MEXICO CITY--(BUSINESS WIRE)--FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ) announced its financial and operating results for the second quarter ended June 30, 2024.
SECOND QUARTER 2024 HIGHLIGHTS
- Consolidated 2Q24 NOI up 6.0% YoY, in underlying USD terms
- Consolidated 2Q24 AFFO flat YoY, in underlying USD terms
- Consolidated 2Q24 portfolio occupancy of 96.9%
- 2Q24 retail occupancy of 92.1%, the highest level since the second quarter of 2020
- Quarterly Industrial leasing renewal spreads of 13.0% on negotiated leases
"Our well-positioned industrial-focused portfolio continues to deliver strong results," said Simon Hanna, FIBRA Macquarie's chief executive officer. "We continue to deliver and lease up new properties from our industrial development program, we have maintained healthy occupancy and are realizing solid rental rate increases across our industrial portfolio. Our development growth strategy maintains its momentum with the delivery of a 200 thousand square foot facility in Apodaca, Nuevo Leon, and 100% lease up of our Mexico City development project. We are making good progress on our other active projects in core industrial markets including our recent acquisition of a strategic, 25-hectare industrial land bank in Monterrey, where we intend to develop approximately 900 thousand square feet of GLA over time."
Mr. Hanna continued, "We continue to maintain our disciplined approach to capital allocation and balance sheet management, building on our consistent track record. We again enhanced our balance sheet with a new US$150 million credit facility, which notably is the first loan commitment for the International Finance Corporation to a Mexican FIBRA. We are also progressing with our pursuit of the acquisition of Terrafina, which would accelerate our growth profile. We maintain our confidence in the FIBRA Macquarie platform, including our robust development pipeline and strong balance sheet, which is well positioned to support ongoing attractive growth in the coming quarters."
TENDER AND EXCHANGE OFFER FOR TERRAFINA
On July 8, FIBRAMQ obtained security holder approval for the acquisition of the Irrevocable Trust Agreement number F/00939, also known as "Terrafina" (BMV: TERRA13). Concurrently, FIBRAMQ launched a tender and exchange offer (the "Offer") for Terrafina Trust Certificates, or certificados bursátiles fiduciarios inmobiliarios (the "Terrafina CBFIs"), subject to the terms and conditions set forth in the tender offer prospectus, for up to 100% of the outstanding Terrafina CBFIs, at a current exchange ratio of 1.185x FIBRAMQ CBFIs for each Terrafina CBFI. The expiration for the Offer is August 12, 2024, unless the Offer Expiration Date is extended pursuant to the terms of the tender and exchange offer prospectus.
Additionally, FIBRA Macquarie announced on July 21 a further reduction in the management fees paid to its Manager from 100 bps of market capitalization to 75 bps of market capitalization, subject to the completion of an acquisition of Terrafina, or any other merger with, or acquisition of, a listed FIBRA or other company by FIBRA Macquarie in the future.
FIBRAMQ believes that a combination with Terrafina, which would form the largest institutional FIBRA, is a compelling value proposition to both FIBRA Macquarie and Terrafina certificate holders. The combined FIBRA would benefit from FIBRA Macquarie's scalable, vertically integrated property administration and development platform, and would serve additional demand coming from the favorable nearshoring tailwinds.
CAPITAL ALLOCATION
FIBRAMQ continues to pursue a strategy of investing in and developing class "A" industrial assets in core markets that demonstrate strong performance and a positive economic outlook.
Industrial Portfolio Growth Capex Program
FIBRAMQ has 1.5 million square feet of GLA under development or stabilization with a total required investment of approximately US$127.0 million. FIBRA Macquarie maintains a target NOI yield on cost of between 9% and 11%, which incorporates the highest sustainability standards and is designed to generate embedded operational efficiencies for its customers.
Projects in process are summarized below. For further details regarding recently delivered projects, please refer to the Supplementary Information materials located at BMV Filings (fibramacquarie.com).
Industrial Development Projects in Process
Apodaca, Nuevo Leon
- FIBRAMQ delivered a 200 thousand square feet property during 2Q24.
- This building delivery is part of a class "A" industrial park that is anticipated to comprise a total potential GLA of 790 thousand square feet, of which FIBRAMQ has completed construction on 590 thousand square feet of GLA.
Tijuana, Baja California
- Work is ongoing for the first building comprising 405 thousand square feet of GLA with an expected delivery date in the second half of 2024.
- This class "A" industrial park is anticipated to comprise a total potential GLA of 890 thousand square feet.
Cuautitlán, Mexico City Metropolitan Area
On July 24, FIBRAMQ executed a 5-year, U.S. dollar-denominated lease with respect to its 225 thousand square foot development project that will be occupied by a multinational e-commerce retailer. The triple-net lease is expected to commence contributing to net operating income in the first quarter of 2025. The property is held in a joint venture in which FIBRA Macquarie holds an 82.2% equity stake.
As an added value driver for its investors, FIBRA Macquarie is the sole beneficiary of development and property administration fees earned from the joint venture vehicle, harnessing the capabilities of its vertically integrated development and property management platform.
FIBRA Macquarie's proportionate investment cost for the building is expected to total US$17.4 million, excluding development fees earned by FIBRA Macquarie. The project is expected to achieve a 12.0% NOI development yield, with a proportionate first year NOI of US$2.1 million.
The building is being constructed in accordance with the U.S. Green Building Council's® LEED® v4.0 Building Design and Construction: Core and Shell Development specifications and is expected to achieve a minimum Gold level certification. In addition, the lease has been executed in accordance with FIBRA Macquarie's green leasing standards.
As part of its continued growth plans, FIBRA Macquarie continues to evaluate acquisition opportunities, including land parcels for industrial development and stabilized property portfolios in markets that FIBRAMQ considers core and strategic.
FINANCIAL AND OPERATING RESULTS
Consolidated Portfolio
FIBRAMQ's consolidated 2Q24 results were as follows:
TOTAL PORTFOLIO | ||||||
2Q24 | 2Q23 | Variance | 2Q24 | 2Q23 | Variance | |
Weighted Average CBFIs (millions) | 797.3m | 761.3m | 4.7% | 797.3m | 761.3m | 4.7% |
Net Operating Income (inc. SLR) | Ps. 975.9m | Ps. 938.5m | 4.0% | US$ 56.7m | US$ 53.0m | 7.1% |
Net Operating Income (exc. SLR) | Ps. 972.0m | Ps. 944.8m | 2.9% | US$ 56.5m | US$ 53.3m | 6.0% |
EBITDA | Ps. 885.6m | Ps. 859.8m | 3.0% | US$ 51.5m | US$ 48.5m | 6.1% |
Funds From Operations (FFO) | Ps. 618.3m | Ps. 623.6m | (0.8%) | US$ 35.9m | US$ 35.2m | 2.1% |
FFO per certificate | Ps. 0.7755 | Ps. 0.8191 | (5.3%) | US$ 0.0451 | US$ 0.0462 | (2.5%) |
Adjusted Funds From Operations (AFFO) | Ps. 480.6m | Ps. 496.3m | (3.2%) | US$ 27.9m | US$ 28.0m | (0.2%) |
AFFO per certificate | Ps. 0.6028 | Ps. 0.6519 | (7.5%) | US$ 0.0350 | US$ 0.0368 | (4.8%) |
NOI Margin (inc. SLR) | 85.6% | 86.5% | (85 bps) | 85.6% | 86.5% | (85 bps) |
NOI Margin (exc. SLR) | 85.3% | 87.1% | (177 bps) | 85.3% | 87.1% | (177 bps) |
AFFO Margin | 42.2% | 45.7% | (356 bps) | 42.2% | 45.7% | (356 bps) |
GLA ('000s square feet) EOP | 35,573 | 35,117 | 1.3% | 35,573 | 35,117 | 1.3% |
GLA ('000s sqm) EOP | 3,305 | 3,263 | 1.3% | 3,305 | 3,263 | 1.3% |
Occupancy EOP | 96.9% | 97.5% | (62 bps) | 96.9% | 97.5% | (62 bps) |
Average Occupancy | 97.0% | 97.3% | (27 bps) | 97.0% | 97.3% | (27 bps) |
Weighted average CBFIs have increased year-over-year solely in connection with an extraordinary distribution of 36,022,750 CBFIs paid on March 14, 2024 to existing Holders.
Industrial Portfolio
The following table summarizes 2Q24 results for FIBRAMQ's industrial portfolio:
INDUSTRIAL PORTFOLIO | ||||||
2Q24 | 2Q23 | Variance | 2Q24 | 2Q23 | Variance | |
Net Operating Income (inc. SLR) | Ps. 837.7m | Ps. 806.4m | 3.9% | US$ 48.7m | US$ 45.5m | 7.0% |
Net Operating Income (exc. SLR) | Ps. 829.8m | Ps. 807.2m | 2.8% | US$ 48.2m | US$ 45.5m | 5.9% |
NOI Margin (inc. SLR) | 89.2% | 89.7% | (49 bps) | 89.2% | 89.7% | (49 bps) |
NOI Margin (exc. SLR) | 88.4% | 89.8% | (141 bps) | 88.4% | 89.8% | (141 bps) |
GLA ('000s square feet) EOP | 30,947 | 30,513 | 1.4% | 30,947 | 30,513 | 1.4% |
GLA ('000s sqm) EOP | 2,875 | 2,835 | 1.4% | 2,875 | 2,835 | 1.4% |
Occupancy EOP | 97.6% | 98.4% | (84 bps) | 97.6% | 98.4% | (84 bps) |
Average Occupancy | 97.8% | 98.2% | (44 bps) | 97.8% | 98.2% | (44 bps) |
Average monthly rent per leased (US$/sqm) EOP | US$ 6.04 | US$ 5.73 | 5.4% | US$ 6.04 | US$ 5.73 | 5.4% |
Customer retention LTM | 86.3% | 93.4% | (715 bps) | 86.3% | 93.4% | (715 bps) |
Weighted Avg Lease Term Remaining (years) EOP | 3.5 | 3.1 | 10.6% | 3.5 | 3.1 | 10.6% |
FIBRAMQ's industrial portfolio performance remains robust, with growing average rental rates and strong retention. For the quarter ended June 30, 2024, FIBRAMQ's industrial portfolio delivered quarterly NOI of US$48.2 million, a 5.9% annual increase. At quarter-end, occupancy was 97.6%. Total leasing activity comprised 1,961 thousand square feet of GLA, including 136 thousand square feet of new leases, and quarterly moveouts were 334 thousand square feet. Renewal leases comprised 21 contracts across 1,825 thousand square feet, driving a solid retention rate of 86.3% over the last 12 months. Renewal and new leases featured an electronics manufacturer in Ciudad Juárez and a logistics company in Reynosa.
Retail Portfolio
The following table summarizes the proportionally combined 2Q24 results for FIBRAMQ's retail portfolio:
RETAIL PORTFOLIO | 2Q24 | 2Q23 | Variance |
Net Operating Income (incl. SLR) | Ps. 138.2m | Ps. 132.1m | 4.6% |
Net Operating Income (excl. SLR) | Ps. 142.2m | Ps. 137.7m | 3.3% |
NOI Margin (%, inc. SLR) | 68.9% | 71.0% | (205 bps) |
NOI Margin (%, exc. SLR) | 70.9% | 74.0% | (307 bps) |
GLA ('000s square feet) EOP | 4,627 | 4,604 | 0.5% |
GLA ('000s sqm) EOP | 430 | 428 | 0.5% |
Occupancy EOP | 92.1% | 91.3% | 77 bps |
Average Occupancy | 91.7% | 90.9% | 80 bps |
Average monthly rent per leased sqm EOP | $181.47 | $173.10 | 4.8% |
Customer retention LTM | 84.5% | 84.1% | 36 bps |
Weighted Avg Lease Term Remaining (years) EOP | 3.4 | 3.4 | (0.1%) |
- Retail portfolio cash collections during the quarter trended up to Ps. 207.0 million, an increase of 11.1% versus the prior corresponding period
- Weighted average lease term remained at 3.4 years and average rents increased 4.8%
FIBRAMQ signed 77 new and renewal leases during the quarter totaling 12.5 thousand square meters of GLA, across a diverse range of tenants. New leasing included a 1.7 thousand square meter lease for a furniture retailer and a 1.3 thousand square meter lease for a general merchandiser. The retail portfolio benefited from strong retention of 84.5% over the last twelve months.
As of June 30, 2024, trade receivables net of provisions were Ps. 7.0 million (excl. VAT), lower by 23.9% QoQ.
Lease Rental Rate Summary
Based on annualized base rents, FIBRAMQ's consolidated lease portfolio is now 65.9% linked to either Mexican or US CPI, representing an increase of 478 bps over the last twelve months.
In the industrial portfolio, FIBRAMQ achieved a weighted average positive releasing spread of 13.0%, in respect of leases generating US$36.7 million of annualized base rent.
For further details about FIBRA Macquarie's Second Quarter 2024 results, please refer to the Supplementary Information materials located at BMV Filings (fibramacquarie.com).
BALANCE SHEET
As of July 23, 2024, FIBRAMQ had US$1,046.3 million of debt outstanding and US$415.7 million available on its undrawn committed and uncommitted revolving credit facilities as well as US$24.1 million of unrestricted cash on hand.
As of July 23, 2024, FIBRAMQ's indebtedness is 100% fixed rate, with 4.3 years of weighted average term remaining. FIBRAMQ does not have any loans maturing before September 2026.
As of June 30, 2024, FIBRAMQ's CNBV regulatory debt to total asset ratio was 30.9% and debt service coverage ratio was 5.2x.
During the quarter, FIBRAMQ closed a senior unsecured, sustainability-linked credit facility with International Finance Corporation (IFC) for US$150 million, maturing in June 2031. The non-amortizing facility has a seven-year term and will bear interest at an all-in fixed-rate of 5.80% considering the executed hedging.
CERTIFICATE REPURCHASE PROGRAM
FIBRAMQ has a Ps. 1,000 million CBFI repurchase-for-cancellation program available through to June 25, 2025. No certificates were repurchased during the quarter.
SUSTAINABILITY
At June 30, 2024, FIBRA Macquarie's green building certification coverage represented 39.9% of consolidated GLA.
Sustainability and green financing linked portion of drawn debt stands at 62.6%.
FY24 GUIDANCE
FIBRA Macquarie's ongoing strong and stable performance continues to reflect the capacity to deliver solid returns to its investors through AFFO and cash distributions.
AFFO
FIBRA Macquarie is reaffirming its FY24 AFFO per certificate guidance of Ps. 2.55 to Ps. 2.60.
The FY24 AFFO guidance equates to a range of US$116 million to US$120 million, representing an annual increase of between 6% and 8% in underlying USD terms.
FIBRAMQ maintains a positive 2024 outlook on operational performance which is expected to be offset by the financing costs of near-term investments in FIBRAMQ's industrial growth capex program that in turn are expected to incrementally contribute to revenue and AFFO growth upon stabilization of each development project. This guidance assumes:
- an average exchange rate of Ps. 17.75 per US dollar for the remainder of 2024;
- no new acquisitions or divestments;
- no deterioration in broader economic and market conditions;
- no certificate repurchases or issuances; and
- excludes any Manager performance fees, if earned
Cash Distribution
FIBRAMQ is reaffirming guidance for cash distributions in FY24 of Ps. 2.10 per certificate, paid in equal quarterly installments of Ps. 0.5250 per certificate to FIBRA Macquarie holders, subject to no new CBFI issuances in relation with the potential acquisition of Terrafina.
Taking into account the ongoing Terrafina tender and exchange offer process, FIBRA Macquarie will shortly provide a further update on the expected timing of payment of the 2Q24 distribution, which is ordinarily scheduled for payment in September.
Outstanding certificates
FIBRA Macquarie had 797,311,397 outstanding certificates as of June 30, 2024. This considers the 36.0 million certificates issuance to existing holders that was made in March 2024 in respect of the extraordinary distribution corresponding to FY23, resulting in a 4.7% increase in outstanding CBFIs.
WEBCAST AND CONFERENCE CALL
FIBRAMQ will host an earnings conference call and webcast presentation on Friday, July 26, 2024, at 11:00 a.m. CT / 13:00 p.m. ET. The conference call, which will also be webcast, can be accessed online at www.fibramacquarie.com or by dialing toll free +1-877-407-2988. Callers from Mexico may dial 01-800-522-0034 and other callers from outside the United States may dial +1-201-389-0923. Please ask for the FIBRA Macquarie Second Quarter 2024 Earnings Call. An audio replay will be available by dialing +1-877-660-6853 or +1-201-612-7415 for callers from outside the United States. A webcast archive of the conference call and FIBRA Macquarie's financial information for the second quarter 2024 will also be available on FIBRAMQ's website, www.fibramacquarie.com.
About FIBRA Macquarie
FIBRA Macquarie México (FIBRA Macquarie) (BMV:FIBRAMQ) is a real estate investment trust (fideicomiso de inversión en bienes raíces), or FIBRA, listed on the Mexican Stock Exchange (Bolsa Mexicana de Valores) targeting industrial, retail and office real estate opportunities in Mexico, with a primary focus on stabilized income-producing properties. FIBRA Macquarie's portfolio consists of 239 industrial properties and 17 retail properties, located in 20 cities across 16 Mexican states as of June 30, 2024. Nine of the retail properties are held through a 50/50 joint venture. For additional information about FIBRA Macquarie, please visit www.fibramacquarie.com.
Cautionary Note Regarding Forward-looking Statements
This release may contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ significantly from these forward-looking statements and we undertake no obligation to update any forward-looking statements.
Other than Macquarie Bank Limited ABN 46 008 583 542 ("Macquarie Bank"), any Macquarie Group entity noted in this document is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these other Macquarie Group entities do not represent deposits or liabilities of Macquarie Bank. Macquarie Bank does not guarantee or otherwise provide assurance in respect to the obligations of these other Macquarie Group entities. In addition, if this document relates to an investment (a) the investor is subject to investment risk including possible delays in repayment and loss of income and principal invested, and (b) none of Macquarie Bank or any other Macquarie Group entity guarantees any particular rate of return on or the performance of the investment, nor do they guarantee repayment of capital in respect to the investment.
Important Notice
No offering or any related document relating to the Terrafina tender and exchange offer has been or will be filed with or reviewed by any federal or state securities commission or regulatory authority of any country, other than Mexico. No authority has passed upon the accuracy or adequacy of the offering or any related documents, and it is unlawful and may be a criminal offense to make any representation to the contrary. The Terrafina tender and exchange offer will be made in reliance on exemptions from the registration requirements of the United States Securities Act of 1933, as amended (the "Securities Act").
The Terrafina tender and exchange offer will be made, and the FIBRAMQ CBFIs will be offered and issued, only (a) in the United States to holders of Terrafina CBFIs who are "qualified institutional buyers" (as defined in Rule 144A under the Securities Act) in reliance upon certain exemptions from the registration requirements of the Securities Act, and (b) outside the United States to holders of Terrafina CBFIs who are persons other than "U.S. persons" (as defined in Rule 902 under the Securities Act) in reliance upon Regulation S under the Securities Act.
This release does not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. The FIBRAMQ CBFIs will not be registered under the Securities Act or the securities laws of any state and may not be offered or sold in the United States absent registration or an exemption from the registration requirements of the Securities Act and applicable state securities laws.
The FIBRAMQ CBFIs are not intended to be offered, sold or otherwise made available to, and should not be offered, sold or otherwise made available to, any persons in member states of the European Economic Area except (i) to persons who are qualified investors for the purposes of Regulation (EU) 2017/1129, as amended (the "EU Prospectus Regulation"), or (ii) in any other circumstances falling within Article 1(4) of the EU Prospectus Regulation; provided that, no such offer of securities shall require FIBRAMQ to publish a prospectus pursuant to Article 3 of the EU Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the EU Prospectus Regulation.
The FIBRAMQ CBFIs are not intended to be offered, sold or otherwise made available to, and should not be offered, sold or otherwise made available to, any persons in the United Kingdom (the "UK") except (i) to persons who are qualified investors for the purposes of the Regulation (EU) 2017/1129 of the European Parliament and of the Council of June 14, 2017 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 (the "UK Prospectus Regulation") or (ii) in any other circumstances falling within Article 1(4) of the UK Prospectus Regulation; provided that, no such offer of securities shall require FIBRAMQ to publish a prospectus pursuant to Section 85 of the Financial Services and Markets Act 2000 or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation.
Contacts
Investor relations:
General enquiries
Tel: +52 (55) 9178 7700
Nikki Sacks
Tel: +1 203 682 8263
Email: nikki.sacks@icrinc.com
For press queries:
FleishmanHillard México
Contact: Zaira Correa
Tel: +52 55 3017 0260
Email: zaira.correa@fleishman.com
