Strategic Expansion. FIBRA Monterrey Successfully Acquires Land in FINSA Aguascalientes

In a strategic move aimed at tapping into the burgeoning industrial demand in Mexico's Bajio region, FIBRA Monterrey has secured a 17,924-square-meter plot of land to extend one of its warehouses within the FINSA Aguascalientes industrial park. As part of its Zeus Real Estate Portfolio, the trust fund is poised to invest $10.1 million in expanding this property. This investment encompasses the land's value, construction, taxes, and other closing expenses.

FIBRA Monterrey's expansion will add approximately 11,719 square meters of gross leasable area (GLA) to its Aguascalientes FINSA – 03 warehouse, increasing its current GLA by over two-thirds, according to SiiLA FIBRA Analytics. The construction process is projected to span 11 months, commencing in August of this year.

This substantial investment aligns with the anticipated growth in the industrial sector in the Bajio region. FIBRA Monterrey's most recent quarterly report highlights expectations for a revival of speculative projects in the coming months in this area. This resurgence is expected to be accompanied by heightened commercial activity due to the expansion of companies and new nearshoring-driven investments.
In line with this, the trust recognizes significant increases of 49% to 50% in industrial space absorption in the Bajio during the first half of 2023.

Aguascalientes stands out as one of the most successful markets in the region, boasting the lowest vacancy rate (2.3%) compared to Guanajuato, Queretaro, and San Luis Potosi. Furthermore, FIBRA Monterrey reports that Aguascalientes and Queretaro have the highest market prices among industrial markets in the Bajio, surpassing the five-dollar per square meter mark. This reflects these areas' high demand and scarcity of available industrial spaces.

The forthcoming expansion in Aguascalientes will be leased as part of the existing triple net (NNN) contract, denominated in dollars, which is already in effect for the FINSA Aguascalientes – 03 warehouse. This arrangement ensures guaranteed rent throughout the remaining tenure of the lease agreement, which spans a compulsory 10-year duration starting from the commencement of the new property's rental income generation. This is set to begin in the third quarter of 2024 and conclude in the third quarter of 2034.

The real estate trust fund anticipates that this expansion will yield an additional approximate net operating income of $1.06 million during the first twelve months of the tenant's extra rental payments.

FIBRA Monterrey's strategic expansion within the FINSA Aguascalientes industrial park underscores a robust response to growth prospects in the Bajio industrial sector. Favorable conditions concerning availability and prices highlight the region's attractiveness, while the long-term lease contract bolsters financial stability and anticipates a positive impact on the trust's operating income.

For more insights into Mexico's REIT performance, explore SiiLA FIBRA Analytics or contact us at contacto@siila.com.mx.