Classified in: Business
Subjects: EARNINGS, Conference Call, Webcast

FIBRA Macquarie México Reports First Quarter 2019 Results

FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ), owner of one of the largest portfolios of industrial and retail property in Mexico, announced its financial and operating results for the quarter ended March 31, 2019.

FIRST QUARTER 2019 HIGHLIGHTS

• AFFO per certificate increased 4.5% YoY to Ps 0.6289
• Consolidated occupancy increased 244 bps YoY to a record 94.7%
• Average industrial and retail rental rates increased 3.2% and 4.0% YoY, respectively
• Same store net operating income increased by 4.4%
• Quarterly cash distribution increased 9.0% YoY to Ps 0.4250 per certificate

"We started 2019 on solid ground with robust activity driving a record result for AFFO per certificate and closing occupancy," said Juan Monroy, FIBRA Macquarie's chief executive officer. "We remain focused on achieving further performance and financial gains across our business. We have a manageable lease expiration profile for 2019 with attractive supply demand dynamics in most of our markets which should support our performance across the portfolio. We also remain focused on disciplined capital management and will continue to pursue expansions and selective development opportunities with attractive yields. With our recent refinancing, we have further strengthened our balance sheet to support our growth initiatives throughout the year and beyond."

FINANCIAL AND OPERATING RESULTS

Consolidated Portfolio

FIBRAMQ's total results were as follows:

FIBRAMQ's same store portfolio results were as follows:

Industrial Portfolio

The following table summarizes the results for FIBRAMQ's industrial portfolio:

For the three months ended March 31, 2019, FIBRAMQ's industrial portfolio delivered net operating income (NOI) of Ps 676.6 million, in line with the prior comparable period. NOI margins also remained steady.

The occupancy rate of the industrial portfolio as of March 31, 2019 was 94.8%, up 297 basis points versus the prior comparable quarter, and up 37 basis points sequentially.

Rental rates at the end of the period improved 3.2% versus the prior comparable quarter, to a weighted average of US$4.82 per leased square meter per month, representing a record rental rate for FIBRAMQ's industrial portfolio. The increase was driven primarily by contractual increases and positive renewal spreads, and the impact of the sale of 35 non-strategic industrial assets which had rental rates lower than the portfolio average.

Both occupancy and rental rates benefitted from the sale of 35 non-strategic industrial assets which had lower occupancy and rental rates than the portfolio average.

FIBRAMQ signed 15 new and renewal leases in the first quarter of 2019, comprising 809 thousand square feet of industrial space. The signed leases included nine new leases totaling 508 thousand square feet and 6 renewal leases totaling 301 thousand square feet. Notable new leases included those with a global manufacturer of telecommunications, network and electronic equipment, and a medical device manufacturer in Ciudad Juárez, a logistics provider for electronics equipment in Monterrey, and an automotive tools manufacturer in Querétaro.

Renewal activity included the retention of a computer component manufacturer, a logistics provider and a retail food distributor. For the twelve-months ending March 31, 2019, FIBRAMQ's retention rate was 86.8%. The efficient re-leasing of four of the five vacated spaces during the same quarter reflects strong underlying market conditions.

For detail on FIBRAMQ's same store industrial portfolio results, please refer to First Quarter 2019 Supplementary Information materials located at www.fibramacquarie.com/investors/bolsa-mexicana-de-valores-filings.

Retail Portfolio

The following table summarizes the proportionally combined results of operations for FIBRAMQ's retail portfolio:

For the quarter ended March 31, 2019, FIBRAMQ's retail portfolio delivered NOI of Ps 152.8 million, a 7.9% increase from the prior year period. Year-over-year growth was driven by a 4.0% increase in average monthly rent, partially offset by a reduction in occupancy. The NOI result was further assisted by early termination lease income of Ps 9.4 million, in respect of two leases that were scheduled to expire after FY2019. Strong leasing demand for both of the vacant prime location spaces are expected to result in both of the premises being re-let to leading retail operators during 2019.

During the first quarter of 2019, FIBRAMQ signed 62 leases, representing 20.1 thousand square meters. This activity included 16 new leases, 46 renewals and after taking into account moveouts, resulted in a sequential decrease in end of period occupancy of 43 bps to 93.5%.

PORTFOLIO ACTIVITY

FIBRAMQ continued its deployment of available capital into accretive investments including targeted expansion of existing properties on a pre-leased basis and selective developments during the first quarter.

Industrial and retail expansions

FIBRAMQ progressed with a 47 thousand square foot industrial property expansion for a manufacturer of lighting products in Reynosa which is expected to complete by June 2019. FIBRAMQ also commenced building a new 2,100 square meter retail center expansion at Multiplaza del Valle in Guadalajara, including 1,400 square meters for Cinépolis, a leading cinema operator. The project is expected to be completed in the second half of 2019.

Industrial development

In January 2019, FIBRAMQ began construction of an industrial project in Ciudad Juárez, Chihuahua. The project involves the construction of up to two buildings, totaling approximately 435,000 square feet. Development will be completed in two stages with an expected total investment, including land, of approximately US$20.4 million. A 209,000 square feet class A industrial building is expected to be completed in 2019 with an approximate investment of US$9 million and is targeted for LEED certification.

Given its strong economic and demographic trends, Ciudad Juárez represents a priority location for FIBRAMQ with respect to its long-term objective of developing class A buildings in core markets. Over the medium term, FIBRAMQ intends to manage its development projects to not exceed 5% of GLA at any given time.

BALANCE SHEET

The following table summarizes FIBRAMQ's debt profile as of March 31, 2019 and following completion of the previously announced refinancing:

¹ Pro-forma calculation takes into account completion of the US$500 million refinancing activity announced on April 1, 2019 and further described below.

FIBRAMQ's CNBV regulatory debt to total asset ratio was 35.1% and the debt service coverage ratio was 5.0x.

Subsequent to quarter end, as previously announced, FIBRAMQ signed agreements representing refinancing activity totaling US$500 million, comprised of a US$425 million unsecured credit facility that closed on April 5, 2019 and a term sheet for a new US$75 million secured term loan facility (together, the Refinancing). The Refinancing is debt neutral and enhances FIBRAMQ's debt profile by significantly extending the weighted average maturity of its debt and diversifying FIBRAMQ's lender base. FIBRAMQ drew US$180 million under the unsecured five-year term loan and US$75 million under the unsecured revolving facility and, together with US$3 million cash on hand, used these proceeds to prepay a US$258 million unsecured term loan that was due to expire on June 30, 2020.

To complete the refinancing activity by June 2019, a borrowing of US$75 million under a new fifteen-year secured loan is expected to be used to repay the drawn revolver.

Of note, FIBRA Macquarie does not have any scheduled debt maturities until June 30, 2023.

CAPITAL ALLOCATION

FIBRAMQ remains committed to its disciplined approach to capital deployment across property expansions and developments, certificate repurchases for cancellation, and repayment of revolving debt.

During the first quarter of 2019, FIBRAMQ continued to fund the expansion and development projects discussed above. During the full year of 2019, FIBRAMQ anticipates a total investment of US$12.9m for the projects already committed and announced.

On January 31^st, FIBRAMQ repaid a Peso-denominated secured loan of approximately Ps 284 million, further improving the capital structure and flexibility of the balance sheet.

FIBRAMQ's current buyback program has Ps 845.5 million remaining capacity until its expiration on June 25, 2019. On April 24, 2019 FIBRAMQ certificate holders approved an extended buyback program of Ps 1.0 billion for the one-year period commencing June 26, 2019. All certificates repurchased have been or will be cancelled.

For additional details on FIBRAMQ's capital management please refer to the First Quarter 2019 Supplementary Information materials located at www.fibramacquarie.com/investors/bolsa-mexicana-de-valores-filings.

DISTRIBUTION

On April 25, 2019, FIBRAMQ declared a cash distribution for the quarter ended March 31, 2019 of Ps 0.4250 per certificate, a 9.0% increase over the distribution in the prior comparable period and a 3.7% increase sequentially. The distribution is expected to be paid on June 14, 2019 to holders of record on June 13, 2019. FIBRAMQ's certificates will commence trading ex-distribution on June 12, 2019.

2019 GUIDANCE

FIBRA Macquarie reaffirmed its previously announced guidance cash distributions of approximately Ps 1.70 per certificate, paid in equal quarterly payments of Ps 0.425 for 2019. FIBRAMQ also reaffirmed its previously announced AFFO guidance of between Ps 2.45 and Ps 2.50 per certificate for the year. This guidance is driven by the following assumptions:

• Cash-generating capacity of its existing portfolio and an average exchange rate of Ps 19.25 per US dollar;
• No new acquisitions or divestments, other than completion of the sale of the two remaining properties from the portfolio sale announced last summer;
• No certificate repurchases;
• The continued stable performance of the properties in the portfolio, and stable market conditions; and
• The payment of cash distributions is subject to the approval of the board of directors of the Manager.

WEBCAST AND CONFERENCE CALL

FIBRAMQ will host an earnings conference call and webcast presentation on Friday, April 26, 2019 at 7:30 a.m. CT / 8:30 a.m. ET. The conference call, which will also be audio webcast, can be accessed online atwww.fibramacquarie.com or by dialing toll free +1 (877) 304 8957. Callers from outside the United States may dial +1 (973) 638 3235. Please ask for the FIBRA Macquarie First Quarter 2019 Earnings Call with conference number 9399517.

An audio replay will be available by dialing +1-855-859-2056 or +1-404-537-3406 for callers from outside the United States. The passcode for the replay is 9399517. A webcast archive of the conference call and a copy of FIBRA Macquarie's financial information for the first quarter 2019 will also be available on FIBRA Macquarie's website, www.fibramacquarie.com.

ADDITIONAL INFORMATION

For detailed charts, tables and definitions, please refer to the First Quarter 2019 Supplementary Information materials located at www.fibramacquarie.com/investors/bolsa-mexicana-de-valores-filings.

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 236 industrial properties and 17 retail/office properties, located in 20 cities across 16 Mexican states as of March 31, 2019. Nine of the retail/office 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.

None of the entities noted in this document is an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities.

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.

THIS ANNOUNCEMENT IS NOT FOR RELEASE IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT MARCH 31, 2019 (UNAUDITED) AND DECEMBER 31, 2018
CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)

CONDENSED UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)

*Real Estate Trust Certificates (Certificados Bursátiles Fiduciarios Inmobiliarios)

CONDENSED UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)

CONDENSED UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)

*The depreciation is in respect of the rights-of-use assets held at the Group´s vertically integrated internal platform level, calculated in accordance with IFRS 16.
**Includes restricted cash balance of $nil (2018: $46.7 million) as at March 31, 2019.

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News published on 25 april 2019 at 20:15 and distributed by: