Industrial Race: At Least Six Investors Interested in FIBRA Terrafina's Portfolio

In Mexico, a bidding war is underway involving at least six major investors, including FIBRA Prologis and FIBRA Uno (FUNO), who are interested in acquiring the industrial portfolio of FIBRA Terrafina through a public tender offer (PTO) for up to 100% of its real estate investment trust certificates (CBFIs).

Following FIBRA Prologis's announcement in mid-February of its intentions to make a PTO to acquire the entire Portfolio of FIBRA Terrafina, FUNO, and four other investors joined the competition to purchase industrial properties nationwide. This is in a context where the PTO could determine which real estate investment trust (or FIBRA) will end up with Mexico's most significant industrial portfolio.

On the one hand, the acquisition would allow FIBRA Prologis to increase its industrial portfolio to 8.4 million square meters, surpassing the six million square meters that FIBRA Next would have. On the other hand, FUNO is looking for "strategic alternatives" to boost its industrial portfolio, as its initiative to separate its industrial properties to form a new trust (FIBRA Next) has been unable to list on the stock exchange since the Tax Administration Service (SAT) stopped the process in November 2023. This happens in a context where investors have accused the company of committing alleged securities fraud due to the speculation of listing its spin-off on the Mexican Stock Exchange (BMV).

In this regard, Terrafina's Technical Committee recently authorized the possibility for at least six interested parties – four of which have not been publicly disclosed – to make a PTO to buy between 10% and 100% of Terrafina's CBFIs in circulation. The offer must be launched no later than four months after the Technical Committee's resolution, and for the offer to be valid, the bidder or bidders must acquire, directly or indirectly through one or more affiliates, the majority of the CBFIs in circulation.

Furthermore, FIBRA Terrafina indicated that the price offered for the CBFIs must be the same for all holders, as they will not be allowed to pay any additional premium to the offer price. It also indicated that the purchase process would only accept offers with specific provisions to guarantee the process' equity.

FIBRA Prologis and FIBRA Uno Offers

An OPA is a proposal made by a person 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 determined price.

In this case, FIBRA Prologis has proposed to pay a fixed exchange ratio of 0.580 for each CBFI of Terrafina. This means that for each Terrafina certificate, shareholders would receive the equivalent of 58% (0.580 times) of a FIBRA Prologis CBFI. For example, if you have 100 CBFIs of Terrafina, under this proposal, you would receive 58 CBFIs of FIBRA Prologis.

For its part, FUNO has proposed collaborating with Terrafina to combine some of its industrial assets into a new subsidiary entity. FUNO's proposal includes contributing the Jupiter Portfolio, owned by FUNO's founders, to Terrafina. This would be done through a capital increase or some other mechanism that is decided. FUNO estimates that the value of this operation would be approximately 49.63 pesos (around 2.9 dollars) for each CBFI of Terrafina. FUNO's proposal has a 90-day period to be considered, and Terrafina, along with its advisors, will review the proposed structure and price to determine their viability.

As of the third quarter of 2023, Terrafina reported having 290 properties, including 286 industrial warehouses, 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.

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