64% Surge in FIBRAs' Market Value Over 5 Years: Attracting Investors to Mexico's Commercial Real Estate Market

Over the past five years, the market value of Mexican REITs (or FIBRAs) has increased by an impressive 64%, according to SiiLA. This surge indicates growing confidence in the Mexican real estate sector and FIBRAs themselves, which investors view as attractive and stable vehicles for commercial real estate investment.

As of the second quarter of 2023, the market price of FIBRAs was close to 407,000 million pesos (USD 22,600 million). This value is calculated by multiplying the number of shares or CBFIs of each FIBRA by the stock price of each share.

The increase in the market price of FIBRAs is directly linked to the rise in the number and value of each certificate. Data from SiiLA FIBRA Analytics reveals that between the first quarter of 2018 and the first quarter of 2023, the number of CBFIs grew by 38%, going from 10.9 to 14.9 million. The average price per CBFI rose by 20% during the same period, from 22.8 to 27.2 pesos. It's worth mentioning that the current average price per certificate is the highest recorded in at least the last five years.

The issuance of CBFIs is a mechanism that FIBRAs use to raise capital without incurring new financial debts. In fact, the average loan-to-value (LTV) ratio for FIBRAs has remained at approximately 31-32% over the past five years. This indicator measures debt as a proportion of asset value, and its relative stability implies that FIBRAs have been cautious in their approach to financing and risk management.

By maintaining their LTV levels, FIBRAs demonstrate a solid financial position and lower exposure to market fluctuations. Additionally, by issuing CBFIs, FIBRAs attract investors seeking to diversify their portfolios with real-estate-backed assets, providing a stable and reliable funding source for their growth and development. This strategy has also contributed to the attractive profitability of FIBRAs, as lower debt burdens result in reduced financial costs and higher profit margins. Consequently, both national and international investors have shown interest in FIBRAs, solidifying their position as an appealing option in the capital market.

For instance, FIBRA Nova (FNOVA) raised 2,722 million pesos (USD 151.2 million) in late May after placing 93.86 million CBFI's on the Mexican Stock Exchange (BMV). This capitalization aligned with the company's expansion plans, aiming to grow its industrial portfolio in the Northern region of Mexico to leverage nearshoring and strengthen the value of its assets in the medium and long term.

In the last quarter, FIBRAs placed 315 million CBFI's, a staggering 62% increase compared to the average number of CBFI's placed per quarter since the first third of 2018. This suggests that FIBRAs are well-positioned to continue attracting investments in the future, further propelling the development and expansion of the real estate market in the country. However, it is crucial to carefully analyze economic and market factors to ensure informed and prudent investment through these instruments. For this purpose, we invite you to explore FIBRA Analytics or to contact us at contacto@siila.com.mx.