Le Lézard
Classified in: Business
Subjects: EARNINGS, Dividend, Conference Call, Webcast

FIBRA Macquarie México Reports Third Quarter 2023 Results


FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ) announced its financial and operating results for the third quarter ended September 30, 2023.

THIRD QUARTER 2023 HIGHLIGHTS

"We are seeing sustained strength in our business, as demonstrated by a 14% increase in Net Operating Income on a per certificate basis," said Simon Hanna, FIBRA Macquarie's chief executive officer. "With robust leasing activity and solid rent spreads, our portfolio continues to benefit from the persistent demand and nearshoring tailwinds."

Mr. Hanna continued, "Our industrial growth capex strategy is generating positive results, building on our demonstrated track record of delivering new developments at accretive yields. We most recently leased up our delivery in Apodaca at a strong 11.9% development yield, and we expect earnings contribution from this project in FY24. We have an additional 1.2 million square feet of premier industrial buildings under construction which we anticipate delivering in the coming quarters. We remain focused on maintaining our strong balance sheet and liquidity position, while continuing to allocate capital in an accretive manner. We are encouraged by the favorable backdrop and leasing environment as we aim to create value by driving organic growth from our in-place portfolio and realizing incremental growth from our investments in industrial developments."

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$160 million, with an expected deployment of a remaining US$95 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.

FIBRAMQ continues construction on five projects, including three that are expected to complete in the fourth quarter. Year to date, FIBRAMQ has executed leases on two new buildings that are designed to the highest sustainability standards and generate embedded operational efficiencies. These buildings were delivered at an average development yield of 11.9%, which is expected to contribute to income during FY24. These deliveries are a emblematic of our development capabilities, our commitment to the communities in which we operate and our ability to deliver positive outcomes for our stakeholders along with accretive returns.

Projects in process are summarized below. For further details, please refer to the Supplementary Information materials located at BMV Filings (fibramacquarie.com).

Cuautitlán, Mexico City Metropolitan Area

Apodaca, Nuevo Leon

Ciudad Juárez, Chihuahua

Reynosa, Tamaulipas

Tijuana, Baja California

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)

 

3Q23

3Q22

Variance

3Q23

3Q22

Variance

Net Operating Income (inc. SLR)

Ps. 904.3m

Ps. 957.4m

(5.5%)

US$ 53.0m

US$ 47.3m

12.1%

Net Operating Income (exc. SLR)

Ps. 902.9m

Ps. 939.4m

(3.9%)

US$ 52.9m

US$ 46.4m

14.0%

EBITDA

Ps. 829.9m

Ps. 887.1m

(6.5%)

US$ 48.7m

US$ 43.8m

11.0%

Funds From Operations (FFO)

Ps. 596.5m

Ps. 645.9m

(7.6%)

US$ 35.0m

US$ 31.9m

9.6%

FFO per certificate

Ps. 0.7835

Ps. 0.8484

(7.6%)

US$ 0.0459

US$ 0.0419

9.6%

Adjusted Funds From Operations (AFFO)

Ps. 466.0m

Ps. 540.3m

(13.8%)

US$ 27.3m

US$ 26.7m

2.3%

AFFO per certificate

Ps. 0.6121

Ps. 0.7097

(13.8%)

US$ 0.0359

US$ 0.0351

2.3%

NOI Margin (inc. SLR)

86.3%

87.6%

(133 bps)

86.3%

87.6%

(133 bps)

NOI Margin (exc. SLR)

86.2%

86.0%

18 bps

86.2%

86.0%

18 bps

AFFO Margin

44.5%

49.5%

(498 bps)

44.5%

49.5%

(498 bps)

GLA ('000s square feet) EOP

35,551

35,033

1.5%

35,551

35,033

1.5%

GLA ('000s sqm) EOP

3,303

3,255

1.5%

3,303

3,255

1.5%

Occupancy EOP

97.1%

96.2%

83 bps

97.1%

96.2%

83 bps

Average Occupancy

97.0%

96.2%

78 bps

97.0%

96.2%

78 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)

 

3Q23

3Q22

Variance

3Q23

3Q22

Variance

Net Operating Income (inc. SLR)

Ps. 770.1m

Ps. 842.7m

(8.6%)

US$ 45.1m

US$ 41.6m

8.4%

Net Operating Income (exc. SLR)

Ps. 774.7m

Ps. 838.2m

(7.6%)

US$ 45.4m

US$ 41.4m

9.7%

NOI Margin (inc. SLR)

89.8%

90.8%

(107 bps)

89.8%

90.8%

(107 bps)

NOI Margin (exc. SLR)

90.3%

90.3%

(4 bps)

90.3%

90.3%

(4 bps)

GLA ('000s square feet) EOP

30,939

30,452

1.6%

30,939

30,452

1.6%

GLA ('000s sqm) EOP

2,874

2,829

1.6%

2,874

2,829

1.6%

Occupancy EOP

97.9%

97.0%

84 bps

97.9%

97.0%

84 bps

Average Occupancy

97.8%

97.1%

79 bps

97.8%

97.1%

79 bps

Average monthly rent per leased (US$/sqm) EOP

US$ 5.79

US$ 5.39

7.5%

US$ 5.79

US$ 5.39

7.5%

Customer retention LTM

91.7%

86.6%

509 bps

91.7%

86.6%

509 bps

Weighted Avg Lease Term Remaining (years) EOP

3.5

3.3

5.7%

3.5

3.3

5.7%

FIBRAMQ's industrial portfolio performance remains robust, with continued increases in occupancy and average rental rates. For the quarter ended September 30, 2023, FIBRAMQ's industrial portfolio delivered quarterly NOI of US$45.4 million, a 9.7% annual increase. At quarter-end, occupancy was 97.9%, up 84 basis points year over year. New leasing activity comprised 641 thousand square feet of GLA, the highest recorded quarterly level since 2016 and which exceeded quarterly moveouts of 312 thousand square feet. New leases featured an e-commerce fulfilment operator in Mexico City and an electronics manufacturer in Saltillo. Renewal leases comprised 18 contracts across 2.2 million square feet, driving a high retention rate of 91.7% over the last 12 months.

Retail Portfolio

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

RETAIL PORTFOLIO

3Q23

3Q22

Variance

Net Operating Income (incl. SLR)

Ps. 134.2m

Ps. 114.7m

17.0%

Net Operating Income (excl. SLR)

Ps. 140.2m

Ps. 128.0m

9.5%

NOI Margin (%, inc. SLR)

70.6%

69.5%

108 bps

NOI Margin (%, exc. SLR)

73.8%

77.7%

(387 bps)

GLA ('000s square feet) EOP

4,613

4,581

0.7%

GLA ('000s sqm) EOP

429

426

0.7%

Occupancy EOP

91.7%

91.0%

70 bps

Average Occupancy

91.5%

90.8%

68 bps

Average monthly rent per leased (Ps./sqm) EOP

$174.79

$164.75

6.1%

Customer retention LTM

86.4%

87.0%

(64 bps)

Weighted Avg Lease Term Remaining (years) EOP

3.4

3.0

11.5%

FIBRAMQ signed 62 new and renewal leases during the quarter totaling 17 thousand square meters of GLA, across a diverse range of tenants including cinemas, entertainment centers, banks and homewares. With this strong leasing activity, the Retail portfolio benefited from strong retention of 86.6% over the last twelve months.

As of September 30, 2023, trade receivables net of provisions were Ps. 3.7 million (excl. VAT), lower by 81.8% over the prior corresponding period.

Lease Rental Rate Summary

Based on annualized base rents, FIBRAMQ's consolidated lease portfolio is now 63.2% linked to either Mexican or US CPI, representing an increase of 506 bps over the last twelve months.

In the industrial portfolio, FIBRAMQ achieved a weighted average positive releasing spread of 16.3%, in respect of leases generating US$24.9 million of annualized base rent. In the retail portfolio, FIBRAMQ achieved a weighted average releasing spread of 8.5%, in respect of leases generating Ps. 78.2 million of annualized base rent.

For further details about FIBRA Macquarie's Third Quarter 2023 results, please refer to the Supplementary Information materials located at BMV Filings (fibramacquarie.com).

BALANCE SHEET

As of September 30, 2023, FIBRAMQ had a US$952 million of debt outstanding, US$329 million available on its undrawn committed revolving credit facility and US$29 million of unrestricted cash on hand.

FIBRAMQ's indebtedness is 94.2% fixed rate, with 4.3 years of weighted average term remaining.

FIBRAMQ's CNBV regulatory debt to total asset ratio was 30.8% and debt service coverage ratio was 5.2x.

NAV per certificate reached a record high of Ps. 43.2, which reflects an internal appraisal update based on a stabilized capitalization rate of 7.9% for the industrial 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 third quarter, FIBRA Macquarie achieved EDGE certification on two industrial buildings. Green building certification coverage on FIBRAMQ's consolidated portfolio now represents 35.6% of GLA.

Sustainability and green financing linked portion of drawn debt stands at 59%.

DISTRIBUTION

Scheduled Distribution

On October 26, 2023, FIBRAMQ declared a cash distribution of Ps. 0.5250 per certificate for the quarter ended September 30, 2023. The distribution is expected to be paid on or about January 30, 2024, to holders of record on January 29, 2024. FIBRAMQ's certificates are expected to commence trading ex-distribution January 26, 2024.

FY23 GUIDANCE

AFFO per certificate

FIBRA Macquarie is updating its FY23 AFFO per certificate guidance to approximately Ps. 2.58 from the prior guidance range of Ps. 2.53 to Ps 2.58.

The FY23 guidance assumes:

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 81.4%, based on 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, October 27, 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 Third 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 third 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 239 industrial properties and 17 retail properties, located in 20 cities across 16 Mexican states as of September 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.


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