FIBRA Prologis has successfully completed the majority acquisition of FIBRA Terrafina, a move that solidifies its leadership in the Mexican industrial real estate market. This strategic transaction, in which FIBRA Prologis acquired 77.14% of FIBRA Terrafina's real estate trust certificates (CBFIs), has significantly bolstered its position in the sector. With this, FIBRA Prologis now holds strategic control over its competitor, becoming the FIBRA with the largest managed industrial gross leasable area (GLA) in the country, covering 39% of the inventory held by the top 10 FIBRAs with industrial properties operating in Mexico, according to SiiLA data.

For the acquisition offer to succeed, the participation of at least 50% plus one of FIBRA Terrafina's outstanding CBFI holders was required. In a show of investor-friendly approach, FIBRA Prologis offered FIBRA Terrafina investors three flexible options to exchange their certificates before the acquisition. The first option was to receive 0.63 FIBRA Prologis certificates for each FIBRA Terrafina certificate. The second option was to receive 45 pesos (around 2.5 dollars) in cash per FIBRA Terrafina certificate, and the third option allowed for a combination of both alternatives, depending on the investor's preference. This flexibility was vital to securing the necessary participation and, ultimately, the transaction's success.

During the process, which concluded on August 2, 2024, approximately 217.2 million CBFIs were exchanged, while a significant portion of investors opted for the cash option, resulting in a distribution of 11,782 billion pesos (nearly 660 million dollars). This balance indicates that some investors sought immediate liquidity, possibly out of caution or a need for diversification, while others trusted in the long-term growth potential of FIBRA Prologis.

The transaction is expected to be settled tomorrow, Tuesday, August 6. This means that investors will receive either cash or new certificates, depending on the option they choose. This process will finalize the agreement, complying with the terms outlined in the public acquisition offer prospectus approved by COFECE in early June of this year.

Impact of the Majority Acquisition

It is essential to clarify that although FIBRA Prologis acquired a majority stake in FIBRA Terrafina, the properties of FIBRA Terrafina do not automatically become part of FIBRA Prologis' portfolio. This acquisition gives FIBRA Prologis control over the management and strategic decisions of FIBRA Terrafina. Still, the properties remain under Terrafina's trust unless additional transactions are made to incorporate these assets into FIBRA Prologis' portfolio formally.

With the acquisition, FIBRA Prologis now has decision-making power over more than 520 industrial properties, with a combined GLA of nearly 8.2 million square meters, roughly double the GLA it previously managed in its portfolio. This growth is not just a one-time spike, but a reflection of the trust's long-term potential. Over the past decade, the GLA of FIBRA Prologis' industrial portfolio increased by 50% with the acquisition of at least 52 properties. During the same period, the trust's revenue grew tenfold, from 150 (8.4 million dollars) to more than 1.5 billion pesos (84 million dollars) annually.

The total number of properties under FIBRA Prologis' management now represents 39% of the industrial inventory of the top 10 FIBRAs with industrial properties in Mexico. Its closest competitors are FIBRA Uno, which manages more than six million square meters, equivalent to 30% of the total, and FIBRA Macquarie, with nearly 2.9 million square meters, which accounts for 14% of the GLA of the leading industrial FIBRAs in the country, according to data from SiiLA FIBRA Analytics.

From a geographical perspective, the transaction will not only increase the size of FIBRA Prologis' managed portfolio but also significantly diversify the distribution of its GLA nationwide.

Currently, 51% of Prologis' GLA is concentrated in the Northern region of Mexico, followed by the Central region (36%) and the Bajío (13%). With the administrative integration of FIBRA Terrafina's portfolio, which involves combining the management and decision-making processes of both entities, this distribution is expected to shift towards the North, reaching 58%. In comparison, the Central and Bajío regions will adjust their shares to 26% and 16%, respectively. This strategy strengthens the trust's manufacturing inventory, with a focus on critical industrial markets such as Reynosa, Tijuana, and Ciudad Juárez, while optimizing the logistical inventory in key consumer areas, particularly in Mexico City, Monterrey, and Guadalajara.

In the context of growing investment in the Mexican industrial real estate market, FIBRA Prologis' majority acquisition of FIBRA Terrafina strengthens the position of both companies and redefines the sector's competitive dynamics.

By controlling a larger inventory of properties, FIBRA Prologis is positioned to capitalize on more opportunities in key regions of the country, especially in the North, where demand has increased due to the expansion and relocation of companies. This consolidation of power will expand its market influence and prompt other players to reassess their strategies, triggering new dynamics of competition and adaptation in an increasingly competitive environment, where large institutional players dictate the rules of the game through their ability to mobilize large amounts of capital and operate on a significant scale. This enables them to set higher standards for efficiency and asset optimization, thereby raising the barriers to entry and making the market more challenging for smaller players.

For more information on the development and performance of the industrial real estate market, explore SiiLA REsource or contact us at contacto@siila.com.mx.