FIBRA Uno Seeks to Purchase 32% Stake of Afores in Mitikah (Mexico City) to Become Sole Owner

FIBRA Uno (FUNO), the largest real estate investment trust (REIT or FIBRA) in Latin America, has strategically partnered with CKD Helios to acquire a 32% stake in the prestigious mixed-use complex Mitikah in Mexico City. This significant move, currently owned by various pension funds (Afores), is a testament to FUNO's commitment to expanding its portfolio and driving growth in the Mexican real estate market. The agreement also includes an option to make the transaction payment in installments, demonstrating FUNO's prudent financial management.

It is noteworthy that as of the end of March 2024, CONSAR reported that ten Afores are investing in REITs, allocating on average about 3% of the funds they manage from Mexican workers. This level of participation by Afores in REITs underscores the growing importance of these investments in the Mexican real estate market, as seen with ambitious projects like Mitikah.

Mitikah, a beacon of success in the Mexican real estate market, is a development with a gross leasable area (GLA) of approximately 337,410 square meters of class A+ space. This includes a thriving shopping center, a state-of-the-art hospital, four towers with offices, residential (exclusively developed by Helios), and hotel spaces. By the end of the first quarter of 2024, the first phase of Mitikah was completed, featuring an operational GLA of about 284,000 square meters. Since 2016, this real estate project has incurred construction costs close to 25 billion pesos (around 1,480 million dollars), including at least 3.8 billion (nearly 225 million dollars) invested by Helios. These impressive figures and the high occupancy rates are a testament to the success and potential of Mitikah's development.

According to SiiLA, the M Tower of offices in Mitikah has an occupancy rate of 82.3%, with tenants like WeWork, L'Oreal, Sanofi, and Omnitracs occupying 68% of the existing space. In the shopping center, the occupancy reaches 99.2%, with anchor stores such as El Palacio de Hierro, Liverpool, and Cinepolis occupying 68% of the GLA. Additionally, the Mexican Public Education Secretariat fully occupies the Bancomer Center.

FUNO's acquisition plans are part of a strategy to strengthen its operating income.

In the first quarter of 2024, the real estate trust demonstrated solid financial performance, reporting a 7% increase in total revenues, reaching 6,823.8 million pesos (about 400 million dollars). This growth reflects a positive trend compared to the same period last year. Moreover, the company's Net Operating Income (NOI) stood at 5,186.7 million pesos (around 300 million dollars).

This growth could be driven by strengthening FUNO's corporate and commercial portfolio. A key example is Mitikah, which represents between 7% and 9% of the trust's operational portfolio of office, retail, and hotel spaces, in a context where 57% of the REIT's revenues come from the commercial and corporate segments. It's important to note that the average asking price per square meter in retail assets is generally higher than in office spaces, and these, in turn, usually exceed prices in industrial properties. For FUNO, according to data from SiiLA FIBRA Analytics, the average rent in the commercial segment is 31 dollars per square meter, 35% more than in offices (23 dollars) and over five times the price in industrial buildings (six dollars).

FUNO's strategy to increase revenues from its commercial segment, alongside the strengthening of its industrial portfolio with a new real estate trust (FIBRA Next) and a partnership with FIBRA Terrafina to combine assets, is also reflected in the development of the real estate portfolio over the last four years. During this period, the company's industrial assets grew by 11%, adding more than 580,000 square meters. Simultaneously, the retail segment increased by 8%, adding more than 230,000 square meters. In comparison, the office segment decreased by 12% or 155,000 square meters, partly due to the sale of assets like the Corporativo San Mateo in the State of Mexico in 2021.

SiiLA tried contacting FUNO to prepare this text but did not receive a response before publication.

For more information on this and other topics related to Mexico's commercial real estate market and REITs, explore SiiLA REsource or contact us at contacto@siila.com.mx.