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FIBRA Macquarie México Reports Second Quarter 2021 Results

·14-min read

- Industrial portfolio rental rate and occupancy increases -
- Retail portfolio posts strong collections and improved rent discounts -
- FY21 AFFO and distribution guidance reaffirmed -

MEXICO CITY, July 28, 2021--(BUSINESS WIRE)--FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ) announced its financial and operating results for the second quarter ended June 30, 2021.

SECOND QUARTER 2021 HIGHLIGHTS

  • AFFO per certificate of Ps 0.6066 compared to Ps. 0.6363 in the prior corresponding period

  • AFFO per certificate up 11.1% in USD terms compared to the prior corresponding period after taking into account Peso appreciation

  • Consolidated occupancy of 94.4%, up 53bps sequentially

  • Industrial portfolio rental rates increased 3.6% compared to the prior corresponding period and occupancy increased 69 bps sequentially

  • 94.5% of Retail portfolio leased GLA and 96.8% of Retail portfolio ABR open and operating

  • FY21 AFFO guidance of Ps. 2.27 to Ps. 2.32 per certificate reaffirmed

  • Authorized 2Q21 cash distribution of Ps. 0.4750 per certificate and reaffirmed FY21 distribution guidance of Ps. 1.90 per certificate

"Our second quarter results demonstrate the ongoing resiliency of our platform as seen in the 11% year over year growth in AFFO per certificate in USD terms," said Juan Monroy, FIBRA Macquarie’s chief executive officer. "We have a well-positioned portfolio with high-quality assets concentrated in key markets with favorable supply-demand dynamics. For our industrial portfolio, robust market fundamentals are supported by limited supply and increasing demand driven by tailwinds such as nearshoring, efforts towards supply chain diversification, and growing e-commerce needs. This backdrop is facilitating a healthy leasing environment, driving both lease rate growth, and strong leasing momentum in terms of new and renewal leases, resulting in a rebound in occupancy to 95%. In our retail portfolio, the easing of COVID-related restrictions allowed for 97% of our retail ABR to be open, resulting in a meaningful improvement in discounts."

Mr. Monroy continued, "In terms of growth, we continue to remain opportunistic with respect to capital deployment as we seek to maximize per CBFI returns. This includes pursuing selective industrial development opportunities by investing in class "A" assets in core markets, and we currently have two developments in pre-construction stage in the Mexico City and Monterrey Metropolitan Areas. With an industrial portfolio that continues to deliver strong operating results and a retail portfolio that is benefiting from improving trading conditions, we continue to maintain a well-covered distribution. We are encouraged by the positive momentum in the industrial segment, and we remain confident in our portfolio, strategy, and the constructive dynamics in our key markets."

FINANCIAL AND OPERATING RESULTS

Consolidated Portfolio

FIBRAMQ’s total results were as follows:

TOTAL PORTFOLIO

2Q21

2Q20

Variance

1H21

1H20

Variance

Net Operating Income (NOI)

Ps 879.4m

Ps 963.9m

-8.8%

Ps 1,749.9m

Ps 1,915.5m

-8.6%

EBITDA

Ps 811.6m

Ps 898.7m

-9.7%

Ps 1,618.5m

Ps 1,792.0m

-9.7%

Funds From Operations (FFO)

Ps 577.5m

Ps 607.1m

-4.9%

Ps 1,145.0m

Ps 1,262.0m

-9.3%

FFO per certificate

Ps 0.7583

Ps 0.7971

-4.9%

Ps 1.5034

Ps 1.6533

-9.1%

Adjusted Funds From Operations (AFFO)

Ps 462.0m

Ps 484.6m

-4.7%

Ps 888.4m

Ps 1,057.1m

-16.0%

AFFO per certificate

Ps 0.6066

Ps 0.6363

-4.7%

Ps 1.1666

Ps 1.3849

-15.8%

NOI Margin

87.9%

87.5%

40 bps

87.7%

88.4%

-66 bps

AFFO Margin

46.2%

44.0%

218 bps

44.5%

48.8%

-424 bps

GLA (’000s sqm) EOP

3,208

3,184

0.8%

3,208

3,184

0.8%

Occupancy EOP

94.4%

95.1%

-71 bps

94.4%

95.1%

-71 bps

Average Occupancy

94.1%

95.2%

-112 bps

93.8%

95.3%

-148 bps

FIBRAMQ’s same store portfolio results were as follows:

Industrial Portfolio - Same Store1

2Q21

2Q20

Variance

1H21

1H20

Variance

Net Operating Income

Ps. 772.7m

Ps. 865.0m

-10.7%

Ps. 1,536.6m

Ps. 1,592.2m

-3.5%

Net Operating Income Margin

91.2%

91.2%

1 bps

91.4%

91.9%

-48 bps

Number of Properties

235

235

0

235

235

0

GLA (’000s sqf) EOP

29,735

29,699

0.1%

29,735

29,699

0.1%

GLA (’000s sqm) EOP

2,762

2,759

0.1%

2,762

2,759

0.1%

Occupancy EOP

94.9%

95.5%

-54 bps

94.9%

95.5%

-54 bps

Average Monthly Rent (US$/sqm) EOP

5.11

4.94

3.4%

5.11

4.94

3.4%

Customer Retention LTM EOP

76.8%

85.5%

-871 bps

76.8%

85.5%

-871 bps

Weighted Avg Lease Term Remaining (years) EOP

3.2

3.3

-3.2%

3.2

3.3

-3.2%

Percentage of US$ denominated Rent EOP

92.6%

93.1%

-42 bps

92.6%

93.1%

-42 bps

COVID-19 Reporting Disclosures

FIBRAMQ continues to provide enhanced COVID-19 related disclosures for its rent collections, retail center store openings, rent relief and trade receivables as part of its Second Quarter 2021 Supplementary Information materials, located at www.fibramacquarie.com/investors/bolsa-mexicana-de-valores-filings.

Industrial Portfolio

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

INDUSTRIAL PORTFOLIO

2Q21

2Q20

Variance

1H21

1H20

Variance

Net Operating Income (NOI)

Ps 782.9m

Ps 864.8m

-9.5%

Ps 1,554.8m

Ps 1,591.9m

-2.3%

NOI Margin

91.2%

91.2%

7 bps

91.4%

91.9%

-45 bps

GLA (’000s sqft) EOP

29,952

29,699

0.9%

29,952

29,699

0.9%

GLA (’000s sqm) EOP

2,783

2,759

0.9%

2,783

2,759

0.9%

Occupancy EOP

95.0%

95.5%

-50 bps

95.0%

95.5%

-50 bps

Average Occupancy

94.6%

95.6%

-96 bps

94.3%

95.6%

-139 bps

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

$5.12

$4.94

3.6%

$5.12

$4.94

3.6%

Customer retention LTM

76.4%

85.5%

-907 bps

76.4%

85.5%

-907 bps

Weighted Avg Lease Term Remaining (years) EOP

3.3

3.3

-1.2%

3.3

3.3

-1.2%

FIBRAMQ’s industrial portfolio, performance remains robust. No COVID-related discounts or deferrals were granted in 2Q21. Cash collections continue to be strong. Through to July 26, 99.2% of scheduled 2Q21 rental income has been collected.

For the quarter ended June 30, 2021, FIBRAMQ’s industrial portfolio delivered NOI of Ps. 782.9 million, lower by 9.5% over the prior corresponding period. This year-over-year variance was primarily driven by a stronger Mexican Peso. In underlying USD terms, 2Q21 NOI was USD 39.1 million, up 5.7% over the prior corresponding period. The strong results were driven by a combination of factors. Leased GLA at June 30, 2021 increased to a two-year high of 28.4 million square feet, whilst average rent rates climbed 3.6% over the year to a record US$5.12 per sqm per month, assisted by continued positive lease renewal spreads. It was another active quarter of leasing, with 1.3 million square feet of renewals across 16 leases driving a healthy retention rate of 76.4% over the last 12 months. New leases of 317 thousand square feet from eight diverse customers in six markets, including an 11-year lease in Mexicali to an electrical goods manufacturer.

As of June 30, 2021, trade receivables net of provisions were Ps. 20.6 million (excl. VAT), lower by 14.3% sequentially and 78.5% over the prior corresponding period, reflecting solid cash collections along with prudent provisioning.

Retail Portfolio

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

RETAIL PORTFOLIO

2Q21

2Q20

Variance

1H21

1H20

Variance

Net Operating Income (NOI)

Ps 96.5m

Ps 99.1m

-2.6%

Ps 170.1m

Ps 287.9m

-40.9%

NOI Margin

67.7%

64.7%

304 bps

83.9%

86.6%

-277 bps

GLA (’000s sqft) EOP

4,580

4,568

0.3%

4,580

4,568

0.3%

GLA (’000s sqm) EOP

426

424

0.3%

426

424

0.3%

Occupancy EOP

90.6%

92.7%

-210 bps

90.6%

92.7%

-210 bps

Average Occupancy

90.6%

92.8%

-220 bps

90.9%

93.1%

-217 bps

Average monthly rent per leased (Ps/sqm) EOP

$153.92

$153.25

0.4%

$153.92

$153.25

0.4%

Customer retention LTM

63.0%

69.2%

-617 bps

63.0%

69.2%

-617 bps

Weighted Avg Lease Term Remaining (years) EOP

3.4

3.8

-11.0%

3.4

3.8

-11.0%

FIBRAMQ’s retail portfolio benefited from improving trading conditions, following the easing of COVID-related trading restrictions.

  • Through July 21, 94.5% of Retail portfolio leased GLA and 96.8% of Retail portfolio ABR is open, a sequential increase 620 bps and 630 bps, respectively.

  • Retail portfolio cash collections during the quarter totaled Ps. 139.7 million, up 13.7% on a sequential basis and representing the highest quarter of cash collections since the onset of COVID-19 in FY20.

  • Total quarterly rent discounts of Ps. 13.5 million were lower sequentially by 53.6%, and down 45.6% compared to the prior corresponding quarter.

For the quarter ended June 30, 2021, FIBRAMQ’s retail portfolio delivered NOI of Ps. 96.5 million, compared to Ps. 99.1 million in the prior comparable period. FIBRAMQ’s retail portfolio average rental rates were up slightly over the prior comparable period as contractual increases and positive new and renewal rental rate spreads were partially offset by the impact of small shop move outs. During the second quarter of 2021, FIBRAMQ signed 82 retail leases across 149.5 thousand square feet, representing the highest level of leasing activity since the second quarter of 2019. Of note, 18 new leases were signed, including a dark kitchen space.

As of June 30, 2021, trade receivables net of provisions were Ps. 10.3 million (excl. VAT), lower by 8.0% sequentially and 44.0% over the prior corresponding period.

Same Store Portfolio Results

For detail on FIBRAMQ’s industrial and retail same store portfolio results, please refer to Second Quarter 2021 Supplementary Information materials located at www.fibramacquarie.com/investors/bolsa-mexicana-de-valores-filings.

PORTFOLIO ACTIVITY

Industrial Development Program

FIBRAMQ is pursuing a strategy to complement and grow its industrial portfolio by investing in class "A" assets in core markets demonstrating strong performance and a positive economic outlook. Preconstruction work continued at FIBRAMQ’s two active development projects which fit this strategic objective.

Apodaca, Nuevo Leon

FIBRAMQ is continuing its pre-construction work on an industrial property development in Apodaca, Nuevo Leon, part of an approximately 800k sqft development project.

Mexico City Metropolitan Area

FIBRAMQ started works at its development project in the Mexico City Metropolitan market. FIBRAMQ expects to develop more than 700k square feet of industrial logistics GLA on the site and anticipates completion of the first phase comprising a 510k sqft building in late 2021/early 2022.

BALANCE SHEET

As of June 30, 2021, FIBRAMQ had approximately Ps. 15.8 billion of debt outstanding, Ps. 4.6 billion available on its undrawn revolving credit facility and Ps. 0.4 billion of unrestricted cash on hand. FIBRAMQ’s indebtedness was 98.8% fixed rate with a weighted-average debt tenor remaining of 4.5 years.

FIBRAMQ’s CNBV regulatory debt to total asset ratio was 35.5% and the debt service coverage ratio was 5.3x.

CERTIFICATE BUYBACK FOR CANCELLATION PROGRAM

During the second quarter of 2021, FIBRAMQ repurchased 0.3 million certificates, for Ps. 7.8 million, representing a weighted average purchase price of Ps 23.40. FIBRA Macquarie has a remaining program capacity of Ps. 1,000.0 million through to June 2022. All certificates repurchased have been or will be cancelled.

DISTRIBUTION

On July 27, 2021, FIBRAMQ declared a cash distribution for the quarter ended June 30, 2021 of Ps. 0.4750 per certificate. The distribution is expected to be paid on September 27, 2021 to holders of record on September 24, 2021. FIBRAMQ’s certificates will commence trading ex-distribution on September 23, 2021.

ESG

FIBRAMQ remains committed to sustainability including protecting the environment, prioritizing governance, and developing its employees, serving its customers and the community. Recognizing these efforts and advancements, in June 2021, FIBRA Macquarie was included in the S&P/BMV Total Mexico ESG Index, along with only 28 other Mexican issuers. The S&P/BMV Total Mexico ESG Index, launched in 2020, is designed to measure the performance of stocks within the S&P/BMV Total Mexico Index that meet sustainability criteria. The index applies exclusions based on business activities and, amongst other things, is weighted by S&P DJI ESG Score.

For additional details on FIBRAMQ’s strategy and progress with regards to its ESG strategy can be found in its annual ESG report. The complete report can be found at https://www.fibramacquarie.com/en/corporate-responsibility.html.

FY21 GUIDANCE

AFFO per certificate

FIBRA Macquarie is reaffirming its FY21 AFFO per certificate guidance of Ps. 2.27 to Ps. 2.32.

This guidance assumes:

  • an average exchange rate of Ps. 20.0 per US dollar for the remainder of FY21;

  • no new government restrictions regarding non-essential retail trading activities;

  • no new acquisitions or divestments of stabilized properties;

  • no issuances or repurchases of certificates; and

  • no further deterioration in broader economic and market conditions

Distribution per certificate

FIBRAMQ is reaffirming it guidance of cash distributions for FY21 of Ps. 1.90 per certificate, with distributions expected to be paid in equal instalments of Ps. 0.4750 per certificate. The payment of cash distributions is subject to the approval of the board of directors of the Manager, stable market conditions and prudent management of FIBRAMQ’s capital requirements.

WEBCAST AND CONFERENCE CALL

FIBRAMQ will host an earnings conference call and webcast presentation on Wednesday, July 28, 2021 at 7:30 a.m. CT / 8:30 a.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 Second Quarter 2021 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 a copy of FIBRA Macquarie’s financial information for the second quarter 2021 will also be available on FIBRA Macquarie’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 236 industrial properties and 17 retail properties, located in 20 cities across 16 Mexican states as of June 30, 2021. 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.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210727006198/en/

Contacts

Investor relations contact:
Tel: +52 (55) 9178 7751
Email: fibramq@macquarie.com

Nikki Sacks
Tel: +1 203 682 8263
Email: nikki.sacks@icrinc.com

For press queries, please contact:
Flavio J. Díaz-Tueme
FleishmanHillard México
Tel: +52 (55) 5520 5460
Email: flavio.diaz@fleishman.com

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