion of final due diligence in H1 2027. He emphasized that completing the deployment of Saga I first makes strategic sense. Jan Van Geet (CEO) added that the remaining deployment for Saga I is still substantial, exceeding EUR0.5 billion, which will be executed through multiple closings this year and next.

Q: Which markets are you currently most enthusiastic about, and which are the most challenging? A: Jan Van Geet (CEO) expressed enthusiasm for Germany, which is seeing significant activity from international companies, as well as Spain and Italy, which are performing well. He also noted a strong recovery in Romania following a team reshuffle. The most challenging market is Austria, which is currently very quiet, though VGP's exposure there is limited. He also highlighted difficulties in acquiring new land in the Netherlands due to regulatory complexity, particularly around nitrogen emissions.

Q: Can you provide more details on the data center development plans, particularly regarding the Russelsheim site and the MOU signed with a partner? A: Jan Van Geet (CEO) confirmed that VGP has secured substantial electrical grid capacity at the Russelsheim site, which is a key enabler for its first data center development. He stated that the company has signed a memorandum of understanding with a reputable partner to bring technical expertise and know-how to a joint venture, mitigating the learning curve. VGP will contribute its land plots, with Paderno and Russelsheim being the most advanced. He declined to provide further specifics, deferring detailed announcements to the Capital Markets Day on September 3, 2026.

Q: What is the current status of the Saga I joint venture deployment, and what are the plans for capital recycling? A: Jan Van Geet (CEO) stated that Saga I is now 60% deployed and is expected to exceed 90% deployment by 2027, two years earlier than originally planned. This accelerated deployment has prompted negotiations for a second Saga vehicle, with an MOU signed and a launch targeted for 2027. The new JV will focus on Western Europe and target at least EUR600 million in equity. Capital recycling is expected to pick up in H2 2026 and accelerate significantly in 2027 as income-generating assets mature.

Q: Can you elaborate on the performance of the renewable energy segment, particularly the battery energy storage systems (BESS)? A: Martijn Vlutters (VP Business Development & IR) reported that the photovoltaic portfolio is now well-aligned with the building portfolio, with 284 projects on 319 buildings. The annualized gross renewable income from the operational PV portfolio is around EUR13.5 million. The BESS segment is becoming a more significant growth driver, with total CapEx spent or committed at EUR170 million, of which over EUR30 million is related to BESS projects. The first BESS projects have been connected and are expected to start meaningfully contributing to revenue in H2 2026.

Q: What is the outlook for the committed annualized rental income, and when will the EUR500 million barrier be broken? A: Jan Van Geet (CEO) confirmed that committed annualized rental income stood at EUR489 million at the end of June

For the complete transcript of the earnings call, please refer to the full earnings call transcript .