- Record high occupancy for industrial portfolio and consolidated portfolio of 98.4% and 97.5%, respectively
- Commencement of a 200 thousand square foot industrial development property in Apodaca, Nuevo León
- Industrial portfolio Same Store NOI up 11.8% YoY, in underlying USD terms
- Cash distribution of Ps. 0.5250 per certificate declared for 2Q23
MEXICO CITY–(BUSINESS WIRE)–FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ) announced its financial and operating results for the second quarter ended June 30, 2023.
SECOND QUARTER 2023 HIGHLIGHTS
- AFFO per certificate was Ps. 0.6519 (US$0.0368) for the quarter, compared with Ps. 0.6707 (US$0.0335) for the prior corresponding quarter
- Consolidated occupancy at 97.5%, up 22 bps QoQ and 126 bps YoY, respectively
- Industrial portfolio customer retention at record 93.4% for the last twelve months
- Consolidated NOI per certificate up 15.5% YoY, in underlying USD terms
- Positive releasing renewal spreads of 9.8% on commercially negotiated leases for industrial portfolio
- Seven industrial buildings under stabilization or development comprising 2.0 million square feet of future GLA, representing an approximately 6% increase in industrial GLA, with a focus on capturing nearshoring opportunities and the demand for logistics space in key consumption markets
- 510 thousand square foot lease executed for Mexico City Metropolitan Area industrial development project prior to completion
“We are pleased with the continued strong performance of our portfolio, which demonstrates the ongoing demand for our well-located, high quality industrial assets,” said Simon Hanna, FIBRA Macquarie’s chief executive officer. “Supported by a highly occupied portfolio, strong market demand, and success in our new developments, we maintain a positive outlook and are focused on the execution of our industrial growth capex strategy. Over the last year, we have leased 0.8 million square feet of industrial development and expansion GLA at a weighted average NOI yield of 11.6%, and we are confident that our ongoing development projects will deliver successful outcomes in the coming quarters. We believe this approach to growth positions FIBRA Macquarie to expand its portfolio, grow earnings and deliver attractive total returns on a per certificate basis.”
“Our second quarter results saw record occupancy across our portfolio and we achieved high levels of retention as well as continued interest from new customers. We are also benefiting from the ongoing recovery of our retail portfolio which delivered a 21% annual increase in NOI and strong leasing activity. As we look ahead, we anticipate sustained performance through the combination of organic rental rate growth and the addition of new GLA through development completions. During the quarter, we further enhanced our balance sheet with a US$250 million sustainability-linked refinancing, and benefited from a lower leverage ratio, giving us additional capacity and flexibility to execute on our growth strategy.”
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 2.0 million square feet of GLA under development or stabilization with a total investment of approximately US$150.7 million. FIBRAMQ expects to deploy US$97.0 million over the next twelve months (this includes remaining building construction costs, contracted tenant improvements as well as deferred consideration for land and certain project-wide infrastructure costs).
FIBRA Macquarie maintains a target NOI yield on cost of between 9% and 11% on its industrial development program.
Cuautitlán, Mexico City Metropolitan Area
- FIBRAMQ executed a lease for its 510 thousand square foot building which is expected to contribute to income and be added to GLA upon the completion of tenant improvements and commencement of tenant occupancy in 2H23.
- FIBRAMQ is nearing completion on the second building in this project, comprising 225 thousand square feet of GLA. The expected delivery date is 2H23, with some short-term construction resources were focused on the completion of tenant improvements for the first building, allowing the tenant to take occupancy sooner than had been anticipated.
Apodaca, Nuevo Leon
- FIBRAMQ recently completed a 210 thousand square feet building in Apodaca which is now in stabilization and has a strong pipeline of lease prospects being evaluated.
- During 2Q23, FIBRAMQ commenced construction on an additional property comprising 200 thousand square feet of GLA, with an expected completion during 1H24.
- This Class A industrial park is anticipated to comprise a total potential GLA of 790 thousand square feet, of which FIBRAMQ has in progress or completed construction of 590 thousand square feet of GLA.
Ciudad Juárez, Chihuahua
- FIBRAMQ has an ongoing development of a 265 thousand square feet GLA building in the southeast market of Ciudad Juárez with an expected delivery date in 2H23.
- The project considers a phased, multi-year construction program of a 10-property Class A industrial park with a total potential GLA of 2.5 million square feet.
Reynosa, Tamaulipas
- FIBRAMQ continues construction of a 145 thousand square feet building in Reynosa with an expected delivery date in 2H23.
Tijuana, Baja California
- Works are ongoing for the development of the first building comprising 405 thousand square feet of GLA with an expected delivery date in 1H24.
- This Class A industrial park is anticipated to comprise a total potential GLA of 890 thousand square feet.
FINANCIAL AND OPERATING RESULTS
Consolidated Portfolio
FIBRAMQ’s consolidated results were as follows:
|
TOTAL PORTFOLIO |
(millions of Pesos unless otherwise stated) |
(millions of Dollars, unless otherwise stated) |
||||
|
|
2Q23 |
2Q22 |
Variance |
2Q23 |
2Q22 |
Variance |
|
Net Operating Income (NOI) |
Ps. 938.5m |
Ps. 919.1m |
2.1% |
US$ 53.0m |
US$ 45.9m |
15.5% |
|
EBITDA |
Ps. 859.8m |
Ps. 851.8m |
0.9% |
US$ 48.5m |
US$ 42.5m |
14.1% |
|
Funds From Operations (FFO) |
Ps. 623.6m |
Ps. 619.3m |
0.7% |
US$ 35.2m |
US$ 30.9m |
13.9% |
|
FFO per certificate |
Ps. 0.8191 |
Ps. 0.8135 |
0.7% |
US$ 0.0462 |
US$ 0.0406 |
13.9% |
|
Adjusted Funds From Operations (AFFO) |
Ps. 496.3m |
Ps. 510.6m |
(2.8%) |
US$ 28.0m |
US$ 25.5m |
9.9% |
|
AFFO per certificate |
Ps. 0.6519 |
Ps. 0.6707 |
(2.8%) |
US$ 0.0368 |
US$ 0.0335 |
9.9% |
|
NOI Margin |
86.5% |
87.7% |
(117 bps) |
86.5% |
87.7% |
(117 bps) |
|
AFFO Margin |
45.7% |
48.7% |
(297 bps) |
45.7% |
48.7% |
(297 bps) |
|
GLA (’000s square feet) EOP |
35,117 |
34,514 |
1.7% |
35,117 |
34,514 |
1.7% |
|
GLA (’000s sqm) EOP |
3,263 |
3,206 |
1.7% |
3,263 |
3,206 |
1.7% |
|
Occupancy EOP |
97.5% |
96.2% |
126 bps |
97.5% |
96.2% |
126 bps |
|
Average Occupancy |
97.3% |
96.2% |
109 bps |
97.3% |
96.2% |
109 bps |
Industrial Portfolio
The following table summarizes the results for FIBRAMQ’s industrial portfolio:
|
INDUSTRIAL PORTFOLIO |
(millions of Pesos, unless otherwise stated) |
(millions of Dollars, unless otherwise stated) |
||||
|
|
2Q23 |
2Q22 |
Variance |
2Q23 |
2Q22 |
Variance |
|
Net Operating Income (NOI) |
Ps. 806.4m |
Ps. 809.8m |
(0.4%) |
US$ 45.5m |
US$ 40.4m |
12.6% |
|
NOI Margin |
89.7% |
91.0% |
(135 bps) |
89.7% |
91.0% |
(135 bps) |
|
GLA (’000s square feet) EOP |
30,513 |
29,931 |
1.9% |
30,513 |
29,931 |
1.9% |
|
GLA (’000s sqm) EOP |
2,835 |
2,781 |
1.9% |
2,835 |
2,781 |
1.9% |
|
Occupancy EOP |
98.4% |
97.1% |
130 bps |
98.4% |
97.1% |
130 bps |
|
Average Occupancy |
98.2% |
97.1% |
113 bps |
98.2% |
97.1% |
113 bps |
|
Average monthly rent per leased (US$/sqm) EOP |
US$ 5.73 |
US$ 5.34 |
7.2% |
US$ 5.73 |
US$ 5.34 |
7.2% |
|
Customer retention LTM |
93.4% |
83.2% |
1,019 bps |
93.4% |
83.2% |
1,019 bps |
|
Weighted Avg Lease Term Remaining (years) EOP |
3.1 |
3.3 |
(4.1%) |
3.1 |
3.3 |
(4.1%) |
FIBRAMQ’s industrial portfolio performance remains robust, with continued increases in occupancy and average rental rates. For the quarter ended June 30, 2023, FIBRAMQ’s industrial portfolio delivered quarterly NOI of US$45.5 million, a 12.6% annual increase. This result was driven by record quarterly industrial revenues of US$50.7 million. At quarter-end, occupancy increased to a record 98.4%, up 130 basis points year over the year. New leasing activity comprised 85 thousand square feet of GLA, exceeding record low quarterly moveouts of 22 thousand square feet. New leases featured a logistics company in Hermosillo and a packaging company in Mexicali. Renewal leases comprised 13 contracts and 896 thousand square feet, driving a record retention rate of 93.4% over the last 12 months.
Retail Portfolio
The following table summarizes the proportionally combined results for FIBRAMQ’s retail portfolio:
|
RETAIL PORTFOLIO |
2Q23 |
2Q22 |
Variance |
|
Net Operating Income (incl. SLR) |
Ps. 132.1m |
Ps. 109.3m |
20.9% |
|
Net Operating Income (excl. SLR) |
Ps. 137.7m |
Ps. 119.8m |
14.9% |
|
NOI Margin (%, inc. SLR) |
71.0% |
68.7% |
231 bps |
|
NOI Margin (%, exc. SLR) |
74.0% |
75.3% |
(128 bps) |
|
GLA (’000s square feet) EOP |
4,604 |
4,583 |
0.5% |
|
GLA (’000s sqm) EOP |
428 |
426 |
0.5% |
|
Occupancy EOP |
91.3% |
90.4% |
88 bps |
|
Average Occupancy |
90.9% |
90.2% |
71 bps |
|
Average monthly rent per leased (Ps./sqm) EOP |
$173.10 |
$161.54 |
7.2% |
|
Customer retention LTM |
84.1% |
80.5% |
366 bps |
|
Weighted Avg Lease Term Remaining (years) EOP |
3.4 |
3.2 |
7.0% |
- Total revenues were Ps. 186.1 million, up 16.9% over the prior corresponding quarter
- Retail portfolio cash collections during the quarter trended up to Ps. 186.2 million, an increase of 11.5% versus the prior corresponding period
- During the second quarter, recorded foot traffic at FIBRAMQ’s shopping centers was approximately 11.5% above the prior comparable period, and approximately 16.2% below pre-pandemic levels
FIBRAMQ signed 62 new and renewal leases during the quarter totaling 40 thousand square meters of GLA. Leasing highlights included a new lease for a Smart Fit gym (1.5 thousand square meters) and record lease renewal activity including two Chedraui grocery anchor lease renewals (11.8 and 11.5 thousand square meters, respectively). With this strong leasing activity, the Retail portfolio benefited from strong retention of 84.1% and WALT being extended by 7.0% over the last 12 months.
As of June 30, 2023, trade receivables net of provisions were Ps. 2.3 million (excl. VAT), lower by 46.3% over the prior corresponding period.
Lease Rental Rate Summary
In the industrial portfolio, we achieved a weighted average positive releasing spread of 9.8% across 11 commercially negotiated leases, representing 0.8 million square feet of GLA. The weighted average releasing spread achieved over the last twelve months of commercially negotiated renewals was 12.1%.
In the retail portfolio, a weighted average positive release spread of 4.7% was commercially negotiated across 37 leases across 18.7 thousand square meters of GLA. The weighted average releasing spread achieved over the last twelve months of commercially negotiated renewals was 7.7%.
Based on FIBRAMQ’s consolidated lease portfolio, 61.2% of leases (as measured by annualized base rent) are directly linked to either Mexican or US CPI.
For further details please about FIBRA Macquarie’s Second Quarter 2023 results, please refer to the Supplementary Information materials located at BMV Filings (fibramacquarie.com).
BALANCE SHEET
As of June 30, 2023, FIBRAMQ had a US$938 million of debt outstanding, US$331 million available on its undrawn committed revolving credit facility and US$22 million of unrestricted cash on hand.
FIBRAMQ’s indebtedness is 95.7% fixed rate, with 4.6 years of weighted average term remaining.
FIBRAMQ’s CNBV regulatory debt to total asset ratio was 30.9% and debt service coverage ratio was 5.3x.
On a consolidated basis, NAV per certificate was Ps. 41.1 as at June 30, 2023. This reflects an independent appraisal update through to 30 June 2023 which reflects a stabilized capitalization rate of 7.8% for the industrial portfolio and 9.6% for the retail portfolio.
CERTIFICATE REPURCHASE PROGRAM
FIBRAMQ has a Ps. 1,000 million CBFI repurchase-for-cancellation program available through to June 25, 2024. No certificates were repurchased during the quarter.
SUSTAINABILITY
During the second quarter, FIBRA Macquarie achieved EDGE certification on two industrial buildings. Green building certification coverage on FIBRAMQ’s consolidated portfolio now represents 35.3% of GLA.
In addition, through the execution of the US$250 million refinancing completed during the quarter, FIBRAMQ significantly increased the sustainability and green financing linked portion of drawn debt to 58.2%.
DISTRIBUTION
Scheduled Distribution
On July 27, 2023, FIBRAMQ declared a cash distribution of Ps. 0.5250 per certificate for the quarter ended June 30, 2023. The distribution is expected to be paid on or about September 28, 2023, to holders of record on September 27, 2023. FIBRAMQ’s certificates are expected to commence trading ex-distribution on September 26, 2023.
FY23 GUIDANCE
AFFO per certificate
On April 27, 2023, FIBRAMQ provided FY23 AFFO per certificate guidance with a range of Ps. 2.60 to 2.65, using an assumed average exchange rate of Ps. 18.25 per US dollar for the remainder of FY23. FIBRAMQ’s operational performance and underlying natural currency cashflows remain robust and consistent with the prior forecast. Reflecting FIBRAMQ’s highly dollarized cashflows and the appreciation of the Mexican Peso against the US dollar, FIBRAMQ has revised its average exchange rate assumption for the remainder of FY23 to Ps. 16.75 per US dollar, which results in a revised FY23 AFFO per certificate guidance range of between Ps. 2.53 and Ps. 2.58 per certificate.
This revised FY23 guidance assumes:
- an average exchange rate of Ps. 16.75 per US dollar for the remainder of FY23, compared to the prior assumption of Ps. 18.25 per US dollar;
- no new acquisitions or divestments of stabilized properties;
- no issuances or repurchases of certificates; and
- no deterioration in broader economic and market conditions.
Distribution per certificate
FIBRAMQ is reaffirming its guidance for cash distributions in FY23 of Ps. 2.10 per certificate, paid in equal quarterly instalments of Ps. 0.5250 per certificate. The guidance is supported by an expected FY23 AFFO payout ratio of approximately 82.2%, based on the mid-point of FIBRAMQ’s revised AFFO guidance per certificate. Distribution per certificate guidance does not consider any extraordinary distribution that may arise as a result of FIBRAMQ’s FY23 fiscal result and its requirement to comply with certain Mexican FIBRA regulations.
The payment of cash distributions is subject to the approval of the Manager, stable market conditions and prudent management of FIBRAMQ’s capital position.
WEBCAST AND CONFERENCE CALL
FIBRAMQ will host an earnings conference call and webcast presentation on Friday, July 28, 2023, at 11:00 a.m. CT / 1:00 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 2023 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 2023 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 238 industrial properties and 17 retail properties, located in 20 cities across 16 Mexican states as of June 30, 2023. 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 other liabilities of Macquarie Bank. Macquarie Bank does not guarantee or otherwise provide assurance in respect of 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 of the investment.
THIS RELEASE IS NOT AN OFFER FOR SALE OF SECURITIES IN THE UNITED STATES, AND SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED.
Contacts
Investor relations contact:
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Tel: +52 (55) 9178 7700
Nikki Sacks
Tel: +1 203 682 8263
Email: nikki.sacks@icrinc.com
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FleishmanHillard México
Contact: Arturo García Arellano
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Email: arturo.garcia@fleishman.com