MEXICO CITY--(BUSINESS WIRE)--FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ) announced its financial and operating results for the fourth quarter ended December 31, 2023.
FOURTH QUARTER 2023 HIGHLIGHTS
- AFFO per certificate was Ps. 0.6363 (US$0.0362) for the quarter, compared with Ps. 0.6762 (US$0.0343) for the prior corresponding quarter, up 5.4% YoY in underlying USD terms
- Consolidated 4Q23 NOI per certificate up 11.4% YoY, in underlying USD terms
- Consolidated portfolio year-end occupancy of 97.3%, up 56 bps YoY
- Leasing renewal spreads of 18.6% on commercially negotiated leases for industrial portfolio
- Delivered three buildings and continues construction on two additional development projects
- Cash distribution of Ps. 0.5250 per certificate declared for 4Q23
- Estimated FY23 extraordinary distribution of approximately Ps. 1.7 billion, to be paid prior to March 15, 2024
“The fourth quarter is a testament to the continued positive momentum we have demonstrated throughout the year, delivering solid occupancy gains, positive leasing spreads and strong underlying NOI growth. With a well-positioned portfolio that is predominately located in nearshoring markets, we are pleased with our ability to maintain high tenant retention as well as attract strong interest from new customers across an array of industries,” said Simon Hanna, FIBRA Macquarie’s chief executive officer. “We increased both our GLA and our occupancy as we delivered new buildings and executed leases which will start contributing to our earnings in 2024. These deliveries demonstrate our development capabilities, including the incorporation of the highest sustainability standards which are not only contribute to our environmental goals but provide a competitive advantage in attracting customers and delivering superior returns.”
Mr. Hanna continued, “As we look ahead, we remain focused on delivering organic growth as well as continuing to execute on our growth capex program. Mexico, and particularly the northern markets where more than three-quarters of our industrial portfolio is, remains in high demand for companies looking benefit from Mexico's established supply chain, skilled labor, and favorable trade network. We are optimistic about our development opportunities and have a solid pipeline, and will remain disciplined in terms of capital allocation and focused on navigating the development landscape. We are pleased with the record NAV per certificate that we reported as of yearend, and we will continue to execute on our strategy designed to maximize value.”
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 investment of approximately US$126 million.
There is an expected capital deployment of US$80 million remaining 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 for all development projects). FIBRA Macquarie maintains a target NOI yield on cost of between 9% and 11% on its industrial development program. Its development program incorporates the highest sustainability standards and is designed to generate embedded operational efficiencies for its customers.
In the fourth quarter, FIBRAMQ delivered three buildings, and continues construction on two additional buildings. During 2023, FIBRAMQ executed leases on two new buildings, achieving an average development yield of 11.9%.
Recently delivered and projects in process are summarized below. For further details, please refer to the Supplementary Information materials located at BMV Filings (fibramacquarie.com).
Delivered Projects and Executed Leases
Cuautitlán, Mexico City Metropolitan Area
- FIBRAMQ executed a lease for its 510 thousand square foot building during 2Q23. The project was fully stabilized in 1Q24.
- FIBRAMQ delivered the second building in this project, comprising 225 thousand square feet of GLA, during 4Q23.
Apodaca, Nuevo Leon
- FIBRAMQ executed a lease for its 210 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 mid-2024.
Ciudad Juárez, Chihuahua
- FIBRAMQ delivered a 265 thousand square foot building in the southeast market of Ciudad Juárez during 4Q23.
- The project is part of 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 delivered a 145 thousand square foot building in Reynosa during 4Q23.
Projects in Process
Apodaca, Nuevo Leon
- FIBRAMQ is constructing 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.
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 FY23 results were as follows:
TOTAL PORTFOLIO |
(millions of Pesos unless otherwise stated) |
(millions of Dollars, unless otherwise stated) |
||||||||||
|
FY23 |
FY22 |
Variance |
FY23 |
FY22 |
Variance |
||||||
Net Operating Income (inc. SLR) |
Ps. 3,739.2m |
Ps. 3,753.1m |
(0.4%) |
US$ 210.5m |
US$ 186.5m |
12.9% |
||||||
Net Operating Income (exc. SLR) |
Ps. 3,759.0m |
Ps. 3,794.4m |
(0.9%) |
US$ 211.6m |
US$ 188.5m |
12.2% |
||||||
EBITDA |
Ps. 3,420.0m |
Ps. 3,473.7m |
(1.5%) |
US$ 192.5m |
US$ 172.6m |
11.6% |
||||||
Funds From Operations (FFO) |
Ps. 2,474.5m |
Ps. 2,521.3m |
(1.9%) |
US$ 139.3m |
US$ 125.3m |
11.2% |
||||||
FFO per certificate |
Ps. 3.2505 |
Ps. 3.3119 |
(1.9%) |
US$ 0.1830 |
US$ 0.1646 |
11.2% |
||||||
Adjusted Funds From Operations (AFFO) |
Ps. 1,964.2m |
Ps. 2,064.9m |
(4.9%) |
US$ 110.6m |
US$ 102.6m |
7.8% |
||||||
AFFO per certificate |
Ps. 2.5801 |
Ps. 2.7124 |
(4.9%) |
US$ 0.1453 |
US$ 0.1348 |
7.8% |
||||||
NOI Margin (inc. SLR) |
86.2% |
87.4% |
(112 bps) |
86.2% |
87.4% |
(112 bps) |
||||||
NOI Margin (exc. SLR) |
86.7% |
88.3% |
(163 bps) |
86.7% |
88.3% |
(163 bps) |
||||||
AFFO Margin |
45.3% |
48.1% |
(276 bps) |
45.3% |
48.1% |
(276 bps) |
||||||
FIBRAMQ’s consolidated 4Q23 results were as follows:
TOTAL PORTFOLIO |
(millions of Pesos unless otherwise stated) |
(millions of Dollars, unless otherwise stated) |
||||||||||
|
4Q23 |
4Q22 |
Variance |
4Q23 |
4Q22 |
Variance |
||||||
Net Operating Income (inc. SLR) |
Ps. 946.0m |
Ps. 947.1m |
(0.1%) |
US$ 53.8m |
US$ 48.1m |
11.9% |
||||||
Net Operating Income (exc. SLR) |
Ps. 951.7m |
Ps. 957.5m |
(0.6%) |
US$ 54.1m |
US$ 48.6m |
11.4% |
||||||
EBITDA |
Ps. 852.7m |
Ps. 872.8m |
(2.3%) |
US$ 48.5m |
US$ 44.3m |
9.5% |
||||||
Funds From Operations (FFO) |
Ps. 613.7m |
Ps. 631.6m |
(2.8%) |
US$ 34.9m |
US$ 32.1m |
8.8% |
||||||
FFO per certificate |
Ps. 0.8061 |
Ps. 0.8297 |
(2.8%) |
US$ 0.0458 |
US$ 0.0421 |
8.8% |
||||||
Adjusted Funds From Operations (AFFO) |
Ps. 484.4m |
Ps. 514.8m |
(5.9%) |
US$ 27.6m |
US$ 26.1m |
5.4% |
||||||
AFFO per certificate |
Ps. 0.6363 |
Ps. 0.6762 |
(5.9%) |
US$ 0.0362 |
US$ 0.0343 |
5.4% |
||||||
NOI Margin (inc. SLR) |
85.1% |
86.0% |
(89 bps) |
85.1% |
86.0% |
(89 bps) |
||||||
NOI Margin (exc. SLR) |
85.6% |
86.9% |
(132 bps) |
85.6% |
86.9% |
(132 bps) |
||||||
AFFO Margin |
43.6% |
46.7% |
(316 bps) |
43.6% |
46.7% |
(316 bps) |
||||||
GLA (’000s square feet) EOP |
35,575 |
35,050 |
1.5% |
35,575 |
35,050 |
1.5% |
||||||
GLA (’000s sqm) EOP |
3,305 |
3,256 |
1.5% |
3,305 |
3,256 |
1.5% |
||||||
Occupancy EOP |
97.3% |
96.8% |
56 bps |
97.3% |
96.8% |
56 bps |
||||||
Average Occupancy |
97.1% |
96.6% |
51 bps |
97.1% |
96.6% |
51 bps |
||||||
Industrial Portfolio
The following table summarizes FY23 results for FIBRAMQ’s industrial portfolio:
INDUSTRIAL PORTFOLIO |
(millions of Pesos, unless otherwise stated) |
(millions of Dollars, unless otherwise stated) |
||||||||||
|
FY23 |
FY22 |
Variance |
FY23 |
FY22 |
Variance |
||||||
Net Operating Income (inc. SLR) |
Ps. 3,209.8m |
Ps. 3,330.7m |
(3.6%) |
US$ 180.7m |
US$ 165.5m |
9.2% |
||||||
Net Operating Income (exc. SLR) |
Ps. 3,207.1m |
Ps. 3,329.5m |
(3.7%) |
US$ 180.6m |
US$ 165.4m |
9.1% |
||||||
NOI Margin (inc. SLR) |
89.5% |
91.1% |
(159 bps) |
89.5% |
91.1% |
(159 bps) |
||||||
NOI Margin (exc. SLR) |
89.4% |
91.1% |
(163 bps) |
89.4% |
91.1% |
(163 bps) |
||||||
The following table summarizes 4Q23 results for FIBRAMQ’s industrial portfolio:
INDUSTRIAL PORTFOLIO |
(millions of Pesos, unless otherwise stated) |
(millions of Dollars, unless otherwise stated) |
||||||||||
|
4Q23 |
4Q22 |
Variance |
4Q23 |
4Q22 |
Variance |
||||||
Net Operating Income (inc. SLR) |
Ps. 808.9m |
Ps. 856.3m |
(5.5%) |
US$ 46.0m |
US$ 43.5m |
5.8% |
||||||
Net Operating Income (exc. SLR) |
Ps. 811.7m |
Ps. 855.5m |
(5.1%) |
US$ 46.2m |
US$ 43.4m |
6.3% |
||||||
NOI Margin (inc. SLR) |
88.3% |
90.8% |
(258 bps) |
88.3% |
90.8% |
(258 bps) |
||||||
NOI Margin (exc. SLR) |
88.6% |
90.7% |
(218 bps) |
88.6% |
90.7% |
(218 bps) |
||||||
GLA (’000s square feet) EOP |
30,947 |
30,452 |
1.6% |
30,947 |
30,452 |
1.6% |
||||||
GLA (’000s sqm) EOP |
2,875 |
2,829 |
1.6% |
2,875 |
2,829 |
1.6% |
||||||
Occupancy EOP |
98.1% |
97.6% |
47 bps |
98.1% |
97.6% |
47 bps |
||||||
Average Occupancy |
97.9% |
97.4% |
46 bps |
97.9% |
97.4% |
46 bps |
||||||
Average monthly rent per leased (US$/sqm) EOP |
US$ 5.88 |
US$ 5.50 |
6.9% |
US$ 5.88 |
US$ 5.50 |
6.9% |
||||||
Customer retention LTM |
89.4% |
90.5% |
(112 bps) |
89.4% |
90.5% |
(112 bps) |
||||||
Weighted Avg Lease Term Remaining (years) EOP |
3.5 |
3.4 |
2.4% |
3.5 |
3.4 |
2.4% |
||||||
FIBRAMQ’s industrial portfolio performance remains robust, with continued increases in occupancy and average rental rates. For the quarter ended December 31, 2023, FIBRAMQ’s industrial portfolio delivered quarterly NOI of US$46.2 million, a 6.3% annual increase. At quarter-end, occupancy was 98.1%, up 47 basis points year over year. New leasing activity comprised 264 thousand square feet of GLA and quarterly moveouts were 176 thousand square feet. New leases featured an electronic equipment manufacturer in Mexicali and an auto parts logistics operator in Saltillo. Renewal leases comprised 18 contracts across 2.2 million square feet, driving a high retention rate of 89.4% over the last 12 months.
Retail Portfolio
The following table summarizes the proportionally combined FY23 results for FIBRAMQ’s retail portfolio:
RETAIL PORTFOLIO |
FY23 |
FY22 |
Variance |
|||
Net Operating Income (incl. SLR) |
Ps. 529.4m |
Ps. 422.5m |
25.3% |
|||
Net Operating Income (excl. SLR) |
Ps. 551.9m |
Ps. 464.7m |
18.8% |
|||
NOI Margin (%, inc. SLR) |
70.5% |
66.0% |
457 bps |
|||
NOI Margin (%, exc. SLR) |
73.5% |
72.5% |
98 bps |
The following table summarizes the proportionally combined 4Q23 results for FIBRAMQ’s retail portfolio:
RETAIL PORTFOLIO |
4Q23 |
4Q22 |
Variance |
|||
Net Operating Income (incl. SLR) |
Ps. 137.1m |
Ps. 90.8m |
51.0% |
|||
Net Operating Income (excl. SLR) |
Ps. 140.0m |
Ps. 102.0m |
37.2% |
|||
NOI Margin (%, inc. SLR) |
70.2% |
57.1% |
1,308 bps |
|||
NOI Margin (%, exc. SLR) |
71.7% |
64.2% |
748 bps |
|||
GLA (’000s square feet) EOP |
4,628 |
4,598 |
0.7% |
|||
GLA (’000s sqm) EOP |
430 |
427 |
0.7% |
|||
Occupancy EOP |
92.0% |
90.9% |
109 bps |
|||
Average Occupancy |
91.9% |
91.1% |
81 bps |
|||
Average monthly rent per leased (Ps./sqm) EOP |
$177.28 |
$168.86 |
5.0% |
|||
Customer retention LTM |
89.6% |
85.5% |
412 bps |
|||
Weighted Avg Lease Term Remaining (years) EOP |
3.4 |
3.0 |
15.3% |
- Total revenues were Ps. 195.3 million, up 22.9% over the prior corresponding quarter
- Retail portfolio cash collections during the quarter trended up to Ps. 192.7 million, an increase of 10.4% versus the prior corresponding period
- Over the last twelve months, weighted average lease term remaining increased by 15.3% alongside an increase in average rents of 5.0%, reflecting improved leasing conditions
- During the fourth quarter, recorded foot traffic at FIBRAMQ’s shopping centers was approximately 14.2% above the prior comparable period, and approximately 10.5% below pre-pandemic levels
FIBRAMQ signed 74 new and renewal leases during the quarter totaling 19 thousand square meters of GLA, across a diverse range of tenants including restaurants, dark kitchens, banks and merchandise stores. With this strong leasing activity, the Retail portfolio benefited from strong retention of 89.6% over the last twelve months.
As of December 31, 2023, trade receivables net of provisions were Ps. 7.4 million (excl. VAT), stable over the prior corresponding period.
Lease Rental Rate Summary
Based on annualized base rents, FIBRAMQ’s consolidated lease portfolio is now 64.7% linked to either Mexican or US CPI, representing an increase of 525 bps over the last twelve months.
In the industrial portfolio, FIBRAMQ achieved a weighted average positive releasing spread of 18.6%, in respect of leases generating US$22.3 million of annualized base rent.
For further details about FIBRA Macquarie’s Fourth Quarter 2023 results, please refer to the Supplementary Information materials located at BMV Filings (fibramacquarie.com).
BALANCE SHEET
As of December 31, 2023, FIBRAMQ had approximately US$954 million of debt outstanding, US$332 million available on its undrawn committed revolving credit facility and US$29 million of unrestricted cash on hand.
FIBRAMQ’s indebtedness is 90.7% fixed rate, with 4.3 years of weighted average term remaining.
FIBRAMQ’s CNBV regulatory debt to total asset ratio was 29.3% and debt service coverage ratio was 5.6x.
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 fourth quarter, FIBRA Macquarie achieved EDGE certification on eleven industrial buildings. Green building certification coverage on FIBRAMQ’s consolidated portfolio now represents 39.7% of GLA.
Sustainability and green financing linked portion of drawn debt stands at 58.7%.
DISTRIBUTION
Regular Distribution
On February 8, 2024, FIBRAMQ declared a cash distribution of Ps. 0.5250 per certificate for the quarter ended December 31, 2023. The distribution is expected to be paid on or about March 8, 2024, to holders of record on March 7, 2024. FIBRAMQ’s certificates are expected to commence trading ex-distribution on March 6, 2024. Including this payment, full year 2023 regular distributions total Ps. 2.10 per certificate, in-line with guidance.
Extraordinary Distribution
In accordance with Mexican tax rules, the total taxable result subject to minimum distribution guidelines for FIBRAs including, amongst other items, FX gains and inflationary impacts on foreign currency denominated debt. FIBRAMQ has calculated these impacts on its 2023 required distribution. In order to comply with the applicable tax laws, FIBRAMQ anticipates an extraordinary distribution of approximately Ps. 1.7 billon, expected to be paid prior to March 15, 2024. This extraordinary distribution is expected to be paid 70% as a distribution in kind (CBFIs) and 30% as distribution in cash, subject to customary final regulatory approvals.
FY24 GUIDANCE
Outstanding certificates
As of the date of this release, FIBRA Macquarie has 761,288,719 outstanding certificates. The anticipated issuance of CBFIs in March 2024 in respect of the extraordinary distribution is expected to be approximately 36.7m CBFIs, resulting in an approximate 4.8% increase in outstanding CBFIs, or an approximate 3.8% on a weighted average basis for the year ending December 31, 2024.
AFFO
FIBRAMQ is initiating FY24 AFFO guidance in a range of Ps. 2.55 to Ps. 2.60 per weighted average certificate, taking into account the expected issuance of certificates connected with the March 2024 extraordinary distribution.
Based on outstanding certificates of 761,288,719 as of December 31, 2023, the FY24 AFFO guidance would imply a range of Ps. 2.65 to Ps. 2.70 per certificate.
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 translating to increased revenue and NOI which is expected to be offset by a combination of the continued impact of Peso appreciation relative to the US Dollar, as well as the financing costs of near-term investments in FIBRAMQ’s industrial growth capex program, which is expected to incrementally contribute to revenue and AFFO growth upon stabilization of each development project. This guidance assumes:
- an average exchange rate of Ps. 17.30 per US dollar for FY24;
- no new acquisitions or divestments;
- no deterioration in broader economic and market conditions.
Cash Distribution
FIBRAMQ is initiating guidance for cash distributions in FY24 of Ps. 2.10 per certificate, paid in equal quarterly instalments of Ps. 0.5250 per certificate, taking into account the expected issuance of certificates connected with the March 2024 extraordinary distribution.
The FY24 cash distribution guidance equates to approximately US$97m, representing an annual increase for scheduled distributions of 8.0% in underlying USD terms.
The guidance implies an expected FY24 AFFO payout ratio of approximately 82%, based on the AFFO guidance midpoint. The payment of 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, February 9, 2024, at 11:00 a.m. CT / 12:00 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 Fourth 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 fourth 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 December 31, 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.