MEXICO CITY--(BUSINESS WIRE)--FIBRA Macquarie México (FIBRA Macquarie) (BMV: FIBRAMQ), owner of one of the largest portfolios of industrial and retail property in Mexico, announced today that it has agreed to sell 37 non-strategic industrial assets comprising 2.6 million square feet of GLA for US$87.4 million of cash proceeds (the “Transaction”). The Transaction is expected to close in mid-2018, subject to satisfaction of customary closing conditions.
“The sale of this portfolio marks a key milestone in our asset recycling program. Upon the close of this Transaction we will have sold 44 non-strategic properties, for an equivalent total of US$117.5 million at an aggregate 2.2 percent premium to book value. This is in stark contrast to the substantial discount of FIBRA Macquarie’s certificate price to its intrinsic net asset value, which exceeds 40 percent,” said Juan Monroy, FIBRA Macquarie’s chief executive officer. “This Transaction enhances our overall portfolio composition and key financial metrics, and substantially accomplishes our near term asset recycling objectives. Furthermore, we are delivering on what we set out to achieve with our capital management strategy as we continue to source and deploy capital in a disciplined manner to maximize value to our investors on a per certificate basis. The proceeds from our asset recycling program, together with retained AFFO, are expected to be ultimately used to fund accretive investments including high quality real estate expansions and selective developments, along with our certificate repurchase for cancellation program.”
The Transaction is fully comprised of non-strategic properties located in Mexico’s northern markets including Matamoros, Reynosa, Ciudad Juarez, Chihuahua, Mexicali and Tijuana. The Transaction complements the US$30.1 million of asset sales completed to date, which resulted in the complete exit from four tertiary industrial markets: Ascension, La Paz, Durango and Villahermosa. In achieving these asset sales, FIBRA Macquarie has sourced a diverse set of buyers including private equity funds, listed entities, existing tenants and family offices.
USE OF PROCEEDS
The Transaction sale proceeds of US$87.4 million are to be received in three tranches comprising US$66.4 million at closing and US$12.2 million and US$8.8 million to be received 18 months and 24 months following closing, respectively. The first tranche will initially be used to fully repay FIBRA Macquarie’s drawn revolver of US$40.0 million, with the remaining US$26.4 million held as unrestricted cash.
The Transaction increases FIBRA Macquarie’s total capital available for investment to approximately US$300 million, comprised of undrawn revolver facility and cash on hand. All of the Transaction sale proceeds are expected to be ultimately re-deployed in accretive investment opportunities, including expansions, developments and certificate repurchases for cancellation.
ENHANCED PORTFOLIO COMPOSITION
Following completion of the Transaction, FIBRAMQ’s industrial portfolio will have an increased focus in core assets and core markets, and will also achieve improved operational efficiencies, with expected NOI margin expansion driven by higher average occupancy and rental rates in the remaining portfolio.
| KEY INDUSTRIAL PORTFOLIO METRICS1 |
1Q18
Actual |
1Q18
Pro forma2 |
Variance |
|||
| Net operating income (NOI) (LTM) | Ps 2,648.6m | Ps 2,537.7m | (-4.2%) | |||
| NOI margin (LTM) | 90.5% | 91.1% | +60bps | |||
| Occupancy (EOP) | 91.9% | 93.3% | +140bps | |||
| Avg. monthly rent per leased (US$/sqm) (EOP) | $4.67 | $4.75 | +1.7% | |||
| Weighted avg. lease term remaining (years) (EOP) | 3.2 | 3.3 | +1.5% | |||
| Percentage of US$ leases (EOP) | 92.5% | 92.0% | (50bps) | |||
| GLA (’000s sqft) (EOP) | 31,991 | 29,407 | (8.1%) | |||
| GLA (’000s sqm) (EOP) | 2,972 | 2,732 | (8.1%) | |||
| Number of properties (EOP) | 271 | 234 | (13.7%) |
| 1. | LTM represents last 12 months. EOP represents end of period. | ||
| 2. | 1Q18 pro forma is provided for illustrative purposes. It assumes the Transaction was completed at the beginning of 2Q17 and includes adjustments which are directly attributable to the Transaction. | ||
Portfolio composition by geography and tenant industries will not be materially affected by the Transaction.
STRENGTHENED KEY FINANCIAL METRICS
The initial debt repayment will improve a number of key financial metrics, including leverage ratios, liquidity and proportion of fixed rate debt.
| KEY FINANCIAL METRICS1 |
1Q18
Actual |
1Q18
Pro forma3 |
Variance |
|||
| Real estate net LTV2 | 38.8% | 36.4% | (240bps) | |||
| Regulatory LTV | 35.8% | 34.7% | (110bps) | |||
| Undrawn revolver facility (US$) | 224.0m | 264.0m | +17.9% | |||
| Fixed rate debt proportion (%) | 95.0% | 100.0% | +500bps | |||
| Debt tenor (weighted avg. years) | 5.7 | 5.9 | +3.5% | |||
| Total debt (US$) | 880.1m | 840.1m | (4.5%) | |||
| Total unrestricted cash (US$) | 19.0m | 44.5m | +134.2% | |||
| Asset sales receivable (US$) | 0.0m | 21.0m | n.a. | |||
| Net debt/EBITDA (LTM) | 5.3x | 5.1x | (4.0%) | |||
| Weighted avg. cost of debt (p.a.) | 5.3% | 5.4% | +10bps | |||
| Regulatory DSCR | 4.6x | 5.4x | +17.4% |
| 1. | LTM represents last 12 months, EOP represents end of period. | ||
| 2. | Real estate Net LTV is stated on a proportionately combined basis and is calculated as (debt - unrestricted cash - asset sales receivable) / (property values). To date, Real estate LTV had been reported based upon a proportionately combined gross debt basis of (debt) / (property values). | ||
| 3. | 1Q18 pro forma is provided for illustrative purposes. It assumes the Transaction was completed at the beginning of 2Q17 and includes adjustments which are directly attributable to the Transaction. | ||
UPDATED GUIDANCE
In respect of the full year 2018, FIBRAMQ re-iterates its expectation to make cash distributions of approximately Ps. 1.56 per certificate, payable in quarterly distributions of Ps. 0.39 per certificate.
FIBRA Macquarie is updating its AFFO guidance for 2018, and estimates revised AFFO of between Ps. 2.19 and Ps. 2.24 per certificate, from its prior range of Ps. 2.25 to Ps. 2.30 per certificate. This reflects the Transaction’s net impact being an expected temporary AFFO reduction of Ps. 0.06 per certificate for 2018.
This guidance is based on the following assumptions:
- Transaction financial close in mid-2018
- Based on the cash-generating capacity of its post-Transaction portfolio and an average exchange rate of Ps. 18.5 per US dollar for the remainder of the year, consistent with guidance provided to date
- No new acquisitions
- No further divestments
- Repurchase for cancellation of the remaining 21.4 million certificates available for buyback, resulting in an aggregate 5.0% of issued certificates being repurchased and cancelled, to close 2018 with 770.8 million certificates outstanding
- The payment of cash distributions is subject to the approval of the board of directors of the Manager, the continued stable performance of the properties in the portfolio, and market conditions.
Based upon the mid-point of our revised 2018 guidance and closing certificate price on May 18, 2018 of Ps. 18.68, the current implied AFFO yield is 11.9% per annum, distribution yield is 8.4% per annum and AFFO payout ratio is approximately 70%.
PRUDENT CAPITAL MANAGEMENT
FIBRA Macquarie continues to source and deploy capital in a disciplined manner to maximize value to its investors on a per certificate basis. FIBRA Macquarie remains committed to utilizing retained AFFO and proceeds from our asset recycling program to deploy accretively across high quality property expansions and developments and certificate repurchases for cancellation.
About FIBRA Macquarie
FIBRA Macquarie México (FIBRA Macquarie) (BMV:FIBRAMQ) is a real estate investment trust (fideicomiso de inversión en bienes raíces), or FIBRA, listed on the Mexican Stock Exchange (Bolsa Mexicana de Valores) targeting industrial, retail and office real estate opportunities in Mexico, with a primary focus on stabilized income-producing properties. FIBRA Macquarie’s portfolio consists of 271 industrial properties and 17 retail properties, located in 20 cities across 16 Mexican states as of March 31, 2018. Nine of the retail properties are held through a 50/50 joint venture. FIBRA Macquarie 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 FIBRA Macquarie, please visit www.fibramacquarie.com. Macquarie Infrastructure and Real Assets is a business within the Macquarie Asset Management division of Macquarie Group and a global alternative asset manager focused on real estate, infrastructure, agriculture and energy assets. Macquarie Infrastructure and Real Assets has significant expertise over the entire investment lifecycle, with capabilities in investment sourcing, investment management, investment realization and investor relations. Established in 1996, Macquarie Infrastructure and Real Assets has approximately US$119 billion of total assets under management as of March 31, 2018.
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 61 office locations in 25 countries. Macquarie employs over 14,400 people and has assets under management of approximately US$382 billion as of March 31, 2018.
For more information, please visit www.macquarie.com.
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 and we undertake no obligation to update any forward-looking statements.
None of the entities noted in this document is an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities.
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.
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