CKDs in Mexico: Stock Investment Vehicles with a Value of Up to 40 Billion Dollars

In Mexico, various investment vehicles are designed to boost project development in the commercial real estate market. One of the most attractive vehicles for institutional investors is the CKDs (Development Capital Certificates).

CKDs operate as a trust that pools capital from institutional investors to fund development projects in high-potential sectors like real estate, infrastructure, or energy. By issuing fiduciary securities on the stock market, CKD holders become partners in projects that offer risk diversification, access to large-scale investment opportunities, and high potential returns.

Despite facing macroeconomic and financial risks and risks associated with construction projects, which may be delayed due to regulatory issues or other circumstances, CKDs are regulated by government and monetary authorities, such as the National Banking and Securities Commission (CNBV) and the Mexican Stock Exchange (BMV). This regulation provides security and transparency for investors.

Since their inception over 13 years ago, these instruments have gained popularity in Mexico, as they channel capital into long-term projects that would otherwise be difficult to finance, thereby contributing to economic growth and sustainable development of the national real estate market.

An example is O'Donnell Capital Management, which, in late 2022, acquired land and properties totaling about 91,000 square meters. The more than 116 million dollars O'Donnell paid for these logistics and last-mile use properties in the metropolitan area of Mexico City came from the placement of CKDs in 2018.

Since their creation between 2009 and 2010 to boost the profitability of AFORES and SIEFOREs, CKDs have become a significant source of investment for the real estate sector in Mexico.

Financial specialist Jacobo Rodriguez from Roga Capital notes that the base capitalization value of CKDs is around 10 billion dollars. However, this amount could increase significantly as, depending on the investment needs of each project, there can be "capital calls," which are mechanisms for making additional certificate issues limited to a maximum authorized amount for each CKD. According to Rodriguez, the maximum number of issues could increase to four times, reaching 40 billion dollars.

For their high returns and long-term investment capacity, CKDs catalyze innovation and competition in the Mexican real estate market.

Interested in learning more about CKDs and how they differ from other institutional investment vehicles such as REITs? Be sure to check out SilLA REsource! In January, we will share an in-depth analysis based on an interview with Jacobo Rodriguez, a financial specialist from Roga Capital.