FIBRA Monterrey's Diversification in Mexico: Strategic Investment or Long-term Risk?

This year, FIBRA Monterrey and FIBRA Prologis emerged as the top industrial buyers among Mexico's leading FIBRAs. By September, their financial reports recorded the acquisition of 25 properties, adding approximately 490,000 square meters to their portfolios. FIBRA Monterrey accounted for nearly 280,000 square meters, while FIBRA Prologis —excluding its majority acquisition of FIBRA Terrafina in August— added 210,000 square meters.

However, 91% of the properties acquired by FIBRA Prologis are in some of the most sought-after markets in Mexico, such as Monterrey, Mexico City, and Tijuana, 43% of the properties purchased by FIBRA Monterrey, as part of the Aerotech Industrial Park acquisition, are in one of Querétaro's submarkets with the highest vacancy rate. These contrasting investment strategies reflect the composition of their respective portfolios. According to SiiLA, FIBRA Monterrey has 8% less presence than its competitor in Mexico's five most dynamic industrial markets in the north, Bajío, and central regions.

This raises a fundamental question: Is FIBRA Monterrey investing in alternative submarkets to diversify its portfolio and strengthen its long-term market position, or is it prioritizing stabilized large-scale portfolios to attract short-term capital?

The question is especially relevant considering that, while FIBRA Monterrey's industrial portfolio is stabilized and generating growing income, the stock market doesn't value its assets as highly as the company. By September, FIBRA Monterrey had repurchased approximately 1.1% of its CBFIs in an attempt to boost their value. The company has acknowledged this discrepancy. In its latest quarterly report to the Mexican Stock Exchange (BMV), it stated, "We believe the market price of our certificate does not adequately reflect our value in relation to our cash flow generation capacity, which is why we are convinced that repurchasing our certificates at these price levels is the most profitable operation for our investors."

Data from SiiLA FIBRA Analytics shows that between September 30, 2021, and 2024, FIBRA Monterrey's CBFIs depreciated by 7.7%, while those of one of the country's most prominent industrial FIBRAs, Prologis, surged by 42.2%. This occurred while the Mexican Stock Exchange's benchmark index, the IPC (Índice de Precios y Cotizaciones), reflected the stock market's overall performance, which increased by 2.0%.

The discrepancy in the valuation of FIBRAs is tied to risk perception, driven by factors such as market conditions, projected asset profitability, and the financial management quality of each trust. Location plays a central role in these perceptions. Traditional markets with higher demand and stability are viewed as less risky, while smaller and emerging markets tend to heighten investor uncertainty. However, investing in less dynamic and competitive markets than national industrial hubs is not necessarily bad. Such investments can present significant growth and diversification opportunities. The challenge lies in how the portfolio is constructed and balanced across these and other regions, especially when maintaining occupancy and generating stable returns is critical to strengthening perceived market value.

For FIBRA Monterrey, the composition of its real estate portfolio—which includes significant assets like "Zeus" and less strategic ones like "Casona"—might increase perceived risk and partially affect its long-term valuation. This occurs while the company continues expanding its presence in secondary markets.

SiiLA requested comment from FIBRA Monterrey, but they did not respond before this article was published.