Thank you for standing by. Welcome to Vesta's Q4 2021 Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be given at that time for you to queue up for questions. If anyone should require operator assistance for the conference, please press star zero on your telephone keypad. I'll now turn the call over to today's host, Ms. María Fernanda Bettinger, Vesta's Investor Relations Officer. Please go ahead.
Thank you, Sherry, and good morning. Welcome to Vesta's conference call to review our Q4 2021 results. We'll begin today's discussion with remarks from Lorenzo Dominique Berho, Chief Executive Officer, Laura Elena Ramirez, Vesta's ESG Director, followed by the financial highlights from the quarter by Juan Sottil, Chief Financial Officer. Following the prepared remarks, there will be a Q&A session. Yesterday, we issued our earnings press release after market close, also available on the investor section of Vesta's website. Before we begin, I'd like to remind you that our call will include projections and other forward-looking statements, and it's important to note that actual results could differ very materially from those projected. Vesta undertakes no obligation to update or revise publicly any forward-looking statement, whether because of new information, future events or other factors.
Investors are urged to carefully review various disclosures made by the company, including the risk and other information disclosure in the company's filing with the Mexican Stock Exchange. In particular, uncertainty remains about the duration and impact of COVID-19 pandemic. This means results could change at any time due to a pandemic impact on the company's business results. Management outlook is therefore our best estimate based on information available as of today's date. Finally, note that all figures included herein were prepared in accordance with IFRS and are stated in nominal US dollars unless otherwise noted. With that, I will now turn the call over to Lorenzo Berho.
Thank you, Fernanda. Thank you all for joining us today. Our outstanding Q4 results capped an excellent year. We broke several historical records for our company, both financial and operational. We closed with an ever-increasing list of blue-chip clients in exciting new growth industries. One of our most important milestones for the year was the meaningful strengthening of our balance sheet, as Juan will comment through multiple channels tied to our Level 3 strategy. Summarizing our leasing activity, more than 50% of all new leases in 2021 were related to logistics and e-commerce, evenly distributed across all regions in which we have presence and leadership. Nearly all dollar-denominated leases, long-term, and with best-in-class multinational tenants. The quality of our leases today is therefore outstanding and comprise exactly of the characteristics of which Vesta is known.
As a result of the historic high 6.4 million sq ft in leasing activity, our portfolio also reached a historic high in the Q4 at just over 94% occupancy. Vesta's state-of-the-art parks and property management teams continue to drive superior customer satisfaction metrics and ended the year with our stabilized property portfolio also at over 94% occupancy. In line with the company's Level 3 strategy, net asset value per share increased by 6.5% in the Q4 to $2.61 from $2.45 in the Q4 2020. This is an indication of the significant opportunities we have had to create shareholder value, even considering the dilution we had throughout the year. Our clearly defined strategy has continued to prove visionary and particularly relevant during times of change.
In the Q4 of 2020, we anticipated shifting market dynamics and prepared our company to be well-positioned for dynamic future opportunities. This enabled Vesta to swiftly pivot to capitalize our company and capture the pandemic's changing tides, leveraging our quality products to expand with the e-commerce sectors precisely at its inflection point, allocating capital and resources to a market opportunity which has since grown significantly and will continue to do so. We enter 2022 with great momentum and enthusiasm for strong capital deployment and favored positioning with the right product and right type of land in today's active high-growth markets. These opportunities are embedded with our Level 3 strategy, our portfolio, and our sizable and highly profitable development pipeline. In this context, let me update you on the overall strength of the Mexican industrial market.
Per CBRE Econometric Advisors, net absorption of space in Mexico's industrial parks was 26% higher in the first nine months of 2021 than in the same period of 2020, and 62% higher than the same three quarters of 2019. Logistics real estate continued to enjoy very strong demand during the year, representing a wide range of businesses as global companies remain focused on expanding their competitive positions and optimizing supply chains. Supply chain volatility heightened the need for additional warehouse space to stockpile goods and mitigate future disruptions. The increased goods imports are putting pressure on existing warehouse space, which is driving the trend toward a shorter, more resilient supply chain, which will include adding new points of manufacturing, reshoring, or nearshoring in Mexico. Therefore, the trends we're seeing look even better, particularly what we are anticipating in e-commerce.
Today, Vesta is well-positioned in all key markets where we are seeing scarcity of good land and infrastructure reflected in extremely low vacancies and increased rent prices. We have taken advantage of these dynamics, increasing rents for our portfolio where possible, and see opportunities in spread investment and cap rate compression. Deploying capital at 10% yield on costs while cap rates are heading down to 6% range, which is a cap compression driven by institutional investors increasingly focusing on institutional real estate. We're also seeing an increase in valuations and appraisals due to this decrease reflected in our results. Spread investment will remain important in the future, and Vesta will continue to be prudent and efficient in our capital allocation strategy. There are clear, strong long-term drivers supporting the sustained growth of industrial real estate for the near future.
Just-in-time is not going away anytime soon, or potentially ever. One of the keys to companies' post-pandemic resilience is for manufacturers to better diversify their manufacturing in light of recent supply chain challenges. This shift will continue to drive manufacturing back to the U.S. and North America, with increased nearshoring to Mexico. With that, let me now turn our discussion over to Laura Ramirez, our ESG Director, who will briefly review Vesta's achievements related to ESG, another very important pillar of Vesta's Level 3 and long-term strategy. Thank you all. Welcome, Laura.
Thank you, Lorenzo. Good morning, everyone. You've read in yesterday's press release that Vesta achieved considerable ESG milestones over the past year. Particularly, we were again included within three key indexes, Dow Jones Sustainability MILA, MSCI, and the S&P/BMV Total Mexico ESG Index for another consecutive year. It's important to also note that our rankings and scores within these indexes and agencies also increased as compared to the prior year. In the Q4, we were particularly honored to have been selected as one of 10 Mexican companies included within the 2022 Bloomberg Gender-Equality Index, which recognizes Vesta's commitment to supporting gender equality through policy development, representation, and transparency. The GEI's summarized reporting framework enables investors to assess how Vesta is investing in women in the workplace, the supply chain, and the communities in which we operate.
Vesta also participates in the United Nations Target Gender Equality Initiative and Accelerator program. Participating companies were part of a select group of Mexican companies advised by the Tecnológico de Monterrey and the Global Compact to strengthen their gender equality strategy within our company by establishing clear and specific objectives in terms of gender and inclusion. As a participant in the UN Human Rights Initiative, Vesta is required to establish a human rights strategy and include human rights within our due diligence process with our clients and suppliers. In both 2020 and 2021, we also audited 42 of Vesta's suppliers on key ESG performance metrics, such as environmental consumption and practices, social responsibility, transparency, and anti-corruption performance.
In 2021, we launched a diagnostic process through Oracle to evaluate the remaining suppliers within our supply chain to ensure they comply with Vesta's specific ESG requirements, such as resource consumption and related practices and social programs supporting employees and the surrounding community. Suppliers are also required to confirm their commitment with Vesta's code of ethics, anti-corruption policy, ESG policy, ESG requirements for suppliers, among others. This process enables Vesta to identify high-quality suppliers. Regarding our tenant commitment program, in 2021, Vesta's ESG department began to join in tenants meetings with the Vesta asset management team at our park to stress the importance of sharing environmental data and establishing clear environmental targets to reduce our collective carbon footprint.
Further, Vesta has included a green lease clause within all leasing contracts since 2020, ensuring all new Vesta tenants are committed to sharing their ESG-related metrics, including waste management, water and energy consumption with Vesta annually. 64% of our 2010 contracts included a green clause, and Vesta ended 2021 with 91% of new contracts, including a green lease clause. On a final note, Vesta's 2020 annual report began reporting based on TCFD and SASB standards. These are only a selection of Vesta's important success related to the ESG pillar of our Level 3 strategy. As Lorenzo commented on last quarter's call, Vesta will be hosting our Vesta Day this coming spring, where I look forward to providing more details on our important related work. With that, I turn it over to Juan.
Thank you, Laura. Let me briefly recap some key financial results. We had a very solid end to a strong year, delivering outstanding financial results which exceeded our upward annual guidance revision while reaching several historic records in key metrics, such as leasing activity, occupancy rates as Lorenzo noted. We achieved $168 million in revenue, representing a 7.3% increase year-over-year, and 80 basis points above the upper end of our revenue guidance of between 6%-6.5% for the full year 2021. NOI and EBITDA margin also exceeded our revised guidance by 70 basis points, reaching 94.7%, and by 50 basis points, reaching 84.5% respectively. Let me now turn to our Q4 results.
Starting with our top line, total revenue increased 9.4% to $41.6 million, mainly due to rental revenue coming from new leases in terms of currency mix. Of the Q4 revenue, 83.6% was denominated in US dollars, decreasing from 85.2% recorded in last year's comparable period. Turning to our cost structure, total operating costs reached $3.8 million in this quarter from $2.5 million in the Q4 of 2020. This was mainly due to an increase in real estate taxes, development in insurance and other property-related interest expenses, as well as higher maintenance expenses due to the increase in the number of parks in the portfolio.
Net operating income increased 8.3% to $38.9 million, driven by higher rental revenues, while the margin contracted 94 basis points to 93.6%, mainly due to higher costs from occupied properties. Administrative expenses were up 5.3%, this was mainly explained by non-cash expenses due to an increase in the company's long-term compensation plan. In turn, EBITDA reached $34.3 million in the Q4 of last year, a 7.4% increase compared to the prior year's quarter. The margin contracted 156 basis points to 82.5% as compared to 84.1% for the same quarter of last year. Moving down the P&L, total other income reached $44 million compared to $2 million in the Q4 of 2020.
This increase was mainly due to a $50.8 million revaluation gain on investment properties, as well as the gain on the property sold. As a result, we closed the quarter with a pre-tax income of $76.6 million, compared to $13.6 million in the Q4 of 2020. While pre-tax FFO increased 3.9% to $23.2 million, and in the Q4 of last year NAV per share increased 6.5% to $2.61 from $2.45 in the same quarter of 2020. Now turning to our CapEx and portfolio composition. We invested $30 million in the quarter, mainly in the construction of new buildings in the Northern and Bajío regions.
At the end of the Q3, the total value of the portfolio was $2.26 billion, comprised of 189 high quality industrial assets with a total GLA of 31.1 million sq ft and with 83.8% of total income denominated in dollars. Notably, during 2021, the appraisal value of our property per square foot increased by 9% to $66 per sq ft at the end of 2021 from $61 per sq ft at the end of 2020. This was mainly due to higher in-place rents, which increased 6.6% year-over-year and a 70 basis point contraction in cap rates. Year-over-year, our stable lease portfolio grew 5.6% t o 31.3 million sq ft, with occupancy at 94.3% from 91.1% in the Q4 of last year.
We ended the year 2021 with a land bank of 39 million sq ft, down 4.5% sequentially due to the use of land in Ciudad Juárez and Guadalajara, as we began construction of new buildings during the Q4 of last year. Turning to our balance sheet, during the year, we took advantage of favorable market conditions and raised nearly $700 million in capital through our debt and equity offerings, as well as property sales. We successfully strengthened our balance sheet and are now well-positioned to continue making potential and strategic investments during 2022 as we anticipate increasing demand while maintaining an efficient capital structure.
Along this line, we closed the year with total debt of $934 million, and our cash position stood at $452 million. Net debt to EBITDA was 3.6x, and our loan-to-value ratio 33.8%. In addition, subsequent to quarter's end, on January 14, we paid a cash dividend for the Q4 of 2021, equivalent to MXN 0.1 per ordinary share. Finally, I would like to discuss our outlook for the year ahead. We're expecting to increase revenue between 5%-6% year-on-year, while we expect to achieve 94% NOI margin and 82.5% EBITDA margin for the full year 2022. With that, we conclude our Q4 and full year 2022 review. Operator, please open the floor to questions.
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Pablo Monsivais with Barclays. Please proceed.
Hi. Good morning. Thanks for taking my question. I have two quick questions here. The first one is if you can shed some light onto what extent the higher construction costs are pushing rents up in markets, with no land constraints, such as in Bajío, for example. Have you been able to increase rents in such markets? That's the first question. My second question is, that you still have a significant portion of your land bank in Aguascalientes. Do you have any plans to start developing that land anytime soon? Thank you.
Hola, Pablo. Thank you very much for being on today's call. Definitely, we have seen and we have experienced an increase in construction costs, and it's something that we dedicate a lot of time in order to be competitive in the markets that we want to develop. As you know, it's part of our strategy to deploy a good amount of capital, particularly to development, given the high yields, the attractive yields that we can see or that we can get through development. We still see that there is a high accretiveness in many of the markets, particularly in the ones that have shown a tremendous amount of demand. Those markets are particularly in our case, Tijuana, where we just recently started construction of two inventory buildings.
The same for Ciudad Juárez, as well as Monterrey and Guadalajara. Many of these markets have experienced increase in rents, in some cases, even at double digits. So with double digits, you can easily pencil up or pencil out some of the investment opportunities and still make double digits, return on costs or yield on costs. Definitely, there are other markets where still it's a bit more challenging. However, in that regard, I think that we're gonna keep some discipline.
We have seen some decrease in construction costs recently, and we think that there will be a time where construction costs decrease will be helpful in order to still get interesting and attractive yield on costs, particularly in the Bajío region, where we are also seeing that rents are increasing for good quality buildings like Class A industrial real estate, like the ones that we have developed. I think that there could be a great opportunity soon in that regard.
Just to, I take the opportunity just to let you know that many of the markets that we operate have shown a tremendous amount of demand, those in several sectors, in not only e-commerce, as I mentioned, but also in automotive industry, as well as other industries related to the exports, such as Puebla. In Puebla, we were able to lease up a good amount of space recently. Querétaro, we are almost out of available buildings. I think that puts us in a position where we need to consider starting new inventory buildings very soon. Nevertheless, that's for Querétaro, which is a larger market, probably the size of Guadalajara.
When it comes to markets like Aguascalientes, we're definitely seeing a bit more of a slowdown. Most of the automakers in Mexico are adjusting their production plans. As you know, there's still a huge disruption in terms of supply chains that will adjust throughout the year. However, you're right, we have some excess land in Aguascalientes, but we can easily wait until there could be a new wave of suppliers. It's incredible the amount of suppliers that we're seeing that are looking throughout Mexico for in the electric vehicle business. Many of the plants are adjusting their production lines. Interestingly, if you watched the Super Bowl last Sunday, all of the ads related to cars were on the electric vehicle business, which was quite interesting to see. Definitely, we are seeing opportunities for Mexico in that regard too.
Perfect. Thank you very much.
Gracias.
Our next question is from Vanessa Quiroga with Credit Suisse. Please proceed.
Hi. How are you, Vesta team? Thanks for taking my question. It's regarding an update of your progress versus your development plan in terms of the land that you wanna have and you need for completing your development plan in which locations you are still missing maybe some land, where you think you are already covered with regards to your needs. Basically, how you see the outlook for the timing for these additional purchases that you still need. Thanks.
Hola, Vanessa, and thank you very much for participating. Definitely, we're gonna be talking about our development plans throughout the next quarters because that's exactly what our main focuses will be. As you know, part of the plan of raising capital is to deploy capital in markets where we can find greenfield development opportunities. We will be investing throughout the year somewhere around $200 million. We have already identified the markets we want to develop. As you know, we throughout the year we not only were able to stabilize our projects, particularly in Monterrey and Guadalajara, but we were able to acquire more land in both markets. These are markets where we're currently analyzing build-to-suit opportunities and also inventory and spec building opportunities.
Many of the clients come without a lot of time to plan on a build-to-suit, and that's why having inventory buildings available is gonna be incredibly important. I think that has been one of the best advantages of Vesta, that we anticipate on acquiring great located land focused for last mile e-commerce, logistics, as well as light manufacturing. We can anticipate the development of inventory buildings of competitive costs. With that, I think that that's what is giving us the advantage and leadership in many of the markets. Tijuana, for example, everybody's talking about a scarcity of land. Well, we're gonna be developing 1.5 million sq ft just in Tijuana because we anticipated and acquired land at the right time, actually at a very competitive cost.
With that, we're gonna keep on being build leaders in Tijuana, as we have been for several years. We currently own over 6 million sq ft in Tijuana. We're gonna keep on developing there and maintain this leadership at attractive double-digit return on costs. One of the good things about these markets is that recently we have seen transactions from institutional investors closer to the 6% cap rate range. While we are developing at 10%, I think this is the reason why investors like to be in a fully integrated company like ours, where we can develop and give that particular investment spread to our current investors. 10% compared to 6% stabilized cap rates in certain markets, I think that's a huge spread investment opportunity that investors can capitalize in vehicles like Vesta.
All right. Thank you. Thank you very much, Lorenzo. Just a quick question for Juan on guidance. The slight decline in margin that you're expecting from 95% to 94%, what's the reason for that slight decline? Thanks.
Vanessa, thank you for the question. Let me just point out that the focus of last year was on strengthening our balance sheet. We were quite successful in doing that by raising equity, cap rate of around just above 8.1, somewhere around there, very attractive raising of capital. When we saw the opportunity of selling some assets at a cap rate of 7.3, 7.25, which we were working on for some time, I think that that's a great opportunity. We sold that asset. We have a great balance sheet. We also increased on debt, that's fine.
Just pointing out on the debt side at an incredibly low, historical low interest rate for a Mexican company in the real estate sector or anywhere else. But the cost of selling properties, of course, is that you forgo some revenue. The properties that we sold carry a revenue of around $8.5 million. If you take into account that January, that revenue that we forgo in 2022, our guidance would have been 10%-11%, which is an extraordinary guidance. Now we sold the properties. We have a stronger balance sheet. Lorenzo pointed out that we're gonna deploy north of around $200 million per year over the next couple of years. We feel confident and happy that we have such a strong balance sheet.
Guidance turned out to be 5%-6%, which I think is a very good guidance. Now there's some implications on our continuing investment in our properties, and that's why we come out with the NOI guidance. Our administrative costs have to be there because we are growing. We're gonna reach 40 million sq ft at some point in time in the near future. We have to have a strong administrative body to be able to carry that GLA. We were very thoughtful about the guidance, and I think it's a good guidance to be given to the market.
That's great. Thank you very much for that detailed plan. Thank you.
Our next question is from Gordon Lee with BTG. Please proceed.
Hi, good morning. Thank you for the call. Two quick questions. The first is, you mentioned this in passing on the press release, but I just wanna confirm that all your dollar leases are indexed to inflation. Just you know, we've heard some competitors talk about, yes, we're indexed to inflation, but we have a cap at 3%. I was wondering if you could discuss what the structure of the annual markups to your US dollar leases are. Then the second question, this you know, somehow linked to the comments on ESG that were made by Laura.
I was wondering if you've detected from potential customers, particularly on the nearshoring side, more concerns around the energy reform and the potential for that to make it more difficult for a lot of these companies to reach their own ESG metrics if they were to shift manufacturing to Mexico. Is that an issue that you're seeing with your customers, or is that something that they're not even focused on? Thank you.
Great. Thank you. I will probably, Gordon, thank you for being on the call. Let me start by the second question. Definitely, I see, we believe that the energy reform actually has been presented definitely, could have not only an impact in terms of competitiveness because of the certain costs, but also, since as you well mentioned, many of the companies are making strong efforts in order to have an important component of, let's say, clean energy, and have different efficiencies in terms of their energy sources. Definitely, this could potentially bring some challenges for many of these companies that are global companies and have global objectives.
That's why we are currently working with different organizations in order to provide more light on why we believe that Mexico should make a better effort in order to take these considerations and the risks involved. However, this is still under discussion, and there's many items related to this political item where we are supporting from the private, let's say from the private business councils in whatever we believe is the most competitive for us and for potential investments in Mexico. Coming to the first question regarding adjustments, and you're right, as you know, Vesta has made strong effort to keep the discipline on having a high number of dollar leases.
Interestingly, this year, I could say that almost all new leases, and it was a great year, were in US dollars. We know it's hard to keep this discipline, but we are strong believers in long-term value through dollar leases. These dollar leases also come with CPI adjustments. The vast majority have CPI adjustments. Nevertheless, there's also some that might have some sort of fixed increase or capped increase, or there could be some minor adjustments. However, the vast majority is very simple. It's CPI when it comes to dollars, and for the ones that we have in pesos, interestingly, more than half of them are not in pesos, are in UDIs. As you know, the UDI, which is the Unidad de Inversíon, it's inflation linked every month.
Every month, we get the inflation adjustment on those leases. That's the half of the ones that we have in pesos. All in all, Gordon, we know that the vast majority has a, let's say, a very clear structure where we can get either CPI or a TIIE interest.
Perfect. Thank you. That's very clear. If I could just have a quick follow-up on the first question that you answered, Lorenzo.
Yeah.
I mean, it's very clear obviously that you and the industry should be very focused on trying to make sure that some of the more crazy parts of the reform, that's the word that came to my mind, are not approved. Have you detected any concern around that from prospective clients? Is that something that's on their radar screen, or is that not really something that they're focused on?
Sure. I mean, clearly I think that we're all on the same boat from different angles. In that regard, I mean, these companies are operating in Mexico and are being incredibly competitive. There are several things that they would like to have better, such as this one and many others. I think that in that regard, I mean, I don't see a risk that potentially they will not be in Mexico operating. However, definitely I think it's regarding new investment opportunities that if we put more challenges, they will take longer for them to make decisions. I think again we're all on the same boat, and I think that definitely they're also working in their regard.
Hopefully we get a, t here are several names to this reform. If it's a PCAT reform, or if it's an adjusted reform or whatever. We're really, all of us are hoping to get something in that, on that design.
Absolutely. Thanks very much.
Thank you.
Our next question is from Juan Ponce with Bradesco BBI. Please proceed.
Hi. Thank you. Good morning, everyone. Most of my questions were already answered, but I mean, what do you guys expect in terms of lease spreads this year and across all your markets, please?
Juan, and welcome to the conference. Thank you for the question. Look, this is a landlord market. There is not enough available space to supply what the demand that we have from our clients and from new clients. That's the general feeling we have in Vesta. We're really working very hard to be able to price each and every deal very competitively. It is a competitive market, but it's clearly a landlord market. On rollovers, we just push that equation to that end. We don't give concessions. Last year on rollovers, we had a 5% lease-up increase, which is very attractive.
If you look at my in-place rent over the last four quarters on an average basis, it increased from $5.1 per sq ft per year to around $5.5, which is a 6.6% increase, clearly blended the pesos and the dollars. It's an impressive spread. It's an impressive increase in in-place rent. The focus is to continue to take advantage of a landlord market, to continue to have a very close relationship with the client, and when there's an opportunity to increase rent, we will not be shy. We believe it varies from market to market.
We have seen some markets that might be tighter, the increases, and could be in the, let's say, mid-single digits. There's other markets where we have seen that there could be opportunities of increasing 10%, 20%, sometimes even 30%, depending on the transaction. It really varies on the location, on the market, and even sometimes in the sub-markets. It's definitely as Juan mentioned, it's a landlord market, and we gotta capture good opportunities in that regard too.
Just a follow-up on the guidance. I mean, just to clarify here, the 5%-6% revenue growth includes the cost, the selling of, or the asset dispositions that you did last year. The foregone revenue, I heard, is $5 million-$8 million?
I mean, by selling the properties, we've foregone $8.5 million in yearly revenues. Therefore, my guidance is 5%-6% increase in revenue. That's the actual growth in sales that we expect to have this year, growth in rental revenue to clarify.
How should we factor in the contribution of the new development? I mean, does it take three months after you finish the project to start generating revenues? How does that work for you guys?
Given the pace of development, as you know, we take about six months to develop a building, and it's taking us about four to six months to stabilize those buildings. Interestingly enough, a couple of buildings are being converted into build-to-suits while we do specs. That was the case of Oredi. Originally, it was a spec building. By the second month in construction, they asked us. I mean, we closed the deal with Oredi. Of course, they had some changes to the building. Instead of taking us six months, it took us eight, whatever. The good news is that as soon as we deliver the buildings, they begin paying rent. That's great. I mean, I could do that every time.
Great. Great. Thank you very much. Really appreciate it.
Our next question is from Francisco Suarez with Scotiabank. Please proceed.
Thank you so much for the call. A question on capital allocation and your efforts to going more green and more efficient on your buildings. One, do you have a budget to certify buildings this year and a target on the percentage of certified GLA for the year? Two, if the answer is yes, can you walk us through the eligibility criteria for doing this? My point is that in certain clusters and in certain markets, the economics of building certification might play out, but in others won't. Anything that you can share with that would be very, very helpful. Thank you.
Hola, Francisco, and thank you for being on the call. Definitely the all new buildings, which we're gonna be very active in new development projects. We've started some this quarter. We're starting more next quarter, and so on, we're gonna continue to develop throughout the year. I would say like almost all of them have LEED certification or some other type of certification. That's part of the strategy to include all of the new development projects with some sort of certification. So that's, let's say, an easy answer.
Regarding the existing portfolio, which is a bit more challenging, it's not necessarily a particular percentage of the ones that we are gonna be increasing from the existing portfolio. We are currently in the certification process of some buildings in different markets. This is not as easy and as quickly as new development. However, this will contribute to the main objective that we have, which is in line to the bond issuance that we have. If you remember that this is a sustainable bond. We were the first company in Latin America to issue a public sustainable bond in real estate. Our goal is by the end of the fifth year to have 25% of the GLA being certified.
That's part of the objective, and we know that's where we want to get. Today I think the percentage, Laura, of GLA that we have is what? When we launched the bond, I think, 11. 9. Because we sold some properties. It's 9%. So we're gonna go from 9 % to 25 in the next five years.
20%. Sorry, Lorenzo. It's 20%.
Thank you for the clarification.
Yeah, I agree. It is hard to see the economics on retrofit for doing this. My guess is that you are in an assessment mode, kind of, for the existing properties on which ones would the economics make sense to do that, isn't it?
Absolutely. Every time that we have some sort of refurbishment in any of the existing buildings or any capital allocation, we try to make it in order to get credits for LEED certifications.
Got you.
I think that's a very important objective that the property asset management team and property management team have. That's what we have been focusing on. I think that Vesta is doing a good job in maintaining and in bringing on best practices in terms of certification and standards, and this is exactly one of them. Hopefully we can have some good cases, Laura, that we can share of some retrofits that we have done or we are doing. I think this could set an example of what can be achieved in terms of certification on the portfolio, no?
Thank you so much. That would be very helpful. Thank you so much. Take care.
Gracias.
As a reminder, just star one on your telephone keypad if you would like to ask a question. Our next question is from Alan Macías with Bank of America. Please proceed.
Hi, good morning. Thank you for the call. Just one question on your EBITDA margin guidance. Do you see any opportunities, upside risk to this? If you can remind us of the cost expense structure percentage in rentals, and if a stronger dollar would mean higher margins and any other sources for higher margins that you could see? Thank you.
Yes. Alan Macías, thank you for the question. As you know, I am very conservative guy. I tend to be conservative and think a lot about what's achievable and then stretch as much as possible. I think 82.5% is a very good guidance. I think it clearly places us with the best margins within the industry. It is conservative. There's upside potential. Really, the upside potential comes not only in savings that we can achieve in expenses. Please let us remind ourselves that we're coming out of two very difficult years where we operated from home. Operating from home is really, in a company such as ours, saves money. We wanna come back. I think we have too much work.
I think that it's up to each of the individual workers of the office, but I am assuming that all of us will be in the office, and that costs a little bit more money. That's why the guidance is a little bit conservative. There is upside potential, yes, and we will be looking. I mean, my boss asked me to specifically focus on that. I mean, control costs and allow the company to continue to build the administrative infrastructure to reach 40 million sq ft at some point in time in the near future.
Thank you.
Our final question is from Armando Rodriguez with Signum Research. Please proceed.
Thank you all for the calls, Fernanda, Juan, Lorenzo, Laura. I have two questions. The first one, sorry, congratulations on these solid results. Considering your NAV levels, you should be trading maybe like 30% discount at current prices. What should we expect, particularly on your buyback program? That's my first question. The second one related to Lorenzo's comments on exit cap rates, particularly on the surprising levels, for example, like Lorenzo said, 6%. Maybe question for Juan, what should we expect on the asset recycling program? You should be maybe more aggressive considering these numbers. That's my only two questions. Thank you very much.
They are very good questions. Thank you. Sure. I think I mean, regarding net asset value and discounts, definitely. I mean, we currently have a buyback program. Throughout 2021, we did not buy back any shares. Actually, we were issuing shares at the beginning of the year just because we were closer to net asset value, and I think that's exactly what we should be doing. Definitely we are active, and if there is for some reason a window, an opportunity where we believe we can add value on the buyback, we're gonna tap into that again. I mean, you're right. We follow very closely the discount to net asset value, and that's one of the drivers. However, as you know, we raised the capital to deploy it through development.
We see good development opportunities too at attractive returns. It's an important investment judgment call where we allocate capital. If there is an attractive discount at some point, you're gonna see Vesta active on the buyback if necessary. If for some reason that particular discount is reduced, then we will keep on focusing on our strategy which is developing at attractive yields on costs, which is the main objective. In regard to the I mean, we as Lorenzo said, the spread investment thesis of Vesta is very strong and it's there. Yes, we develop at very attractive yields on cost, and the exit cap rates have compressed. That's the spread that we want to capture. Will we sell more portfolios during 2022?
Well, we have $400 million in cash. So the focus is on deployment, on accretive transactions. We wanna take our time, we wanna be aggressive, and we wanna watch the yields on costs, which is our main driver. If there is an opportunity to sell some properties and we're moving the cash on hand quickly enough, sure, we'll take them. It's always a good idea to develop at 10% and sell at 7%. It's always a good idea. So yes, we wanna be keen on capturing that.
Perfect. Very clear. Thank you very much, Lorenzo, Juan, and congratulations again.
Gracias.
Thank you. As there are no further questions, I would like to turn the call back over to Mr. Berho for concluding remarks. Please go ahead, sir.
Thank you, operator, and thank you everyone for being today. In closing, Vesta had a very successful 2021. We were leveraging on our Level 3 strategy by pivoting to take advantage of opportunities, as mentioned, in new industries, high-growth markets, and existing markets where we maintain a leadership. The team is excited to execute on the growth opportunities ahead, and we continue to prudently allocate capital to Mexico's most dynamic markets. Our industry fundamentals are exceptionally strong. The continuing evolution of e-commerce and the global supply chains are catalysts for incremental industrial real estate demand today and for the foreseeable future. Therefore, we would like to thank you again and hope to see you in our next quarterly call. Goodbye, everybody.
Thank you. This does conclude today's conference. Thank you for your participation. You may now disconnect your lines.