In a strategic move aimed at capitalizing on the growing trend of nearshoring and the technological demands of the manufacturing and logistics industry in Mexico, the industrial REIT "Nearshoring Experts and Technologies," known as FIBRA Next, is set to make its debut on the Mexican Stock Exchange (BMV) on November 29. This action marks a milestone in the Mexican capital market, as this issuance is expected to be one of the largest in recent years.

FIBRA Next, created by FIBRA Uno (FUNO), aims to raise 15,000 million pesos (more than 830 million dollars) through the issuance of stock shares (known as CBFI's). Each share will be offered at an estimated price between 51 to 56 pesos (around three dollars), roughly double FUNO's current trading price. The proceeds will be used for property acquisition and development, as well as general corporate purposes. The offering includes the option of additional shares equivalent to 20% of the base offering, along with a potential over-allotment of up to 15%.

FIBRA Next's listing on the BMV will be traded under the ticker symbol "NEXT 23". The issuance will not be limited to the local market, as it will take place simultaneously in the international market, coordinated by major financial institutions such as BBVA, Bank of America, BTG Pactual, Citi, and J.P. Morgan. In addition, Goldman Sachs, Morgan Stanley, and Scotiabank will act as placement agents, while locally, Actinver, Banorte, HSBC, and Santander will also participate in the process.

It's important to note that FUNO's current investors will continue to receive dividends despite the "carve-out" of FUNO's industrial portfolio. Since FIBRA Next operates as a subsidiary of FUNO, both REITs will consolidate their financial results, although both will operate independently. Thus, FUNO's holders will be able to diversify their investments, as FUNO will continue to invest in different types of assets (commercial, industrial, offices, and others), while FIBRA Next's holders will have an investment exclusively focused on the industrial sector.

FIBRA Next's Portfolio

The most noteworthy aspect of FIBRA Next is its unprecedented size in the Mexican industrial sector and its internal management structure. Its initial portfolio will include 199 properties, of which approximately 98.5% are already stabilized. Together, these properties comprise nearly 7.5 million square meters of gross leasable area (GLA), representing about 10% of Mexico's industrial GLA. This positions FIBRA Next as the sector leader, with a portfolio nearly twice the size of the largest industrial REIT or FIBRA on the BMV, which is FIBRA Prologis.

FIBRA Next's industrial portfolio will be primarily distributed in the Mexico City Metropolitan Area, the Bajio region, Monterrey, Ciudad Juarez, and Tijuana. However, 75% of its portfolio will be concentrated in the central region of the country, which, according to Jorge Pigeon, senior Finance, Capital Markets, and Investor Relations executive at FUNO, will give their properties a logistical vocation and a competitive advantage in terms of electricity and water supply, space availability, and infrastructure challenges.

Of the 199 properties in FIBRA Next, over 91% will come from FUNO, with the remainder coming from e-Group's "Júpiter" real estate portfolio. These industrial properties will have an occupancy rate of over 97% with an average lease term of four years and over 600 tenants, including Amazon, DHL, FedEx, FEMSA, PepsiCo, and Walmart.

Additionally, FIBRA Next has ambitious growth plans. According to FUNO, it currently has an approximate land reserve of 5.8 million square meters, of which around 1.1 million are available for development. FUNO also estimates that its potential portfolio could reach around 13.3 million square meters of GLA in the coming years. This growth is based on its land reserve and e-Group's acquisition and development pipeline.

The Profitability of the New FIBRA

According to Jorge Pigeon from FUNO, FIBRA Next currently has an average rental income 22% lower than the market. However, it is important to note that a significant portion of its lease contracts will expire in the next three years, representing an opportunity to increase income organically. In addition, Pigeon highlighted that once the increases in current rents materialize and the ongoing acquisitions and developments in the trust's industrial portfolio are completed, there is the potential to achieve an annual income of approximately one trillion pesos (more than 55 billion dollars), with an estimated annualized dividend yield of roughly 5% to 6%.

FUNO's executive also mentioned that FIBRA Next will have a NOI margin of 92.6%, indicating high efficiency in managing its real estate assets, as well as an EBITDA margin of 87.2%, indicating that the company is generating a high level of net profit before interest, taxes, and other non-effective expenses in relation to its total income. These indicators are positive signals of strong operational efficiency and the ability to maintain healthy profit margins.

Due to its financial prospects and operational structure, FIBRA Next promises to be a dominant player in Mexico's industrial sector, capitalizing on the growing nearshoring trend and offering innovative solutions to market demands. Its launch on the BMV on November 29 will be an event that will significantly impact Mexico's commercial real estate market.

SiiLA will continue to monitor this and other real estate trusts at the national level. For more information, explore SiiLA REsource or contact us at contacto@siila.com.mx.