VGP reported its trading update for 1Q09 after market close on Friday. The firm’s gross rental income came in at € 4.1m for the first quarter, up 95 % y/y. The increase was due to projects completed in 2008 and 1Q09, when four projects with a total 32,342 sqm were completed. The occupancy rate of VGP’s properties currently stands at 92 %. The company also announced the cancellation of future lease agreements worth € 2.6m in the Baltic states.
VGP’s turnover appears to be performing well and in line with our forecasts. The significant completion of new projects had been known since the release of full-year 2008 results, when the company reported gross rental income up 116.6 % y/y. Despite cancelling projects in the Baltic states, some of which were supposed to be completed this year, the company has reiterated its target to complete more than 175,000 sqm of industrial space this year, which we believe is achievable. We see the news as neutral.