FIBRA Macquarie Mxico Reports First Quarter 2021 Results | Financial Buzz

FIBRA Macquarie Mxico Reports First Quarter 2021 Results

FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ), owner of one of the largest portfolios of industrial and retail property in Mexico, announced its financial and operating results for the first quarter ended March 31, 2021.

FIRST QUARTER 2021 HIGHLIGHTS

  • Collected 98.3% of consolidated base rents as of April 27, 2021
  • Average industrial portfolio rental rates increased 3.6% YoY
  • 88.3% of retail GLA and 90.5% of retail ABR remains open and operating
  • Consolidated occupancy stable at 93.8%
  • 1Q21 AFFO per certificate of Ps 0.5600, down 25.2% YoY. Excluding non-recurring lease early termination income received in 1Q20, AFFO per certificate down 8.0% YoY
  • Commenced works on a Mexico City industrial development project and continued pre-construction work on an industrial development project in Apodaca, Nuevo Leon
  • Authorized 1Q21 cash distribution of Ps. 0.4750 per certificate, flat on a YoY basis
  • Reaffirmed FY21 guidance for AFFO of Ps. 2.27 – Ps. 2.32 per certificate and FY21 distribution guidance of Ps. 1.90 per certificate

“Our results in the first quarter were in line with our expectations, as the stability of our industrial portfolio and grocery-anchored shopping centers was partially offset by the ongoing impact of the COVID-19 pandemic and a stronger Mexican Peso,” said Juan Monroy, FIBRA Macquarie’s chief executive officer. “There are a number of tailwinds bolstering the Mexican industrial real estate market, including U.S. and Mexico trade growth, near shoring and supply chain enhancements, and increasing logistics demand. This dynamic is supporting an attractive investment and leasing environment in our core markets, resulting in strong portfolio performance and growth prospects, highlighted by a 3.6% annual increase in our average industrial portfolio rental rates. We are excited about our two new industrial development projects that are underway, along with executing on a plan to redevelop our prime Mexico City property. While improving, the retail environment remains challenging as COVID-19 continues to impact shopping center foot-traffic compared to pre-pandemic levels; however, we are encouraged by an outlook that should result in progressively lower levels of required rent relief. As we look ahead we will continue to pursue selective accretive growth opportunities while maintaining the same disciplined approach to capital management we have demonstrated over time.”

FINANCIAL AND OPERATING RESULTS

Consolidated Portfolio

FIBRAMQ’s total results were as follows:

TOTAL PORTFOLIO

1Q21

 

 

 

1Q20

 

 

 

Variance

Net Operating Income (NOI)

Ps 870.5m

 

 

 

Ps 951.6m

 

 

 

-8.5%

EBITDA

Ps 806.9m

 

 

 

Ps 893.3m

 

 

 

-9.7%

Funds From Operations (FFO)

Ps 567.5m

 

 

 

Ps 654.9m

 

 

 

-13.4%

FFO per certificate

0.7451

 

 

 

0.8561

 

 

 

-13.0%

Adjusted Funds From Operations (AFFO)

Ps 426.5m

 

 

 

Ps 572.5m

 

 

 

-25.5%

AFFO per certificate

0.5600

 

 

 

0.7483

 

 

 

-25.2%

NOI Margin

87.6%

 

 

 

89.3%

 

 

 

-175 bps

AFFO Margin

42.9%

 

 

 

53.7%

 

 

 

-1083 bps

GLA (’000s sqm) EOP

3,208

 

 

 

3,184

 

 

 

0.8%

Occupancy EOP

93.8%

 

 

 

95.3%

 

 

 

-150 bps

Average Occupancy

93.5%

 

 

 

95.4%

 

 

 

-187 bps

FIBRAMQ’s same store portfolio results were as follows:

TOTAL PORTFOLIO – SAME STORE

1Q21

1Q20

Variance

Net Operating Income

Ps. 864.4m

 

 

 

Ps. 846.2m

 

 

 

2.1%

Net Operating Income Margin

87.7%

 

 

 

88.3%

 

 

 

-53 bps

Number of Properties

251

 

 

 

251

 

 

 

0

GLA (’000s sqf) EOP

34,316

 

 

 

34,268

 

 

 

0.1%

GLA (’000s sqm) EOP

3,188

 

 

 

3,184

 

 

 

0.1%

Occupancy EOP

93.8%

 

 

 

95.3%

 

 

 

-154 bps

Average Monthly Rent (US$/sqm) EOP

5.40

 

 

 

5.32

 

 

 

1.6%

Weighted Avg Lease Term Remaining (years) EOP

3.3

 

 

 

3.4

 

 

 

-3.0%

Percentage of US$ denominated Rent EOP

75.8%

 

 

 

74.5%

 

 

 

125 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 First Quarter 2021 Supplementary Information materials, located at www.fibramacquarie.com/investors/bolsa-mexicana-de-valores-filings.

With respect to FIBRAMQ industrial portfolio, performance remains robust with no COVID-related discounts or deferrals granted during the quarter. In addition, all deferred rents scheduled for collection during the quarter were received.

As foreshadowed, FIBRAMQ’s retail portfolio experienced a challenging quarter driven by COVID-19 trading restrictions imposed on non-essential businesses in our key retail markets.

  • All of FIBRAMQ’s shopping centers are supermarket anchored and have remained open since the onset of the pandemic. From late December 2020 to mid-February 2021, government mandated closures were imposed upon non-essential business, impacting our retail customers. While most non-essential businesses have reopened, many are operating at reduced hours and/or capacity limits, providing for challenging trading conditions.
  • Through April 23, 88.3% of Retail portfolio GLA and 90.5% of Retail portfolio ABR is open, a meaningful improvement from the prior disclosure of 70.5% of GLA and 68.1% of ABR as of January 26, 2021
  • Retail portfolio cash collections of Ps. 96.2 million were down 17.0% on a sequential basis, mainly due to rent discounts granted to non-essential tenants who were impacted by COVID-19 trading restrictions imposed through to the middle of 1Q21. Through April 27, 2021, 90.6% of scheduled first quarter rents have been collected
  • Total quarterly rent concessions of Ps. 29.1 million were higher when compared to 4Q20 rent concessions of Ps. 12.9 million. First quarter rent concessions were fully comprised of rent discounts
  • Deferred rents scheduled for collection in for the remainder of FY21 total Ps. 5.2 million
  • As of March 31, 2021, trade receivables net of provisions was Ps. 11.2 million (excl. VAT), lower QoQ by 28.0%

Industrial Portfolio

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

INDUSTRIAL PORTFOLIO

1Q21

 

 

 

1Q20

 

 

 

Variance

Net Operating Income (NOI)

Ps 772.0m

 

 

 

Ps 727.1m

 

 

 

6.2%

NOI Margin

91.6%

 

 

 

92.7%

 

 

 

-111 bps

GLA (’000s sqft) EOP

29,955

 

 

 

29,699

 

 

 

0.9%

GLA (’000s sqm) EOP

2,783

 

 

 

2,759

 

 

 

0.9%

Occupancy EOP

94.3%

 

 

 

95.7%

 

 

 

-143 bps

Average Occupancy

93.9%

 

 

 

95.7%

 

 

 

-183 bps

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

$5.07

 

 

 

$4.89

 

 

 

3.6%

Customer retention LTM

76.6%

 

 

 

85.3%

 

 

 

-865 bps

Weighted Avg Lease Term Remaining (years) EOP

3.3

 

 

 

3.3

 

 

 

2.4%

FIBRAMQ’s industrial portfolio had a stable quarter.

For the quarter ended March 31, 2021, FIBRAMQ’s industrial portfolio delivered NOI of Ps. 772.0 million, up 6.2% compared to the prior comparable period. This increase was driven by a combination of Peso depreciation and rental rate increases, partially offset by lower average occupancy. Approximately 93% of FIBRAMQ’s industrial ABR is US dollar denominated, consistent with historic levels. The average rental rates increase was mainly due to contractual increases and positive leasing spreads on renewal leases. During the quarter, FIBRAMQ signed a total of 23 new and renewal leases, comprising 1.3 million square feet of GLA. FIBRA Macquarie executed on five new leases totaling 294 thousand square feet and 18 renewal leases totaling 1.0 million square feet, respectively. Offsetting this leasing activity was 301 thousand square feet that was vacated by seven customers, resulting in a retention rate of 76.6% for the last twelve months.

Retail Portfolio

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

RETAIL PORTFOLIO

1Q21

 

 

 

1Q20

 

 

 

Variance

Net Operating Income (NOI)

Ps 98.5m

 

 

 

Ps 224.5m

 

 

 

-56.1%

NOI Margin

65.1%

 

 

 

79.8%

 

 

 

-1474 bps

GLA (’000s sqft) EOP

4,579

 

 

 

4,568

 

 

 

0.2%

GLA (’000s sqm) EOP

425

 

 

 

424

 

 

 

0.2%

Occupancy EOP

91.1%

 

 

 

93.1%

 

 

 

-200 bps

Average Occupancy

91.1%

 

 

 

93.3%

 

 

 

-215 bps

Average monthly rent per leased (Ps/sqm) EOP

$153.88

 

 

 

$153.78

 

 

 

0.1%

Customer retention LTM

51.1%

 

 

 

78.1%

 

 

 

-2701 bps

Weighted Avg Lease Term Remaining (years) EOP

3.5

 

 

 

4.0

 

 

 

-13.4%

For the quarter ended March 31, 2021, FIBRAMQ’s retail portfolio delivered NOI of Ps. 98.5 million, compared to Ps. 224.5 million in the prior comparable period. Excluding the impact of non-recurring early termination lease income, the adjusted prior comparable result is Ps. 117.5 million. FIBRAMQ’s retail portfolio average rental rates were mainly steady 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. Occupancy at the end of the first quarter 2021 was 91.1%, down 200 basis points from the prior year and 36 basis points from the fourth quarter of 2020, mainly driven by additional vacancy arising from the impact of COVID-19.

During the first quarter of 2021, FIBRAMQ signed 48 retail leases, representing 75.6 thousand square feet. This activity included 14 new leases and 34 renewals. Of note during the quarter, a lease commenced with a leading restaurant chain to operate a dark kitchen in an underground space at our Grand Polanco retail property, located in Mexico City.

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

PORTFOLIO ACTIVITY

Industrial Development Program

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. This development forms part of FIBRAMQ’s broader 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.

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 by year end.

BALANCE SHEET

As of March 31, 2021, FIBRAMQ had approximately Ps 16.3 billion of debt outstanding, Ps 5.0 billion available on its undrawn revolving credit facility and Ps 0.3 billion of unrestricted cash on hand. FIBRAMQ’s indebtedness was 100% fixed rate and had a weighted-average debt tenor remaining of 4.8 years.

FIBRAMQ’s CNBV regulatory debt to total asset ratio was 35.9% and the CNBV regulatory debt service coverage ratio was 5.7x.

DISTRIBUTION

On April 29, 2021, FIBRAMQ declared a cash distribution for the quarter ended March 31, 2021 of Ps. 0.4750 per certificate. The distribution is expected to be paid on June 15, 2021 to holders of record on June 14, 2021. FIBRAMQ’s certificates will commence trading ex-distribution on June 11, 2021.

FY21 GUIDANCE

AFFO per certificate

FIBRA Macquarie is reaffirming its FY21 AFFO per certificate guidance of between 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 for the remainder of the year;
  • 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. 0.475 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 Friday, April 30, 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 First 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 first 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 March 31, 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.

Contacts

Investor relations contact:

Tel: +52 (55) 9178 7751

Email: fibramq@macquarie.com

Evelyn Infurna

Tel: +1 203 682 8265

Email: evelyn.infurna@icrinc.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