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FIBRA Macquarie México Reports Fourth Quarter and Full Year 2019 Results

January 31, 2020 GMT

MEXICO CITY--(BUSINESS WIRE)--Jan 30, 2020--

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 quarter and year-ended December 31, 2019.

FOURTH QUARTER 2019 HIGHLIGHTS

FULL YEAR 2019 HIGHLIGHTS

“FIBRA Macquarie closed 2019 with a strong fourth quarter as we delivered AFFO growth per certificate of 5.9% compared to the prior year... Our steady occupancy and operational performance was driven by our ongoing customer-centric approach and proactive asset management and was supported by a stable macro backdrop,” said Juan Monroy, FIBRA Macquarie’s chief executive officer. “We continue to prioritize disciplined capital management and are proud of our successful track record of creating value through our accretive capital deployment and sourcing. During the year, we also made enhancements to our reporting and governance practices, which align with our ongoing pursuit of opportunities to further enhance our reporting, transparency and corporate governance. Looking ahead, we anticipate delivering similar operational performance, along with selective development, expansion and remodeling projects, provide us with a strong foundation to increase our annual distribution while maintaining prudent AFFO payout and leverage ratios.”

FINANCIAL AND OPERATING RESULTS

Consolidated Portfolio

FIBRAMQ’s total results were as follows:

TOTAL PORTFOLIO

4Q19

4Q18

Variance

FY19

FY18

Variance

Net Operating Income (NOI)

Ps 858.7m

Ps 823.4m

4.3%

Ps 3,403.5m

Ps 3,307.2m

2.9%

EBITDA

Ps 800.7m

Ps 770.4m

3.9%

Ps 3,185.2m

Ps 3,087.5m

3.2%

Funds From Operations (FFO)

Ps 571.6m

Ps 531.6m

7.5%

Ps 2,303.6m

Ps 2,179.9m

5.7%

FFO per certificate

0.7465

0.6887

8.4%

2.9973

2.7790

7.9%

Adjusted Funds From Operations (AFFO)

Ps 494.7m

Ps 461.0m

7.3%

Ps 1,979.7m

Ps 1,907.5m

3.8%

AFFO per certificate

0.6460

0.5972

8.2%

2.5758

2.4317

5.9%

NOI Margin

86.9%

86.5%

48 bps

87.8%

87.5%

25 bps

AFFO Margin

50.1%

48.4%

168 bps

51.1%

50.5%

58 bps

GLA (’000s sqm) EOP

3,202

3,216

-0.4%

3,202

3,216

-0.4%

Occupancy EOP

95.6%

94.4%

122 bps

95.6%

94.4%

122 bps

Average Occupancy

95.6%

94.1%

151 bps

95.2%

93.2%

200 bps

FIBRAMQ’s same store portfolio results were as follows:

TOTAL PORTFOLIO – SAME STORE

4Q19

4Q18

Variance

FY19

FY18

Variance

Net Operating Income

Ps 856.6m

Ps 820.9m

4.4%

Ps 3,398.1m

Ps 3,232.7m

5.1%

Net Operating Income Margin

87.0%

86.5%

49 bps

87.8%

87.7%

17 bps

Number of Properties

251

251

0

251

251

0

GLA (’000s sqf) EOP

34,261

34,388

-0.4%

34,261

34,388

-0.4%

GLA (’000s sqm) EOP

3,183

3,195

-0.4%

3,183

3,195

-0.4%

Occupancy EOP

95.6%

94.6%

94 bps

95.6%

94.6%

94 bps

Average Monthly Rent (US$/sqm) EOP

5.45

5.24

3.9%

5.45

5.24

3.9%

Industrial Customer Retention LTM EOP

81.0%

88.6%

-767 bps

81.0%

88.6%

-767 bps

Weighted Avg Lease Term Remaining (years) EOP

3.5

3.8

-9.5%

3.5

3.8

-9.5%

Industrial Portfolio

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

INDUSTRIAL PORTFOLIO

4Q19

4Q18

Variance

FY19

FY18

Variance

Net Operating Income (NOI)

Ps 719.0m

Ps 681.8m

5.5%

Ps 2,811.7m

Ps 2,731.4m

2.9%

NOI Margin

91.3%

89.9%

144 bps

91.6%

91.0%

63 bps

GLA (’000s sqft) EOP

29,598

29,696

-0.3%

29,598

29,696

-0.3%

GLA (’000s sqm) EOP

2,750

2,759

-0.3%

2,750

2,759

-0.3%

Occupancy EOP

95.9%

94.5%

144 bps

95.9%

94.5%

144 bps

Average Occupancy

95.9%

94.1%

174 bps

95.4%

93.0%

248 bps

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

$4.93

$4.79

2.9%

$4.93

$4.79

2.9%

Customer retention LTM

81.0%

86.8%

-579 bps

81.0%

86.8%

-579 bps

Weighted Avg Lease Term
Remaining (years) EOP

3.3

3.6

-10.3%

3.3

3.6

-10.3%

For the quarter ended December 31, 2019, FIBRAMQ’s industrial portfolio delivered NOI of Ps 719.0 million, up 5.5% compared to the prior comparable period. Of note, quarterly revenues reached a new record Ps 787.2 million, up 3.8% compared to the prior comparable period, whilst property level expenses were lower by 11.0% compared to the prior comparable period, primarily due to reduced credit loss expense and higher average occupancy.

For the year ended December 31, 2019, FIBRAMQ’s industrial portfolio delivered NOI of Ps 2,811.7 million, up 2.9% compared to the prior year. Higher occupancy, rental rates and recoveries contributed to record revenues, up 2.2% compared to the prior comparable period. Property level expenses for the full year were lower by 5.0% compared to the prior comparable period, primarily driven by lower repairs and maintenance expenses and lower credit loss expense.

The 2.9% YoY increase in annual NOI demonstrates the strong underlying performance of our industrial portfolio, particularly after taking into account the sale of 35 industrial properties in July 2018, with annual NOI for the industrial portfolio on a same store basis increasing 5.6% compared to the prior comparable period.

The occupancy rate of the industrial portfolio as of December 31, 2019 was 95.9%, up 144 basis points versus the prior comparable quarter. The ongoing level of occupancy for FIBRAMQ’s industrial portfolio reflects healthy market fundamentals and solid leasing results.

FIBRAMQ signed 17 new and renewal leases in the fourth quarter of 2019, comprising 2.2 million square feet of industrial GLA. This included the completion of an industrial development in Ciudad Juárez, Chihuahua, with the entire building comprising 201,000 square feet of GLA being leased upon construction completion to a U.S.-based manufacturer of laser printers and imaging products. In addition, FIBRAMQ continued to experience healthy renewals, achieving a retention rate of 81.0% for the 12 months ending December 31, 2019. FIBRAMQ executed on 15 renewal leases totaling 1.9 million square feet, including a few sizable renewals. Notable renewals included a multinational food manufacturer in Querétaro, which renewed 850k sqft for an additional 10-year term and logistics companies in Puebla and Guadalajara.

Industrial rental rates at the end of the quarter improved 2.9% as compared to rental rates in the prior comparable quarter, to a weighted average of US$4.93 per leased square meter per month. The increase was driven primarily by contractual increases and positive lease renewal spreads.

FIBRAMQ’s industrial portfolio achieved a record full year NOI margin of 91.6%, up 63 basis points versus the prior year. This result was driven by record quarterly revenues, up 2.2% as compared to the prior year, along with lower property-level expenses, down 5.0% from the prior year.

For detail on FIBRAMQ’s same store industrial portfolio results, please refer to Fourth Quarter 2019 Supplementary Information materials located at www.fibramacquarie.com/investors/bolsa-mexicana-de-valores-filings.

Retail Portfolio

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

RETAIL PORTFOLIO

4Q19

4Q18

Variance

FY19

FY18

Variance

Net Operating Income (NOI)

Ps 139.6m

Ps 141.6m

-1.4%

Ps 591.8m

Ps 575.8m

2.8%

NOI Margin

69.7%

73.0%

-334 bps

73.2%

74.1%

-95 bps

GLA (’000s sqft) EOP

4,864

4,918

-1.1%

4,864

4,918

-1.1%

GLA (’000s sqm) EOP

452

457

-1.1%

452

457

-1.1%

Occupancy EOP

93.8%

94.0%

-18 bps

93.8%

94.0%

-18 bps

Average Occupancy

93.8%

93.7%

7 bps

93.5%

94.2%

-77 bps

Average monthly rent per leased
(Ps/sqm) EOP

$163.10

$156.65

4.1%

$163.10

$156.65

4.1%

Customer retention LTM

82.6%

73.3%

929 bps

82.6%

73.3%

929 bps

Weighted Avg Lease Term
Remaining (years) EOP

4.1

4.3

-4.4%

4.1

4.3

-4.4%

For the quarter ended December 31, 2019, FIBRAMQ’s retail portfolio delivered NOI of Ps 139.6 million, down 1.4% compared to the prior comparable period. Quarterly revenues increased 3.4% compared to the prior year, offset by higher property level expenses including utilities and marketing expenses.

For the year ended December 31, 2019, FIBRAMQ’s retail portfolio delivered NOI of Ps 591.8 million, up 2.8% compared to the prior comparable year, in line with Mexican CPI.

During the fourth quarter of 2019, FIBRAMQ signed 92 retail leases, representing 11.6 thousand square meters. This activity included 15 new leases and 77 renewals, representing a robust 82.6% retention rate for the year.

PORTFOLIO ACTIVITY

During the fourth quarter, FIBRAMQ continued its deployment of available capital into accretive investments including targeted expansions of existing properties on a predominately pre-leased basis and selective property developments.

FIBRAMQ completed an industrial development project in Ciudad Juárez, Chihuahua, delivering a 201,000 square foot, class A industrial building fully leased to a high-quality customer with an annualized NOI yield in excess of 11%. Ciudad Juárez is a core industrial city and it represents FIBRAMQ’s second largest market by GLA, and its portfolio of 34 properties have a year-end occupancy rate of 96.6%, up 90 bps on an annual basis. Supported by these strong fundamentals, FIBRAMQ has begun construction on the second 217,000 square foot building in Ciudad Juárez.

FIBRAMQ progressed its remodeling projects in its retail portfolio. Work continued at the Coacalco Power Center, whilst at Multiplaza Arboledas remodeling was completed, providing an enhanced customer experience and a positive leasing outlook heading into 2020.

BALANCE SHEET

As of December 31, 2019, FIBRAMQ had approximately Ps 15.5 billion of debt outstanding, Ps 4.7 billion available on its undrawn revolving credit facility and Ps 708.3 million of unrestricted cash on hand.

FIBRAMQ’s indebtedness was 100% fixed rate and had a weighted-average debt tenor remaining of 6.1 years.

FIBRAMQ’s CNBV regulatory debt to total asset ratio was 34.8%, representing a reduction of 68bps over the prior twelve months. In addition, FIBRAMQ’s CNBV debt service coverage ratio was 4.8x, compared to 5.3x at the prior comparable reporting date.

As of December 31, 2019, FIBRAMQ has no near-term loan maturities, with the next loan expiration not due until June 2023.

CAPITAL ALLOCATION

FIBRAMQ remains committed to its disciplined approach to capital deployment as well as capital sourcing across property expansions and developments, certificate repurchases for cancellation and repayment of debt.

Property Investments

During the fourth quarter of 2019, FIBRAMQ continued to fund the expansion, development and remodeling projects discussed above. For the full year FIBRAMQ invested approximately US$22.0 million.

Certificate repurchase for cancellation program

FIBRA Macquarie has repurchased a total of 45.7 million certificates, or 5.6% of its market capitalization, since launching the program in June 2017. The weighted average purchase price of Ps 21.34 represents a significant discount to intrinsic value and current trading levels. FIBRA Macquarie has a remaining program capacity of approximately Ps 900 million through to June 25, 2020. All certificates repurchased have or will be cancelled.

DISTRIBUTION

On January 30, 2020, FIBRAMQ declared a cash distribution for the quarter ended December 31, 2019 of Ps 0.4550 per certificate. The distribution is expected to be paid on March 11, 2020 to holders of record on March 10, 2020. FIBRAMQ’s certificates will commence trading ex-distribution on March 9, 2020.

For the full year 2019, FIBRAMQ had distributions of Ps 1.78, which represented an 11.3% increase from the prior year and an AFFO payout ratio of 68.9%.

2020 Guidance

FIBRA Macquarie is introducing its guidance for 2020. FIBRAMQ estimates total AFFO per certificate of between Ps 2.57 and Ps 2.62 for the year.

For full year 2020, FIBRAMQ expects to make cash distributions of approximately Ps 1.90 per certificate, to be paid in equal quarterly payments of Ps 0.475. This represents an annual increase of 6.7% from the prior year, while maintaining a prudent and stable AFFO payout ratio of approximately 73-74%.

This outlook is driven by the following assumptions:

The payment of cash distributions is subject to the approval of the board of directors of the Manager.

WEBCAST AND CONFERENCE CALL

FIBRAMQ will host an earnings conference call and webcast presentation on Friday, January 31, 2020 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 +1-877-304-8957. Callers from Mexico may dial 01-800-926-9157 and other callers from outside the United States may dial +1-973-638-3235. Please ask for the FIBRA Macquarie Fourth Quarter 2019 Earnings Call with conference number 6587384.

An audio replay will be available by dialing +1-855-859-2056 or +1-404-537-3406 for callers from outside the United States. The passcode for the replay is 6587384. A webcast archive of the conference call and a copy of FIBRA Macquarie’s financial information for the fourth quarter 2019 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 235 industrial properties and 17 retail properties, located in 20 cities across 16 Mexican states as of December 31, 2019. 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 document includes forward-looking statements that represent our opinions, expectations, beliefs, intentions, estimates or strategies regarding the future, which may not be realized. These statements may be identified by the use of words like “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “should,” “seek,” and similar expressions. The forward-looking statements reflect our views and assumptions with respect to future events as of the date of this document and are subject to risks and uncertainties.

Actual and future results and trends could differ materially from those described by such statements due to various factors, including those beyond our ability to control or predict. Given these uncertainties, you should not place undue reliance on the forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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/20200130005915/en/

CONTACT: Investor relations:

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.comFor press queries:

Flavio J. Díaz-Tueme FleishmanHillard México

Tel: +52 (55) 5520 5460 E

Email:flavio.diaz@fleishman.com

KEYWORD: CENTRAL AMERICA MEXICO

INDUSTRY KEYWORD: PROFESSIONAL SERVICES COMMERCIAL BUILDING & REAL ESTATE FINANCE CONSTRUCTION & PROPERTY REIT BANKING

SOURCE: FIBRA Macquarie México

Copyright Business Wire 2020.

PUB: 01/30/2020 07:51 PM/DISC: 01/30/2020 07:51 PM

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