► Industrial portfolio occupancy reaches a record 97.1%%, up 279 bps YoY
► AFFO per certificate growth of 6.0% QoQ and 17.1% YoY
► AFFO per certificate and distribution guidance for FY22 reaffirmed
MEXICO CITY–(BUSINESS WIRE)–FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ) announced its financial and operating results for the first quarter ended on March 31, 2022.
FIRST QUARTER 2022 HIGHLIGHTS
AFFO per certificate Ps. 0.6558
Authorized cash distribution of Ps. 0.5000 per certificate, resulting in a 76.2% AFFO payout
Consolidated occupancy of 96.1%, up 225 bps YoY and up 89 bps sequentially
Industrial occupancy at 97.1% at quarter end, up 279 bps YoY and up 108 bps sequentially
FY22 AFFO per certificate guidance of Ps. 2.50 – Ps. 2.55 reaffirmed
FY22 distribution per certificate guidance of Ps. 2.00 reaffirmed
Approximately one million square feet of industrial expansion and development projects under construction
Subsequent to 1Q22, completed US$425 million refinancing with sustainability-linked credit facility
“The strengthening market backdrop has contributed to healthy momentum in our results, contributing to a 17.1% annual growth in AFFO per certificate and an AFFO margin expansion of 448 bps,” said Simon Hanna, FIBRA Macquarie’s chief executive officer. “Our high-quality portfolio of industrial assets realized a 6.5% annual increase in NOI, as we closed the quarter with record occupancy of 97.1%. Supported by the ongoing demand for manufacturing and logistics properties, leasing momentum has continued to accelerate, including interest in new developments. We are nearing completion on the delivery of the first building in our Monterrey development project and advancing with the development of our Mexico City industrial project. We are also seeing ongoing stabilization in our retail portfolio and are pleased to report a 9.3% increase in first quarter NOI compared to the prior year. In addition, we recently announced enhancements to our balance sheet with the refinancing of our unsecured bank facility, thereby lowering our cost of borrowing, extending our maturities, and positioning us to execute on our organic and new development growth strategies.”
FINANCIAL AND OPERATING RESULTS
Consolidated Portfolio
FIBRAMQ’s total results were as follows:
TOTAL PORTFOLIO
1Q22
1Q21
Variance
Net Operating Income (NOI)
Ps. 929.6m
Ps. 870.5m
6.8%
EBITDA
Ps. 861.9m
Ps. 806.9m
6.8%
Funds From Operations (FFO)
Ps. 624.5m
Ps. 567.5m
10.1%
FFO per certificate
0.8204
0.7451
10.1%
Adjusted Funds From Operations (AFFO)
Ps. 499.2m
Ps. 426.5m
17.1%
AFFO per certificate
Ps. 0.6558
Ps. 0.5600
17.1%
NOI Margin
88.2%
87.6%
65 bps
AFFO Margin
47.4%
42.9%
448 bps
GLA (’000s sqft) EOP
34,461
34,534
(0.2%)
GLA (’000s sqm) EOP
3,202
3,208
(0.2%)
Occupancy EOP
96.1%
93.8%
225 bps
Average Occupancy
96.3%
93.5%
275 bps
FIBRAMQ’s same store portfolio results were as follows:
INDUSTRIAL PORTFOLIO – SAME STORE
1Q22
1Q21
Variance
Net Operating Income
Ps. 814.5m
Ps. 763.9m
6.6%
Net Operating Income Margin
91.8%
91.6%
18 bps
Number of Properties
235
235
–
GLA (’000s sqft) EOP
28,789
29,737
(3.2%)
GLA (’000s sqm) EOP
2,675
2,763
(3.2%)
Occupancy EOP
97.0%
94.2%
281 bps
Average Monthly Rent (US$/sqm) EOP
5.25
5.06
3.8%
Customer Retention LTM EOP
83.5%
76.3%
725 bps
Weighted Avg Lease Term Remaining (years) EOP
3.3
3.3
0.1%
Percentage of US$ denominated Rent EOP
92.3%
93.0%
(70 bps)
Industrial Portfolio
The following table summarizes the results for FIBRAMQ’s industrial portfolio:
INDUSTRIAL PORTFOLIO
1Q22
1Q21
Variance
Net Operating Income (NOI)
Ps. 821.9m
Ps. 772.0m
6.5%
NOI Margin
91.7%
91.6%
11 bps
GLA (’000s sqft) EOP
29,884
29,955
(0.2%)
GLA (’000s sqm) EOP
2,776
2,783
(0.2%)
Occupancy EOP
97.1%
94.3%
279 bps
Average Occupancy
96.3%
93.9%
238 bps
Average monthly rent per leased (US$/sqm) EOP
$5.26
$5.07
3.7%
Customer retention LTM
83.5%
76.6%
691 bps
Weighted Avg Lease Term Remaining (years) EOP
3.3
3.3
(0.3%)
FIBRAMQ’s industrial portfolio performance remains robust, with positive results across key metrics including occupancy, rental rates and NOI margin. For the quarter ended March 31, 2022, FIBRAMQ’s industrial portfolio delivered NOI of Ps. 821.9 million, a 6.5% increase year over year. This result was driven by top line performance, with record quarterly lease revenues of US$40.9 million. Underlying performance in the industrial portfolio continued to be supported by a favorable supply-demand environment with the quarterly increase in average rental rates accelerating to 6.0% on an annualized basis.
At quarter-end, occupancy was 97.1%, up 279 basis points from the prior year period, and also up 108 basis points sequentially. New leasing activity gained momentum through the quarter adding 481 thousand sqft. with six new customers across five northern markets, and all new leases being denominated in a US Dollars. New leasing deals included Asian domiciled electronics manufacturers and German domiciled industrial manufacturers. Renewal leases comprised 14 leases and 713 thousand sqft, driving a healthy retention rate of 83.5% over the last 12 months.
Cash collections continue to be strong, and through April 26, 98.7% of scheduled 1Q22 rental income has been collected. Cash collections for the quarter totaled Ps. 1,025 million, up 5.7% over the prior corresponding quarter.
As of March 31, 2022, trade receivables net of provisions were Ps. 20.2 million (excl. VAT), lower by 16.7% over the prior corresponding period, reflecting solid cash collections along with prudent provisioning.
Retail Portfolio
The following table summarizes the proportionally combined results for FIBRAMQ’s retail portfolio:
RETAIL PORTFOLIO
1Q22
1Q21
Variance
Net Operating Income (NOI)
Ps. 107.7m
Ps. 98.5m
9.3%
NOI Margin
68.4%
65.1%
324 bps
GLA (’000s sqft) EOP
4,577
4,579
(0.1%)
GLA (’000s sqm) EOP
425
425
(0.1%)
Occupancy EOP
89.8%
91.1%
(131 bps)
Average Occupancy
89.8%
91.1%
(135 bps)
Average monthly rent per leased (Ps./sqm) EOP
$160.13
$153.88
4.1%
Customer retention LTM
69.6%
51.1%
1,853 bps
Weighted Avg Lease Term Remaining (years) EOP
3.2
3.5
(8.6%)
FIBRAMQ’s retail portfolio benefited from improving trading conditions, with NOI higher by 9.3% year over year.
Quarterly rent discounts of Ps. 3.3 million were lower for the fourth consecutive quarter, and are now at the lowest level since the start of the pandemic. Rent discounts were down sequentially by 65.4%, and down 88.5% versus the prior corresponding period.
Retail portfolio cash collections during the quarter totaled Ps. 161.3 million, representing an increase of 31.2% versus the prior corresponding period.
Contributing to the strong NOI performance, property-level expenses were well-contained at Ps. 49.9 million and reflected a 5.5 per cent decline over the prior corresponding quarter, mainly driven by lower doubtful debt provisioning.
During the first quarter, monitored foot traffic at FIBRAMQ’s shopping centers was approximately 42% above the prior comparable period, and approximately 25% below pre-pandemic levels.
Lease renewal activity was strong for the quarter. FIBRAMQ signed 60 leases encompassing 24.5 thousand sqm of retail space during the first quarter of 2022. This single 2022 quarter of leasing renewal compares favorably to the full year lease renewal activity in FY21 (46.5k sqm) and FY20 (17.6k sqm). Leasing highlights included renewals for Fun Central family entertainment centers at our Coacalco and Tecamac Power Centers (14.5 thousand sqm, MCMA), and a new restaurant lease for Casa de Toño in Multiplaza Ojo de Agua (0.5 thousand sqm, MCMA).
As of March 31, 2022, trade receivables net of provisions were Ps. 6.8 million (excl. VAT), lower 39.3% over the prior corresponding period.
Same Store Portfolio Results
For detail on FIBRAMQ’s industrial and retail same store portfolio results, please refer to First Quarter 2022 Supplementary Information materials located at BMV Filings (fibramacquarie.com).
New Disclosure – Lease rental rate summary
Consistent with our efforts to provide increasing transparency to the market, this quarter we have included additional detail in our Supplementary Information materials with regards to contractual rental rate increases in our portfolio. These disclosures include information pertaining to the scheduled lease escalation profile by type of escalation as well as phasing of such escalations throughout the year. Of note, 57.8% of leases for FIBRAMQ’s consolidated portfolio is directly linked to either Mexican or US CPI. In addition, rental rates in our industrial portfolio increased by 13.7% for leases that renewed during the quarter. For detail on FIBRAMQ’s lease rental rate disclosures, please refer to First Quarter 2022 Supplementary Information materials located at BMV Filings (fibramacquarie.com).
CAPITAL ALLOCATION
Industrial Development
FIBRAMQ continues to pursue a strategy to complement and grow its existing industrial portfolio by investing and developing class “A” assets in core markets that demonstrate strong performance and a positive economic outlook.
FIBRAMQ nears completion on a 183 thousand sqft industrial property development in Apodaca, Nuevo Leon, as part of an approximately 800 thousand sqft development project. FIBRAMQ currently anticipates completion of the first phase of the project in the first half of 2022 and has received strong tenant interest in the property.
FIBRAMQ also continued its industrial development project in the Mexico City Metropolitan Area. FIBRAMQ expects to deliver the two-building project comprising 734 thousand sqft of industrial GLA on the site in the second half of 2022.
These projects, as well as FRIBAMQ’s active build to suit expansion projects, amount to approximately one million square feet of new GLA which is expected to be completed during 2022.
Certificate repurchase program
At the recent annual general meeting, FIBRA Macquarie received certificate holder approval for an extension of its Ps. 1,000.0 million CBFI repurchase-for-cancellation program through June 25, 2023.
BALANCE SHEET
As of March 31, 2022, FIBRAMQ had approximately Ps. 16.0 billion of debt outstanding, with Ps. 4.7 billion available on its undrawn committed revolving credit facility and Ps. 0.4 billion of unrestricted cash on hand.
As of March 31, 2022, FIBRAMQ’s indebtedness was 98.8% fixed rate, with 3.8 years weighted-average debt tenor remaining.
FIBRAMQ’s CNBV regulatory debt to total asset ratio was 32.2% and the debt service coverage ratio was 5.8x.
On a consolidated basis, NAV per certificate increased over the year by 18% to Ps. 40.5.
On April 5, 2022, FIBRAMQ closed on a US$425.0 million sustainability-linked unsecured credit facility, and primarily used the new sustainability-linked facility to repay the amounts drawn under the unsecured credit facility that was due to expire on April 1, 2024. As a result of the transaction, and taking into account related interest rate swap transactions, FIBRAMQ’s indebtedness was 92% fixed rate and the weighted average annual cost of debt for its entire debt portfolio of US$836.0 million was 5.2%.
ESG
FIBRAMQ remains committed to sustainability including protecting the environment, prioritizing governance, and developing its employees, serving its customers and the community. FIBRAMQ has been recognized for its ongoing focus on, amongst other things, green building and green leasing, stakeholder engagement and transparency, as well as the commitment to continual improvement.
In January 2022, FIBRA Macquarie was recognized as being an “EDGE Champion.” EDGE Champions are organizations that collaborate with International Finance Corporation (IFC) to accelerate the adoption of green building options. EDGE Champions have committed to accelerating the adoption of green building practices through the promotion of voluntary green building certification programs based on the EDGE (“Excellence in Design for Greater Efficiencies”) software, standard, and certification system.
During the first quarter, FIBRA Macquarie achieved the EDGE certification on four industrial buildings.
For additional details on FIBRAMQ’s strategy and progress with regards to its ESG strategy can be found in its annual ESG report at https://www.fibramacquarie.com/en/corporate-responsibility.html.
DISTRIBUTION
On April 28, 2022, FIBRAMQ declared a cash distribution for the quarter ended March 31, 2022 of Ps. 0.5000 per certificate. The distribution is expected to be paid on June 16, 2022, to holders of record on June 15, 2022. FIBRAMQ’s certificates will commence trading ex-distribution on June 14, 2022.
FY22 GUIDANCE
AFFO per certificate
FIBRA Macquarie is reaffirming its FY22 AFFO per certificate guidance of Ps. 2.50 to Ps. 2.55.
This guidance assumes:
an average exchange rate of Ps. 20.0 per US dollar for the remainder of FY22, compared to the prior assumption of an average exchange rate of Ps. 20.5;
no new government restrictions regarding 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.
The ability to maintain guidance in a strengthening Peso environment is reflective of FIBRA Macquarie’s strong underlying performance.
Distribution per certificate
FIBRAMQ is reaffirming it guidance of cash distributions for FY22 of Ps. 2.00 per certificate, therefore indicating an expected first quarter 2022 distribution of Ps. 0.5000 per certificate.
The payment of cash distributions is subject to the approval 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 Friday, April 29, 2022 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 First Quarter 2022 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 first quarter 2022 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 March 31, 2022. 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.
THIS ANNOUNCEMENT IS NOT FOR RELEASE IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA.
Contacts
Investor relations contact:
Tel: +52 (55) 9178 7763
Nikki Sacks
Tel: +1 203 682 8263
Email: nikki.sacks@icrinc.com
For press queries, please contact:
FleishmanHillard México
Contact: Arturo García Arellano
Tel: +52 55 8664 0910
Email: arturo.garcia@fleishman.com
