FIBRA Nova Capitalizes on Mexico's Nearshoring Demand with a 2.3 Billion Pesos Investment

FIBRA Nova (FNOVA) plans to invest over 2.3 billion pesos (USD 127.4 million) in 2023 to capitalize on industrial warehouses' demand driven by nearshoring in Mexico. The real estate investment trust fund's resources will be used to develop projects in the northern part of the country, specifically in Chihuahua, Ciudad Juarez, and Reynosa. These projects include three Build to Suit (BTS) properties and three speculative properties, according to SiiLA analyzed data.

As of the first quarter of 2023, FNOVA had already invested 631 million pesos (USD 35 million) in its expansion plan, utilizing its territorial reserves covering 748,831 square meters. As stated in a quarterly report, the company reported that a significant portion of these reserves were acquired in early 2022 in strategic and attractive areas for foreign companies.

The six properties currently under development are in Ciudad Juarez and Chihuahua. The BTS properties cover a total area of 49,808 square meters. Two started generating income between May and June 2023 and are occupied by Regal Rexnord and ZF Electronic Systems. The third property will begin generating revenue in October this year and will be occupied by Essilor International. On the other hand, speculative properties cover 48,280 square meters, which will be delivered in the coming months. According to FNOVA, these speculative warehouses will allow the company to seize investment opportunities and consistently grow throughout 2023.

It's worth noting that, in May 2022, FNOVA obtained 2.722 billion pesos by placing 93.86 million stocks (or CBFIs) on the Mexican Stock Exchange (BMV). This debt contraction reflects the company's investment strategy, aimed at strengthening the long-term increase in the value of its assets.

According to SiiLA FIBRA Analytics, FNOVA's loan-to-value (LTV) ratio has increased by 1.7 times in the past 2.5 years, while its asset value has grown by 1.9 times during the same period. The LTV is an indicator that measures debt as a proportion of asset value. Both the LTV and the asset value indicate that despite the significant debt of the real estate trust, which represents 47.9% of its asset value, the value of FNOVA's assets has yielded positive results. Therefore, debt contraction is expected to slow down in the medium term, and the asset value will further increase. Currently, FNOVA's assets are valued at approximately 13.629 billion pesos (USD 755 million).

In this regard, Luis Carlos Pinon, FNOVA's CFO, has mentioned that they expect double-digit growth of over 19% in the coming quarters while maintaining their EBITDA margin (earnings before interest, tax, depreciation, and amortization) above 90% and continuing with a policy of distributing 100% of their operating margin, which they anticipate will exceed 73% by the end of this year.

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