Macquarie Mexican REIT Announces Fourth Quarter 2012 Earnings Results

  • Largest REIT IPO ever on the Mexican Stock Exchange (Bolsa Mexicana de Valores); raised gross proceeds of MX$12.8 billion (approximately US$1 billion) from its global offering on December 19, 2012
  • Acquired the 2nd largest industrial portfolio in Mexico with approximately 2.5 million square meters of gross leasable area, for approximately MX$18.5 billion (US$1.4 billion)
  • Portfolio occupancy rate increased one percentage point from 91.1% at the end of 3Q12 to 92.1% at 4Q12
  • Total revenues for 4Q12 were MX$156.1 million (approximately US$12.0 million); Net Operating Income of MX$152.0 million (approximately US$11.7 million)
  • Funds From Operations of MX$121.7 million (approximately US$9.4 million) in 4Q12

MEXICO CITY--()--Macquarie Mexican REIT (MMREIT) (BMV: FIBRAMQ), owner of the second largest industrial real estate portfolio in Mexico, announced today its results for the quarter ended December 31, 2012.

MMREIT’s real estate trust certificates (certificados bursátiles fiduciarios inmobiliarios or “CBFIs”) commenced trading on the Mexican Stock Exchange (Bolsa Mexicana de Valores) on December 14, 2012 and MMREIT completed the acquisition of its initial portfolio of 244 properties on December 19, 2012. The information provided below corresponds to the operational period during the quarter from December 19 to December 31, 2012 in which MMREIT operated as a publicly traded trust, per regulatory requirements.

“We are pleased with MMREIT’s successful global offering,” said Nick O’Neil, Director of Macquarie México Real Estate Management, S.A. de C.V., the manager of MMREIT. “We view the strong response we received as an indication of the attractiveness of the real estate opportunity in Mexico to both local and international investors, as well as of the strength of our initial portfolio. We believe MMREIT is well positioned to capitalize on the trends in Mexico that have arisen from the changing dynamics of the real estate market.”

Fourth Quarter 2012 Results

MMREIT’s total revenue in the abbreviated fourth quarter amounted to MX$156.1 million (approximately US$12.0 million), including one-time lease termination revenue of MX$98.3 million (approximately US$7.6 million) that was received during the period. Rental revenues totaled MX$56.3 million (approximately US$4.3 million). Net operating income (NOI) for the quarter was MX$152.0 million (approximately US$11.7 million). NOI per CBFI was MX$0.30 (approximately US$0.02), based on 511,856,000 total outstanding CBFIs as of December 31, 2012. Net loss for the fourth quarter, during the operating period of December 19, 2012 to December 31, 2012, totaled MX$725.1 million, or MX$1.42 per CBFI, based on 511,856,000 CBFIs as of December 31, 2012.

Funds from Operations (“FFO”) for the fourth quarter totaled MX$121.7 million (approximately US$9.4 million), or MX$0.24 (approximately US$0.02) per CBFI.

The net loss for the quarter was principally due to transaction cost charges related to MMREIT’s global offering as well as the initial portfolio acquisition. All acquisition costs related to the initial portfolio have been expensed in accordance with IFRS 3 Business Combinations to the extent they are not directly related to the issuance of equity or debt.

Total cash and cash equivalents amounted to MX$1.3 billion (approximately US$101.8 million) as of December 31, 2012. Total liabilities outstanding at the end of the fourth quarter totaled MX$11.0 billion (approximately US$848.9 million). As of December 31, 2012, the value of MMREIT’s portfolio of properties was MX$18.5 billion (approximately US$1.4 billion). Traded and other receivables, including value added tax, totaled MX$2.6 billion (approximately US$198.5 million).

“We are pleased with the emerging trends in our portfolio in terms of occupancy and leasing activity,” said Jaime Lara, CEO of MMREIT. “As we look ahead to 2013, our primary focus will be on improving portfolio occupancy and rental rates, as well as seeking opportunities to further diversify.”

Property Operating Results and Leasing Activity

As of December 31, 2012, MMREIT owned 244 industrial properties located in 21 cities across 15 states in Mexico, with approximately 2.5 million square meters of gross leasable area. Total consolidated occupancy was 92.1% at the end of the fourth quarter, up one percentage point from 91.1% as of September 30, 2012, due to increased leasing activity in the key markets of Chihuahua, Reynosa, Tijuana, Nuevo Laredo and Ciudad Juarez. The portfolio’s weighted average remaining lease term (based on Annualized Base Rent) as of September 30, 2012 was 3.4 years, and increased to 3.5 years as of December 31, 2012 due to renewals and new leases having longer durations. MMREIT also noted an increase in the average lease terms primarily due to key tenants extending existing leasing contracts.

MMREIT signed leases totaling approximately 160,000 square meters in the fourth quarter of 2012. Rental rates on signed leases remained flat when compared to the third quarter of 2012. MMREIT’s tenant retention rate was 85% in the fourth quarter of 2012 based on leasable area.

“We continue to see a general recovery in many of the markets in which MMREIT operates. Most notably, Ciudad Juarez, our most important market, has experienced a resurgence of interest and investment, driving occupancy rates up. While the rental rates in this market have not yet fully recovered, we expect this to change over the coming months,” added Mr. Lara.

Capital Markets Transactions

MMREIT was established as a real estate investment trust (fideicomiso de inversíon en bienes raices) targeting industrial, office and retail real estate in Mexico, with a primary focus on stabilized income-producing properties. On December 19, 2012, MMREIT completed its global offering of 511,856,000 CBFIs, which generated gross proceeds of MX$12.8 billion (approximately US$1.0 billion). On January 17, 2013, pursuant to the conditions established in the global offering, the underwriters partially exercised the over-allotment option granted to them and MMREIT issued an additional 55,310,126 CBFIs, generating an additional MX$1.4 billion (approximately US$110 million) in gross proceeds and increasing the number of total outstanding CBFIs to 567,166,126. Total gross proceeds from the global offering, including from the partial exercise of the over-allotment option, amounted to MX$14.2 billion (approximately US$1.1 billion).

First Holders Meeting

On January 28, 2013, MMREIT held the initial meeting of CBFI holders where the independence of the independent members of the Technical Committee, Dr. Alvaro de Garay, Mr. Juan Antonio Salazar and Mr. Luis Alberto Aziz, was confirmed. Holders did not exercise their right to appoint members of the Technical Committee at this time.

Establishment of Audit and Practices Committee

On February 5, 2013, MMREIT’s Audit and Practices Committee was formally constituted, comprising the three independent members of the Technical Committee, with Mr. Salazar acting as Chairman.

Repayment of VAT Facility

On February 13, 2013, MMREIT exercised its right to voluntarily prepay its US$70 million short-term facility with Macquarie Bank Limited (MBL). Considering the interest expense savings and the resulting reduction in leverage, MMREIT decided to prepay its short-term facility with MBL using available cash on hand after the completion of its global offering and the partially exercised over-allotment option.

Webcast and Conference Call

MMREIT will host a webcast and conference call to discuss quarterly results and current market conditions on Tuesday, February 26, 2013 at 7:30 a.m. CST / 8:30 a.m. EST. The conference call, which will also be webcast, can be accessed online at www.macquarie.com/mmreit or by dialing toll free +1 877-303-6152. Callers from outside the United States may dial +1 678-809-1066. Please ask for the Macquarie Mexican REIT Fourth Quarter 2012 earnings call.

An audio replay of the conference call will be available through March 1, 2013, by dialing +1 855-859-2056 or +1 404-537-3406 for callers outside the US. The pass-code for the replay is 14621495. A webcast archive of the conference call and a copy of fourth quarter financial information will also be available on MMREIT’s website: www.macquarie.com/mmreit.

About Macquarie Mexican REIT

Macquarie Mexican REIT (MMREIT) (BMV: FIBRAMQ) is a real estate investment trust (fideicomiso de inversíon en bienes raices), or FIBRA, listed on the Mexican Stock Exchange (Bolsa Mexicana de Valores, S.A.B. de C.V.) targeting industrial, retail and office real estate opportunities in Mexico, with a primary focus on stabilized income-producing properties. MMREIT’s initial portfolio consists of 244 industrial properties located in 21 cities across 15 Mexican states. MMREIT is managed by Macquarie México Real Estate Management, S.A. de C.V., which operates within the Macquarie Infrastructure and Real Assets division of Macquarie Group. For additional information about MMREIT, please visit www.macquarie.com/mmreit.

About Macquarie Group

Macquarie Group (Macquarie) is a global provider of banking, financial, advisory, investment and funds management services. Macquarie’s main business focus is making returns by providing a diversified range of services to clients. Macquarie acts on behalf of institutional, corporate and retail clients and counterparties around the world. Founded in 1969, Macquarie operates in more than 70 office locations in 28 countries. Macquarie employs approximately 13,500 people and has assets under management of over US$353 billion (as of September 30, 2012).

Macquarie Infrastructure and Real Assets, a division of Macquarie, is a leading global alternative asset manager specializing in investments across infrastructure, real estate, agriculture and energy. Macquarie Infrastructure and Real Assets manages 49 funds with US$101 billion of assets under management across 25 countries (as of December 31, 2012).

Cautionary Note Regarding Forward-Looking Statements: This release may contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ significantly from these forward-looking statements.

THIS RELEASE IS NOT AN OFFER FOR SALE OF SECURITIES IN THE UNITED STATES, AND SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED.

Unaudited consolidated financial statements

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED DECEMBER 31, 2012

 

CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS

   
2012
    Note   $’000
Income
Property rental income 3(a) 57,787
Property expenses       (4,099)
Net property income       53,688
 
Other operating income and charges 3(b) (278,125)
Other income   3(a)   99,911
Total operating expense net of property expenses       (124,526)
 
Expenses
Management fees 3(c) (4,558)
Finance costs 3(d) (21,350)
Transaction related expenses 3(e) (569,002)
Other operating expenses   3(f)   (5,663)
Total expenses       (600,573)
Loss for the period       (725,099)
 
Other comprehensive income
Other comprehensive income for the period       -
Total comprehensive loss for the period       (725,099)
         
Earnings per CBFI
Basic earnings per CBFI 6 (1.42)
Diluted earnings per CBFI   6   (1.27)
 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2012

 

CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS

   
2012
    Note   $’000
Current assets
Cash and cash equivalents 7 1,324,884
Trade and other receivables 8 2,563,886
Total current assets 3,888,770
 
Non-current assets
Other assets 9 75,878
Investment properties 10 18,476,822
Total non-current assets       18,552,700
Total assets       22,441,470
 
Current liabilities
Trade and other payables 11 14,286
Interest bearing liabilities 13 886,794
Total current liabilities 901,080
 
Non-current liabilities
Other liabilities 12 465,706
Interest bearing liabilities 13 9,677,860
Total non-current liabilities       10,143,566
Total liabilities       11,044,646
         
Net assets       11,396,824
 
Equity
Contributed equity 14 12,121,923
Accumulated losses 15 (725,099)
         
Total equity       11,396,824
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED DECEMBER 31, 2012

 

CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS

       

Contributed
Equity

Accumulated
Losses

Total
    Note   $’000   $’000  

$’000

Initial contribution at November 14, 2012 50 - 50
Contributions of equity, net of issue costs 16,17 12,121,873 - 12,121,873
Total comprehensive loss for the period       -   (725,099)   (725,099)
Total equity at December 31, 2012       12,121,923   (725,099)   11,396,824
 

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED DECEMBER 31, 2012

 

CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS

   
2012
$’000
    Note   Inflows / (Outflows)
Operating activities:
Loss for the period (725,099)
Straight line rental income adjustment (319)
Foreign currency exchange loss 3(b) 198,076
Finance costs 3(d) 21,350
Increase in receivables 8 (2,563,886)
Increase in payables 11 14,286
Security deposits received from tenants 12 224,838
Net cash flows from operating activities (2,830,754)
 
Investing activities:
Purchase of investment property 10 (18,235,636)
Net cash flows from investing activities (18,235,636)
 
Financing activities:
Proceeds from interest bearing liabilities, net of facility fees 10,362,372
Interest paid (17,404)
Reserves held by lenders (75,878)
Proceeds from issue of CBFIs, net of capital raising costs 14 12,121,923
Net cash flows from financing activities 22,391,013
 
Net increase in cash and cash equivalents 1,324,623
Cash and cash equivalents at the beginning of the period -
Effect of exchange rate changes on cash and cash equivalents       261
Cash and cash equivalents at the end of the period   7   1,324,884

Contacts

Macquarie Mexican REIT
Eduardo Camarena, +52 (55) 9178 7730
Investor Relations
eduardo.camarena@macquarie.com
or
For international media press queries, please contact:
Macquarie Group
Paula Chirhart, +1-212-231-1239
Corporate Communications
paula.chirhart@macquarie.com
or
For press queries in Mexico, please contact:
Carral Sierra PR
Jose Manuel Sierra, +52 (55) 5105 5907
jmsierra@carralsierra.com.mx
Andrea Barba, +52 (55) 5286 0793
abarba@carralsierra.com.mx

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Contacts

Macquarie Mexican REIT
Eduardo Camarena, +52 (55) 9178 7730
Investor Relations
eduardo.camarena@macquarie.com
or
For international media press queries, please contact:
Macquarie Group
Paula Chirhart, +1-212-231-1239
Corporate Communications
paula.chirhart@macquarie.com
or
For press queries in Mexico, please contact:
Carral Sierra PR
Jose Manuel Sierra, +52 (55) 5105 5907
jmsierra@carralsierra.com.mx
Andrea Barba, +52 (55) 5286 0793
abarba@carralsierra.com.mx