FIBRA Monterrey Seeks to Expand its Industrial Portfolio with Investments of Up to $280 Million by 2024

In 2023, FIBRA Monterrey doubled the size of its real estate portfolio by acquiring 46 industrial properties from the Zeus portfolio. The Mexican REIT's strategy in recent years has been clear: capitalize on the relocation and expansion of companies in Mexico due to nearshoring. Thanks to this strategy, FIBRA Monterrey is poised to invest up to $280 million in potential purchase transactions during the first half of 2024.

According to their latest financial report, FIBRA Monterrey has already identified $1.2 billion in transaction opportunities in the industrial sector. Out of this amount, the trust is already moving forward to finalize acquisition agreements totaling approximately $280 million.

In a recent interview with El Economista, Javier Llaca, the company's Director of Operations and Acquisitions, confirmed that FIBRA Monterrey plans to invest at least $180 million in expansions and the acquisition of 15 industrial warehouses in the northwest and Bajio regions of Mexico.

As of the third quarter of 2023, FIBRA Monterrey reported multiple industrial expansion requirements, including $49 million signed and under construction, adding approximately 52,700 square meters to their portfolio in Aguascalientes, Nuevo Leon, Queretaro, and San Luis Potosi. Additionally, the real estate trust fund plans to add another 50,000 square meters in expansions, including investments of $19 million in projects in the final negotiation stage and $22 million in the initial stage. If all these expansion projects materialize, the company's Gross Leasable Area (GLA) will increase by 6%.

This growth could be further fueled by acquisitions expected to take place between this year and the next. According to Javier Llaca, industrial expansions and acquisitions will allow FIBRA Monterrey to incorporate around 300,000 square meters into its portfolio, representing nearly 18% of the GLA managed by the company.

As of the third quarter of 2023, the REIT reported having 106 properties in its portfolio, including 81 industrial properties, 19 office properties, and six commercial spaces. These properties have a combined GLA of over 1.6 million square meters.

FIBRA Monterrey's Financial Outlook

By September 2024, FIBRA Monterrey had development commitments valued at approximately $100.7 million, including outstanding payments for the acquisition of "La Perla" corporate property ($7.5 million) in Jalisco and the remaining Zeus portfolio properties ($47.4 million), as well as estimated investments in expansions and "other minor commitments" for the mentioned period.

To meet these commitments, FIBRA Monterrey will likely incur bank borrowing and even consider launching a Public Offering on the Mexican Stock Exchange to raise capital and restructure its debt.

According to the company, as of the third quarter of this year, they had a borrowing capacity of up to $255 million to seize investment opportunities, such as the already agreed-upon expansions and ongoing acquisition negotiations. This level of indebtedness falls within the trust's target debt range of 25% to 35%.

Regarding this, SiiLA FIBRA Analytics data indicates that over the last three years, FIBRA Monterrey's average indebtedness level has been 25% of its total asset value. This proportion is nearly seven basis points below the average indebtedness level of FIBRAs or REITs nationwide. This suggests that the real estate trust has maintained a solid financial position and efficiently managed its debt, providing the necessary flexibility to execute its expansion and acquisition plans, supported by its strategy to capitalize on the relocation and expansion of companies in Mexico due to nearshoring.

With significant growth in its portfolio and reasonable borrowing capacity, FIBRA Monterrey is well-positioned to capitalize on opportunities in the industrial market in the coming years.

For more information about this and other REITs, explore SiiLA REsource or contact us at contacto@siila.com.mx.