MEXICO CITY--(BUSINESS WIRE)--FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ) announced its financial and operating results for the first quarter ended March 31, 2024.
FIRST QUARTER 2024 HIGHLIGHTS
- Consolidated 1Q24 NOI up 10.2% YoY, in underlying USD terms
- Consolidated 1Q24 AFFO up 4.0% YoY, in underlying USD terms
- Consolidated 1Q24 portfolio occupancy of 97.3%
- Quarterly retail foot traffic above pre-pandemic levels for the first time
- Cash distribution of Ps. 0.5250 per certificate declared for 1Q24
“We achieved another quarter of strong growth as we adhere to our core focus of maintaining a high-quality, well-located portfolio, and disciplined capital allocation. With a backdrop that continues to be supported by nearshoring tailwinds, we remain optimistic in our positioning and ability to continue to deliver accretive growth,” said Simon Hanna, FIBRA Macquarie’s chief executive officer. “With these favorable drivers we are pleased to have realized record consolidated revenue and robust rental rate increases as we see ongoing demand for industrial space in our key northern Mexico markets, leading to a 10.1% YoY increase in our distribution per certificate, in underlying USD terms. Additionally, our retail portfolio has demonstrated ongoing momentum, and during the first quarter we saw a meaningful rebound in foot traffic to pre-Covid levels for the first time, contributing to a sustained and ongoing recovery.”
Mr. Hanna continued, “We see a compelling opportunity to leverage our platform to further accelerate our growth in the coming years. Subsequent to quarter end, we acquired a strategic 25 hectare land parcel in the core industrial market of Monterrey, and we look forward to commencing works to continue to capitalize on the strong demand environment.”
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$108 million remaining over the next twelve months (this includes remaining building construction costs, contracted tenant improvements as well as consideration for land, including our recent acquisition in Monterrey, 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, 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).
Monterrey Metropolitan Area, Nuevo Leon
- On April 19, 2024, FIBRAMQ completed the acquisition of a 25 hectare land parcel in Monterrey for US$12.4 million, excluding transaction costs and taxes.
- The land parcel is strategically positioned near Monterrey’s International Airport and approximately 1.5kms from FIBRAMQ’s Apodaca Industrial Park.
- The long-term development plan for this parcel anticipates a phased, multi-year construction of a multi-building Class A industrial park, with a total potential GLA of approximately 906 thousand square feet.
Projects in Process
Apodaca, Nuevo Leon
- FIBRAMQ is constructing an additional property comprising 200 thousand square feet of GLA, with an expected completion during 2Q24.
- This class “A” industrial park is anticipated to comprise a total potential GLA of 790 thousand square feet, of which FIBRAMQ has in progress or completed construction of 590 thousand square feet of GLA.
Tijuana, Baja California
- Works are ongoing for the first building comprising 405 thousand square feet of GLA with an updated expected delivery date in the second half of 2024.
- This class “A” industrial park is anticipated to comprise a total potential GLA of 890 thousand square feet.
FINANCIAL AND OPERATING RESULTS
Consolidated Portfolio
FIBRAMQ’s consolidated 1Q24 results were as follows:
TOTAL PORTFOLIO |
|
|
||||||||||
|
1Q24 |
1Q23 |
Variance |
1Q24 |
1Q23 |
Variance |
||||||
Net Operating Income (inc. SLR) |
Ps. 952.9m |
Ps. 950.4m |
0.3% |
US$ 56.1m |
US$ 50.8m |
10.3% |
||||||
Net Operating Income (exc. SLR) |
Ps. 958.4m |
Ps. 956.7m |
0.2% |
US$ 56.4m |
US$ 51.2m |
10.2% |
||||||
EBITDA |
Ps. 864.1m |
Ps. 877.6m |
(1.5%) |
US$ 50.8m |
US$ 46.9m |
8.4% |
||||||
Funds From Operations (FFO) |
Ps. 614.1m |
Ps. 640.8m |
(4.2%) |
US$ 36.1m |
US$ 34.3m |
5.5% |
||||||
FFO per certificate |
Ps. 0.7991 |
Ps. 0.8418 |
(5.1%) |
US$ 0.0470 |
US$ 0.0450 |
4.5% |
||||||
Adjusted Funds From Operations (AFFO) |
Ps. 489.3m |
Ps. 517.6m |
(5.5%) |
US$ 28.8m |
US$ 27.7m |
4.0% |
||||||
AFFO per certificate |
Ps. 0.6368 |
Ps. 0.6799 |
(6.3%) |
US$ 0.0375 |
US$ 0.0363 |
3.1% |
||||||
NOI Margin (inc. SLR) |
85.7% |
87.1% |
(140 bps) |
85.7% |
87.1% |
(140 bps) |
||||||
NOI Margin (exc. SLR) |
86.2% |
87.7% |
(149 bps) |
86.2% |
87.7% |
(149 bps) |
||||||
AFFO Margin |
44.0% |
47.4% |
(343 bps) |
44.0% |
47.4% |
(343 bps) |
||||||
GLA (’000s square feet) EOP |
35,575 |
35,055 |
1.5% |
35,575 |
35,055 |
1.5% |
||||||
GLA (’000s sqm) EOP |
3,305 |
3,257 |
1.5% |
3,305 |
3,257 |
1.5% |
||||||
Occupancy EOP |
97.3% |
97.3% |
7 bps |
97.3% |
97.3% |
7 bps |
||||||
Average Occupancy |
97.2% |
96.9% |
23 bps |
97.2% |
96.9% |
23 bps |
||||||
Industrial Portfolio
The following table summarizes 1Q24 results for FIBRAMQ’s industrial portfolio:
INDUSTRIAL PORTFOLIO |
|
|
||||||||||
|
1Q24 |
1Q23 |
Variance |
1Q24 |
1Q23 |
Variance |
||||||
Net Operating Income (inc. SLR) |
Ps. 812.2m |
Ps. 824.4m |
(1.5%) |
US$ 47.8m |
US$ 44.1m |
8.4% |
||||||
Net Operating Income (exc. SLR) |
Ps. 816.6m |
Ps. 822.7m |
(0.7%) |
US$ 48.0m |
US$ 44.0m |
9.2% |
||||||
NOI Margin (inc. SLR) |
88.9% |
90.4% |
(144 bps) |
88.9% |
90.4% |
(144 bps) |
||||||
NOI Margin (exc. SLR) |
89.4% |
90.2% |
(77 bps) |
89.4% |
90.2% |
(77 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 |
98.2% |
98.2% |
1 bps |
98.2% |
98.2% |
1 bps |
||||||
Average Occupancy |
98.0% |
97.8% |
21 bps |
98.0% |
97.8% |
21 bps |
||||||
Average monthly rent per leased (US$/sqm) EOP |
US$ 5.97 |
US$ 5.63 |
6.1% |
US$ 5.97 |
US$ 5.63 |
6.1% |
||||||
Customer retention LTM |
88.9% |
92.5% |
(360 bps) |
88.9% |
92.5% |
(360 bps) |
||||||
Weighted Avg Lease Term Remaining (years) EOP |
3.4 |
3.2 |
4.0% |
3.4 |
3.2 |
4.0% |
||||||
FIBRAMQ’s industrial portfolio performance remains robust, with continued increases in occupancy and average rental rates. For the quarter ended March 31, 2024, FIBRAMQ’s industrial portfolio delivered quarterly NOI of US$48.0 million, a 9.2% annual increase. At quarter-end, occupancy was 98.2%. New leasing activity comprised 128 thousand square feet of GLA and quarterly moveouts were 96 thousand square feet. Renewal and new leases featured a cardboard packaging manufacturer in Monterrey and an auto parts warehousing facility in Saltillo. Renewal leases comprised 8 contracts across 541 thousand square feet, driving a solid retention rate of 88.9% over the last 12 months.
Retail Portfolio
The following table summarizes the proportionally combined 1Q24 results for FIBRAMQ’s retail portfolio:
RETAIL PORTFOLIO |
1Q24 |
1Q23 |
Variance |
|||
Net Operating Income (incl. SLR) |
Ps. 140.6m |
Ps. 126.0m |
11.6% |
|||
Net Operating Income (excl. SLR) |
Ps. 141.7m |
Ps. 134.0m |
5.8% |
|||
NOI Margin (%, inc. SLR) |
70.7% |
70.3% |
42 bps |
|||
NOI Margin (%, exc. SLR) |
71.3% |
74.8% |
(349 bps) |
|||
GLA (’000s square feet) EOP |
4,629 |
4,603 |
0.6% |
|||
GLA (’000s sqm) EOP |
430 |
428 |
0.6% |
|||
Occupancy EOP |
91.4% |
91.0% |
41 bps |
|||
Average Occupancy |
91.2% |
91.0% |
25 bps |
|||
Average monthly rent per leased sqm EOP |
Ps. 179.60 |
Ps. 169.69 |
5.8% |
|||
Customer retention LTM |
87.3% |
82.1% |
523 bps |
|||
Weighted Avg Lease Term Remaining (years) EOP |
3.5 |
3.1 |
13.8% |
- Total revenues were Ps. 198.9 million, up 11.0% over the prior corresponding quarter
- Retail portfolio cash collections during the quarter trended up to Ps. 196.7 million, an increase of 2.1% versus the prior corresponding period
- Over the last twelve months, weighted average lease term remaining increased by 13.8% alongside an increase in average rents of 5.8%, reflecting improved leasing conditions
- During the first quarter, recorded foot traffic at FIBRAMQ’s shopping centers was approximately 4.0% above the prior comparable period, and was above pre-pandemic levels by 1.0%
FIBRAMQ signed 79 new and renewal leases during the quarter totaling 27.4 thousand square meters of GLA, across a diverse range of tenants including a cinema, a gym and a hotel. With this strong leasing activity, the Retail portfolio benefited from strong retention of 87.3% over the last twelve months.
As of March 31, 2024, trade receivables net of provisions were Ps. 9.2 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 65.7% linked to either Mexican or US CPI, representing an increase of 592 bps over the last twelve months.
In the industrial portfolio, FIBRAMQ achieved a weighted average positive releasing spread of 11.8%, in respect of leases generating US$21.3 million of annualized base rent.
For further details about FIBRA Macquarie’s First Quarter 2024 results, please refer to the Supplementary Information materials located at BMV Filings (fibramacquarie.com).
BALANCE SHEET
As of March 31, 2024, FIBRAMQ had US$1,014.6 million of debt outstanding, US$307.9 million available on its undrawn committed revolving credit facility and US$32.1 million of unrestricted cash on hand.
FIBRAMQ’s indebtedness is 88.7% fixed rate, with 3.9 years of weighted average term remaining. FIBRAMQ’s does not have any of its debt maturing before September 2026.
FIBRAMQ’s CNBV regulatory debt to total asset ratio was 30.5% 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, 2025. No certificates were repurchased during the quarter.
SUSTAINABILITY
At 31 March, 2024, FIBRA Macquarie’s green building certification coverage represented 39.9% of consolidated GLA.
Sustainability and green financing linked portion of drawn debt stands at 61.1%.
DISTRIBUTION
On April 25, 2024, FIBRAMQ declared a cash distribution of Ps. 0.5250 per certificate for the quarter ended March 31, 2024. The distribution is expected to be paid on or about June 17, 2024, to holders of record on June 14, 2024. FIBRAMQ’s certificates are expected to commence trading ex-distribution on June 14, 2024.
FY24 GUIDANCE
AFFO
FIBRA Macquarie is reaffirming its FY24 AFFO per certificate guidance of Ps. 2.55 to Ps. 2.60.
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 the remainder of 2024;
- no new acquisitions or divestments;
- no deterioration in broader economic and market conditions.
Cash Distribution
FIBRAMQ is reaffirming guidance for cash distributions in FY24 of Ps. 2.10 per certificate, paid in equal quarterly instalments of Ps. 0.5250 per certificate.
The FY24 cash distribution guidance equates to approximately US$97.4 million, representing an annual increase for scheduled distributions of 8.6% 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.
Outstanding certificates
FIBRA Macquarie had 797,311,397 outstanding certificates as of March 31, 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
FIBRAMQ will host an earnings conference call and webcast presentation on Friday, April 26, 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 First 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 first 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 239 industrial properties and 17 retail properties, located in 20 cities across 16 Mexican states as of March 31, 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 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.
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