FIBRA Monterrey Strengthens Its Portfolio with the Purchase of Industrial Properties in Queretaro for $83.3 Million

FIBRA Monterrey, the real estate investment trust (REIT) focusing on industrial and corporate properties in Mexico, announced a significant expansion of its portfolio by acquiring industrial properties in Queretaro. This transaction, valued at approximately $83.3 million plus taxes and associated expenses, comprises six Class A industrial buildings totaling a gross leasable area (GLA) of 93,525 square meters.

Located in the Aerotech industrial park, near Queretaro International Airport, and with excellent access to major transportation routes, these properties strengthen FIBRA Monterrey's market presence and offer added value to its investors. The lease agreements for these properties, denominated in dollars and with a remaining term of nine years, ensure a stable income stream for the trust. Moreover, the projected net operating income (NOI) for the next 12 months is approximately $9.7 million.

It is important to note that FIBRA Monterrey's most recent investment reflects a medium and long-term expansion strategy. On one hand, the purchase price includes:

1.- $67.8 million corresponds to the core & shell of the buildings, which alone will generate an NOI of $5.7 million.

2.- $13.6 million for tenant improvements, which will serve as the basis for the NOI through collecting $4 million in rent for amortizations of the upgrades.

3.- $1.9 million for land for future expansions, considering that the GLA of the buildings is constructed on a plot of approximately 253,611 square meters.

On the other hand, the contracts' triple net (NNN) nature, where the tenant covers maintenance, insurance, and property tax expenses, adds an additional layer of financial security for FIBRA Monterrey. This transaction will also allow the trust to increase its weighted average lease term to income (WALT) from 4.9 years at the end of 2023 to an estimated 5.2 years. This implies that FIBRA Monterrey is expanding its portfolio of high-quality properties and improving the stability and predictability of its future income, further consolidating its position as a key player in Mexico's commercial real estate market.

Strategic Partners and Approvals 

For this transaction, FIBRA Monterrey has strategic partners such as American Industries, Impulsora Queretana de Inmuebles, and Abitat. It is worth noting that the trust had previously collaborated with American Industries in 2021, specifically for acquiring 25% of the La Perla office complex in Guadalajara.

FIBRA Monterrey's most recent transaction is expected to be concluded and settled by April 2024. However, the operation is still subject to certain conditions, although FIBRA Monterrey's Technical Committee has already approved it and has received authorization from the Federal Economic Competition Commission (COFECE).

At the end of the fourth quarter of 2023, FIBRA Monterrey demonstrated solid growth and diversification in its portfolio, with 106 properties, 19 for office use, 81 for industrial use, and six for commercial use, covering 1,652,673 square meters of GLA, with an occupancy rate of 96.3%.

In addition to its current portfolio, the company has significant potential for growth, as its land reserve reaches 882,723 square meters. The trust has announced industrial expansions with a total estimated value of nearly $100 million, with capitalization rates above 9%. Of this total, $45 million is already signed and under construction, $19 million is in the final negotiation phase, and the remainder is in the initial stage. If all expansion projects are completed, FIBRA Monterrey's industrial portfolio will experience a significant increase of more than 100,000 square meters, of which approximately 18.3 thousand are already under construction.

For more information about the performance of FIBRAs and trends in Mexico's commercial real estate market, explore SiiLA REsource or write to us at contacto@siila.com.mx.