In a strategic move that could transform the landscape of Mexico's industrial real estate market, FIBRA Prologis, a prominent owner and operator of Class-A industrial properties in the country, is seeking to acquire the entire portfolio of Terrafina by purchasing all the Real Estate Trust Certificates (CBFIs) of the company.

FIBRA Prologis plans to make a non-binding tender offer and exchange, subject to approval by financial authorities, including the National Banking and Securities Commission (CNBV). A tender offer is a proposal made by an individual or company to buy the shares of a publicly traded company. This offer extends to all shareholders and can also apply to other financial instruments that can be converted into shares, all in exchange for a specified price.

In this case, FIBRA Prologis has proposed paying a fixed exchange factor of 0.580 for each Terrafina CBFI. This means that for every Terrafina certificate, shareholders will receive the equivalent of 58% (0.580 times) of a FIBRA Prologis CBFI. For instance, if you own 100 Terrafina CBFIs, under this proposal, you would receive 58 CBFIs of FIBRA Prologis.

It's important to note that as a "non-binding exchange" operation, the proposal does not obligate any of the parties, neither FIBRA Prologis nor Terrafina nor their respective CBFI holders, to execute the transaction, nor does it constitute a public offering of securities. This is because any acquisition offer by FIBRA Prologis is contingent on obtaining all regulatory approvals.

FIBRA Prologis has already communicated its proposal to Terrafina's management. The initiative follows friendly conversations between both parties that began in December 2023.

As of the third quarter of 2023, Terrafina reported having 290 properties, including 286 industrial buildings, with approximately 3.9 million square meters of gross leasable area (GLA) and four land reserves designed to preserve the portfolio's organic growth capacity. FIBRA Prologis, on the other hand, ended 2023 with 235 logistics and manufacturing facilities in six industrial markets in Mexico, totaling 4.4 million square meters of GLA. Thus, with the acquisition of Terrafina's industrial properties, FIBRA Prologis would have the most significant industrial portfolio in Mexico, surpassing the six million square meters that FIBRA Next will have.

According to JP Morgan, this operation would involve the issuance of new shares by FIBRA Prologis and is expected to improve its market position, significantly increasing its GLA. Moreover, JP Morgan notes that the transaction, which still requires approval from the shareholders of both parties, could result in significant synergies, optimizing the management of Terrafina's assets and improving the liquidity of FIBRA Prologis's shares.

The American multinational banking and financial services corporation also estimates that 22% of Terrafina's assets, located in secondary markets for FIBRA Prologis, such as Aguascalientes, Baja California, Guanajuato, San Luis Potosi, Sonora, Tabasco, and Tamaulipas, could be sold. Furthermore, JP Morgan anticipates that in terms of tenants, FIBRA Prologis's portfolio mix (40% manufacturing and 60% logistics) will diversify with Terrafina's assets (73% manufacturing and 27% logistics). This will add value to the portfolios in an investment context driven by nearshoring to Mexico.

The potential agreement between FIBRA Prologis and Terrafina reflects the current dynamism of Mexico's industrial real estate market. It could set a precedent in consolidating high-quality industrial real estate assets in the country, offering new growth and value opportunities for investors of both trusts. The eventual realization of this transaction will depend on negotiations and approval by regulatory authorities.

For more information on other FIBRAs in Mexico, explore SiiLA REsource or contact us at contacto@siila.com.mx.