MEXICO CITY--(BUSINESS WIRE)--FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ) announced its financial and operating results for the third quarter ended September 30, 2024.
THIRD QUARTER 2024 HIGHLIGHTS
- Industrial 3Q24 occupancy of 97.2%, down 69bps YoY
- Retail 3Q24 occupancy of 93.0%, up 133bps YoY
- FY24 AFFO per certificate guidance upgraded to a range of Ps. 2.60 to Ps. 2.63
- FY24 distribution guidance of Ps. 2.10 per certificate reaffirmed
“We produced another quarter of solid earnings growth as our high-quality assets continue to deliver reliable performance,” said Simon Hanna, FIBRA Macquarie’s chief executive officer. “Our industrial portfolio realized 8.6% NOI growth year over year in underlying USD terms, as we see the benefits of ongoing rental rate increases as well as contributions from our development program. In the third quarter we reached a record leased GLA of 34.8 million square feet, supported by the addition to GLA of two recently completed and fully leased assets in Mexico City and Monterrey. We continue to be pleased with the ongoing momentum in our retail portfolio where we have increased occupancy to a post-pandemic high of 93.0% driving annual NOI growth of 7.9% in underlying Peso terms, as we attract new tenants to our well-located shopping centers.”
Mr. Hanna continued, “Consistent with our demonstrated track record, we are selectively pursuing new development and growth opportunities which provide a pipeline for sustained growth over time. We continue to make progress on our growth capex strategy as we complete and work towards lease-up of our new deliveries in line with our expectations.”
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
FIBRA Macquarie has 1.0 million square feet of GLA under development or stabilization with a total required investment of approximately US$88.0 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 León
- FIBRAMQ is marketing for lease a 200 thousand square feet property that was delivered during 3Q24.
- 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 406 thousand square feet of GLA with an expected delivery date of year end.
- 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 a multinational e-commerce retailer for its 225 thousand square foot development project. The triple-net lease is expected to commence meaningfully contributing to NOI in the first quarter of 2025. The property is held in a joint venture in which FIBRA Macquarie holds an 81.8% equity stake.
- 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$2.1 million. The property was independently revalued to a 6.5% stabilized NOI cap rate, representing significant value creation for FIBRA Macquarie investors.
FINANCIAL AND OPERATING RESULTS
Consolidated Portfolio
FIBRAMQ’s consolidated 3Q24 results were as follows:
TOTAL PORTFOLIO |
|
|
||||
|
3Q24 |
3Q23 |
Variance |
3Q24 |
3Q23 |
Variance |
Weighted Average CBFIs (millions) |
797.3m |
761.3m |
4.7% |
797.3m |
761.3m |
4.7% |
Net Operating Income (inc. SLR) |
Ps. 1,087.0m |
Ps. 904.3m |
20.2% |
US$ 57.5m |
US$ 53.0m |
8.4% |
Net Operating Income (exc. SLR) |
Ps. 1,073.2m |
Ps. 905.7m |
18.5% |
US$ 56.7m |
US$ 53.1m |
6.9% |
EBITDA |
Ps. 967.5m |
Ps. 829.9m |
16.6% |
US$ 51.1m |
US$ 48.7m |
5.1% |
Funds From Operations (FFO) |
Ps. 676.5m |
Ps. 596.5m |
13.4% |
US$ 35.8m |
US$ 35.0m |
2.3% |
FFO per certificate |
Ps. 0.8484 |
Ps. 0.7835 |
8.3% |
US$ 0.0449 |
US$ 0.0459 |
(2.3%) |
Adjusted Funds From Operations (AFFO) |
Ps. 527.3m |
Ps. 466.0m |
13.2% |
US$ 27.9m |
US$ 27.3m |
2.0% |
AFFO per certificate |
Ps. 0.6613 |
Ps. 0.6121 |
8.0% |
US$ 0.0350 |
US$ 0.0359 |
(2.6%) |
NOI Margin (inc. SLR) |
87.2% |
86.3% |
90 bps |
87.2% |
86.3% |
90 bps |
NOI Margin (exc. SLR) |
87.1% |
86.3% |
74 bps |
87.1% |
86.3% |
74 bps |
AFFO Margin |
42.3% |
44.5% |
(217 bps) |
42.3% |
44.5% |
(217 bps) |
GLA (’000s square feet) EOP |
36,009 |
35,551 |
1.3% |
36,009 |
35,551 |
1.3% |
GLA (’000s sqm) EOP |
3,345 |
3,303 |
1.3% |
3,345 |
3,303 |
1.3% |
Occupancy EOP |
96.6% |
97.1% |
(43 bps) |
96.6% |
97.1% |
(43 bps) |
Average Occupancy |
96.4% |
97.0% |
(61 bps) |
96.4% |
97.0% |
(61 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 3Q24 results for FIBRAMQ’s industrial portfolio:
INDUSTRIAL PORTFOLIO |
|
|
||||
|
3Q24 |
3Q23 |
Variance |
3Q24 |
3Q23 |
Variance |
Net Operating Income (inc. SLR) |
Ps. 938.3m |
Ps. 770.1m |
21.8% |
US$ 49.6m |
US$ 45.1m |
9.9% |
Net Operating Income (exc. SLR) |
Ps. 921.9m |
Ps. 765.5m |
20.4% |
US$ 48.7m |
US$ 44.9m |
8.6% |
NOI Margin (inc. SLR) |
90.5% |
89.8% |
73 bps |
90.5% |
89.8% |
73 bps |
NOI Margin (exc. SLR) |
90.3% |
89.7% |
63 bps |
90.3% |
89.7% |
63 bps |
GLA (’000s square feet) EOP |
31,382 |
30,939 |
1.4% |
31,382 |
30,939 |
1.4% |
GLA (’000s sqm) EOP |
2,915 |
2,874 |
1.4% |
2,915 |
2,874 |
1.4% |
Occupancy EOP |
97.2% |
97.9% |
(69 bps) |
97.2% |
97.9% |
(69 bps) |
Average Occupancy |
96.9% |
97.8% |
(90 bps) |
96.9% |
97.8% |
(90 bps) |
Average monthly rent per leased (US$/sqm) EOP |
US$ 6.14 |
US$ 5.79 |
5.9% |
US$ 6.14 |
US$ 5.79 |
5.9% |
Customer retention LTM |
82.5% |
91.7% |
(920 bps) |
82.5% |
91.7% |
(920 bps) |
Weighted Avg Lease Term Remaining (years) EOP |
3.5 |
3.5 |
1.6% |
3.5 |
3.5 |
1.6% |
FIBRAMQ’s industrial portfolio performance remains robust, with growing average rental rates and strong retention. For the quarter ended September 30, 2024, FIBRAMQ’s industrial portfolio delivered quarterly NOI of US$ 48.7 million, a 8.6% annual increase. At quarter-end, occupancy was 97.2%. Total leasing activity comprised 1,873 thousand square feet of GLA, including 702 thousand square feet of new leases, and quarterly moveouts were 408 thousand square feet. Renewal leases comprised 13 contracts across 1,171 thousand square feet, driving a solid retention rate of 82.5% over the last 12 months. New leases featured an auto parts supplier manufacturer in Reynosa and an e-commerce logistics company in Mexico City.
Retail Portfolio
The following table summarizes the proportionally combined 3Q24 results for FIBRAMQ’s retail portfolio:
RETAIL PORTFOLIO |
3Q24 |
3Q23 |
Variance |
Net Operating Income (incl. SLR) |
Ps. 148.7m |
Ps. 134.2m |
10.8% |
Net Operating Income (excl. SLR) |
Ps. 151.3m |
Ps. 140.2m |
7.9% |
NOI Margin (%, inc. SLR) |
70.9% |
70.6% |
27 bps |
NOI Margin (%, exc. SLR) |
71.3% |
71.5% |
(27 bps) |
GLA (’000s square feet) EOP |
4,627 |
4,613 |
0.3% |
GLA (’000s sqm) EOP |
430 |
429 |
0.3% |
Occupancy EOP |
93.0% |
91.7% |
133 bps |
Average Occupancy |
92.7% |
91.5% |
124 bps |
Average monthly rent per leased sqm EOP |
$184.27 |
$174.79 |
5.4% |
Customer retention LTM |
82.7% |
86.4% |
(370 bps) |
Weighted Avg Lease Term Remaining (years) EOP |
3.4 |
3.4 |
(0.6%) |
FIBRAMQ signed 65 new and renewal leases during the quarter totaling 23 thousand square meters of GLA, across a diverse range of tenants. New leasing and renewals included a 5.6 thousand square meter new lease for a logistics company in Mexico City and a 4.3 thousand square meter contract renewal for a gym. The retail portfolio benefited from strong retention of 82.7% over the last twelve months.
As of September 30, 2024, trade receivables net of provisions were Ps. 6.0 million (excl. VAT), lower by 15% QoQ.
Lease Rental Rate Summary
Based on annualized base rents, FIBRAMQ’s consolidated lease portfolio is now 65.2% linked to either Mexican or US CPI, representing an increase of 31 bps over the last twelve months.
In the industrial portfolio, FIBRAMQ achieved a weighted average positive releasing spread of 16.9%, in respect of commercially negotiated lease renewals generating US$41.3 million of annualized base rent.
For further details about FIBRA Macquarie’s Third Quarter 2024 results, please refer to the Supplementary Information materials located at BMV Filings (fibramacquarie.com).
BALANCE SHEET
As of September 30, 2024, FIBRAMQ had US$1,044.2 million of debt outstanding and US$411.2 million available on its undrawn committed and uncommitted revolving credit facilities as well as US$25.5 million of unrestricted cash on hand. FIBRAMQ’s indebtedness is 100% fixed rate, with 4.0 years of weighted average tenor remaining.
FIBRAMQ does not have any loans maturing before September 2026.
As of September 30, 2024, FIBRAMQ’s CNBV regulatory debt to total asset ratio was 30.7% and debt service coverage ratio was 6.1x.
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 September 30, 2024, FIBRA Macquarie’s green building certification coverage represented 39.8% of consolidated GLA.
Sustainability and green financing linked portion of drawn debt stands at 62.7%.
DISTRIBUTION
FIBRA Macquarie declared a cash distribution of Ps. 0.5250 per certificate for the quarter ended September 30, 2024. The distribution is expected to be paid on or about January 30, 2025, to holders of record on January 29, 2025. FIBRAMQ’s certificates are expected to commence trading ex-distribution on January 29, 2025.
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. FIBRAMQ maintains a positive 2024 outlook on operational performance.
AFFO
FIBRA Macquarie is upgrading its FY24 AFFO per certificate guidance to a range of Ps. 2.60 to Ps. 2.63, from the prior guidance range of Ps. 2.55 to Ps. 2.60.
The FY24 AFFO guidance equates to a range of US$113 million to US$115 million.
This guidance assumes:
- an average exchange rate of Ps. 19.50 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
FIBRA Macquarie 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.
Outstanding certificates
FIBRA Macquarie had 797,311,397 outstanding certificates as of September 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
FIBRA Macquarie will host an earnings conference call and webcast presentation on Friday, October 25, 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 Third 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 Third 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 241 industrial properties and 17 retail properties, located in 20 cities across 16 Mexican states as of September 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.