FIBRA Macquarie México Reports Fourth Quarter and Full Year 2020 Results

- Collected 97.7% of 4Q20 consolidated base rents -

- Authorized 4Q20 cash distribution of Ps. 0.4750 per certificate -

- Announces new Apodaca, Nuevo Leon industrial development project -

- FY21 distribution guidance of Ps. 1.90 per certificate -

MEXICO CITY--(BUSINESS WIRE)--FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ), owner of one of the largest portfolios of industrial and retail property in Mexico, announced its financial and operating results for the fourth quarter and year ended December 31, 2020.

FOURTH QUARTER 2020 HIGHLIGHTS

• AFFO per certificate of Ps 0.5940 for the quarter, down 8.0% YoY
• Consolidated occupancy of 93.9%, up 20 bps QoQ and down 170 bps YoY
• Completed and fully leased 217k square foot LEED Gold industrial development project in Ciudad Juárez
• Acquisition of strategic 20.6 hectare land parcel located in Apodaca, Nuevo Leon for the development of more than 900k square feet of industrial GLA
• Authorized 4Q20 cash distribution of Ps. 0.4750 per certificate, up 4.4% YoY
• Introduces FY21 AFFO per certificate guidance of Ps. 2.27 to Ps. 2.32
• Introduces FY21 distribution guidance of Ps. 1.90 per certificate

FULL YEAR 2020 HIGHLIGHTS

• Full year 2020 distribution of Ps. 1.90 per certificate, up 6.7% YoY, in line with guidance established on January 30, 2020, prior to onset of the COVID-19 pandemic
• Increase in AFFO per certificate of 0.6% YoY to a record Ps 2.5911, also in line with guidance
• Average industrial rental rates increased 2.5%; same store retail rental rates increased 0.6% YoY
• Advancement in ESG program, including improvement to 3 GRESB Green Stars and completion of green building certifications for selected industrial and retail properties
• Progression of industrial development program, with the acquisition of strategic land parcels located in the Mexico City and Apodaca, Nuevo Leon Metropolitan Areas for construction of industrial buildings exceeding 1.6m square feet of GLA
• Efficient sourcing of capital totaling US$44.8 million, comprised of US$24.6m retained AFFO and US$20.3m of deferred asset sale proceeds
• Capital allocation of US$49.9 million, across industrial development program, property expansions, certificate repurchase for cancellation program and retail center remodeling
• Robust balance sheet with liquidity of US$288.5 million including US$243.1 million undrawn revolver facility and US$45.4 million cash at bank, stable Real Estate Net LTV to 37.6% (up 120 bps YoY) and steady Net Debt/EBITDA multiple of 4.6x, unchanged from the end of FY19

“In 2020, we delivered earnings growth slightly above our expectations and delivered on our guidance, even as we navigated the challenges brought on by the global pandemic,” said Juan Monroy, FIBRA Macquarie’s chief executive officer. “The stability in our industrial portfolio is underpinned by the sustained demand for industrial properties in the strategic markets in which we operate. While the retail environment remains more challenging, we have confidence that our defensively positioned properties are well positioned to navigate through the current environment. Additionally, during the year we completed construction and fully leased our second industrial development project in Ciudad Juárez, which demonstrates the successful execution of our development program with a well-managed risk profile to drive attractive returns. With a longstanding history of disciplined capital management, we maintained our distribution whilst allocating capital accretively towards strategic industrial development opportunities and other accretive investments.”

Mr. Monroy continued, “As we look ahead to 2021, there are a few factors that we anticipate will impact our results for the year. These include a stronger Mexican Peso compared to 2020 levels, ongoing COVID-19 challenges in the retail segment, and the lease termination for one of our prime Mexico City retail properties which occurred in the first quarter of 2020. We are conducting market sounding, with the goal of pre-leasing a multi-level project or leasing as a refurbished property. We are encouraged by the stability in our industrial portfolio. We look forward to the completion of the first phase of our industrial logistics project in Mexico City towards the end of this year, which is part of an ongoing initiative to pursue select developments in core markets to drive growth. Furthermore, we are encouraged by trends including nearshoring manufacturing and logistics demand which provide for compelling longer-term tailwinds.”

FINANCIAL AND OPERATING RESULTS

Consolidated Portfolio

FIBRAMQ’s total results were as follows:

TOTAL PORTFOLIO	4Q20	4Q19	Variance	FY20	FY19	Variance
Net Operating Income (NOI)	Ps 870.3m	Ps 858.7m	1.4%	Ps 3,692.7m	Ps 3,403.5m	8.5%
EBITDA	Ps 798.0m	Ps 800.7m	-0.3%	Ps 3,431.5m	Ps 3,185.2m	7.7%
Funds From Operations (FFO)	Ps 557.7m	Ps 571.6m	-2.4%	Ps 2,394.3m	Ps 2,303.6m	3.9%
FFO per certificate	0.7322	0.7465	-1.9%	3.1402	2.9973	4.8%
Adjusted Funds From Operations (AFFO)	Ps 452.4m	Ps 494.7m	-8.5%	Ps 1,975.6m	Ps 1,979.7m	-0.2%
AFFO per certificate	0.5940	0.6460	-8.0%	2.5911	2.5758	0.6%
NOI Margin	86.0%	86.9%	-94 bps	87.4%	87.8%	-37 bps
AFFO Margin	44.7%	50.1%	-538 bps	46.8%	51.1%	-430 bps
GLA (’000s sqm) EOP	3,208	3,202	0.2%	3,208	3,202	0.2%
Occupancy EOP	93.9%	95.6%	-170 bps	93.9%	95.6%	-170 bps
Average Occupancy	93.6%	95.6%	-199 bps	94.5%	95.2%	-70 bps

FIBRAMQ’s same store portfolio results were as follows:

TOTAL PORTFOLIO - SAME STORE	4Q20	4Q19	Variance	FY20	FY19	Variance
Net Operating Income	Ps. 866.6m	Ps. 832.4m	4.1%	Ps. 3,567.4m	Ps. 3,299.4m	8.1%
Net Operating Income Margin	86.2%	86.6%	-48 bps	87.2%	87.5%	-30 bps
Number of Properties	250	250	0	250	250	0
GLA (’000s sqf) EOP	34,114	33,967	0.4%	34,114	33,967	0.4%
GLA (’000s sqm) EOP	3,169	3,156	0.4%	3,169	3,156	0.4%
Occupancy EOP	93.8%	95.5%	-171 bps	93.8%	95.5%	-171 bps
Average Monthly Rent (US$/sqm) EOP	5.39	5.35	0.8%	5.39	5.35	0.8%
Weighted Avg Lease Term Remaining (years) EOP	3.4	3.4	-1.20%	3.4	3.4	-1.2%
Percentage of US$ denominated Rent EOP	75.1%	73.5%	164 bps	75.10%	73.50%	164 bps

COVID-19 Reporting Disclosures

FIBRAMQ continues to provide enhanced COVID-19 related disclosures for its rent collections, retail center store openings, rent relief and trade receivables as part of its Fourth Quarter 2020 Supplementary Information materials, located at www.fibramacquarie.com/investors/bolsa-mexicana-de-valores-filings.

With respect to FIBRAMQ’s total portfolio performance on a proportionally combined basis, positive trends continued in financial metrics including rent concessions, trade receivables and cash collections, across both the industrial and retail portfolios:

• Base rent cash collections in 4Q20 increased to Ps. 965.8 million, up 1.1% from 3Q20 and 6.1% from 2Q20. Total cash collections were Ps. 1.147 bn, up 2.8% from 3Q20 and 15.5% from 2Q20, respectively. Collected 97.7% of 4Q20 consolidated base rents as at January 31, 2021
• Rent concessions in 4Q20 were Ps. 15.6 million, lower by 67.1% versus 3Q20 and 86.5% versus 2Q20. On a sequential basis, there were less rent discounts and deferrals granted for both the Industrial and Retail portfolios
• Deferred rent program substantially completed. FY20 rents subject to deferral totaled Ps. 101.0 million deferred rents, with 99.8% scheduled for collection in FY20 successfully received and only Ps. 19.0 million scheduled for collection in FY21.
  Net trade receivables, excluding VAT, reduced to Ps. 46.2 million, lower by 36.9% from 3Q20 and 59.4% versus 2Q20, driven by strong quarterly cash collections and prudent levels of credit

Industrial Portfolio

The following table summarizes the results for FIBRAMQ’s industrial portfolio:

INDUSTRIAL PORTFOLIO	4Q20	4Q19	Variance	FY20	FY19	Variance
Net Operating Income (NOI)	Ps 779.7m	Ps 719.0m	8.4%	Ps 3,183.3m	Ps 2,811.7m	13.2%
NOI Margin	90.5%	91.3%	-79 bps	91.2%	91.6%	-41 bps
GLA (’000s sqft) EOP	29,955	29,598	1.2%	29,955	29,598	1.2%
GLA (’000s sqm) EOP	2,783	2,750	1.2%	2,783	2,750	1.2%
Occupancy EOP	94.3%	95.9%	-162 bps	94.3%	95.9%	-162 bps
Average Occupancy	93.9%	95.9%	-200 bps	94.8%	95.4%	-68 bps
Average monthly rent per leased (US$/sqm) EOP	$5.05	$4.93	2.5%	$5.05	$4.93	2.5%
Customer retention LTM	77.9%	81.0%	-309 bps	77.9%	81.0%	-309 bps
Weighted Avg Lease Term Remaining (years) EOP	3.4	3.3	5.3%	3.4	3.3	5.3%

With respect to ongoing impact of COVID-19 on FIBRAMQ’s industrial portfolio:

• Cash collections continue to be strong. Through to January 31, 2021, 99.0% of scheduled 4Q20 rents were collected
• FIBRAMQ granted COVID-19 related rent concessions in respect of fourth quarter rents totaling Ps. 2.8 million, lower by 87.4% QoQ. Rent concessions in 4Q20 were comprised solely of rent deferrals, with no rent discounts provided
• Cumulative contracted rent relief now totals Ps. 96.8 million, comprised of Ps. 92.7 million in rent deferrals and Ps. 4.1 million in rent discounts
• Deferred rents scheduled for collection in 4Q20 totaled Ps. 39.6 million and Ps. 11.8 million are scheduled for collection in FY21
• As of December 31, 2020, trade receivables net of provisions were Ps. 30.7 million (excl. VAT), lower by 45.3% QoQ. This reflects solid cash collections along with a prudent provisioning approach.

For the quarter ended December 31, 2020, FIBRAMQ’s industrial portfolio delivered NOI of Ps. 779.7 million, up 8.4% compared to the prior comparable period. This increase was driven by a depreciation of the Mexican Peso and contracted annual rent increases, partially offset by lower average occupancy. Approximately 93% of FIBRAMQ’s industrial ABR is US dollar denominated, consistent with historic levels. Average rental rates increased 2.5% on an annual basis, driven by contractual increases and positive leasing spreads on renewal leases.

During the quarter, FIBRAMQ signed 31 new and renewal leases, comprising 2.1 million square feet of GLA. FIBRA Macquarie executed on 7 new leases totaling 564 thousand square feet and 24 renewal leases totaling 1.5 million square feet, respectively. Of note, FIBRAMQ leased its newly completed 217 thousand square foot LEED Gold certified building in Ciudad Juárez to a multinational customer involved in the power management sector. Somewhat offsetting this leasing activity was 223 thousand square feet that was vacated by five customers, resulting in a retention rate of 77.9% for the last twelve months. The active quarter of leasing also assisted in extending the Industrial portfolio’s weighted average lease term to 3.4 years, an increase of 5.3% against the prior comparable period.

For detail on FIBRAMQ’s same store industrial portfolio results, please refer to Fourth Quarter 2020 Supplementary Information materials located at www.fibramacquarie.com/investors/bolsa-mexicana-de-valores-filings

Retail Portfolio

The following table summarizes the proportionally combined results of operations for FIBRAMQ’s retail portfolio:

RETAIL PORTFOLIO	4Q20	4Q19	Variance	FY20	FY19	Variance
Net Operating Income (NOI)	Ps 90.6m	Ps 139.6m	-35.1%	Ps 420.0m	Ps 486.2m	-13.6%
NOI Margin	60.1%	69.7%	-956 bps	78.1%	82.5%	-437 bps
GLA (’000s sqft) EOP	4,577	4,864	-5.9%	4,577	4,864	-5.9%
GLA (’000s sqm) EOP	425	452	-5.9%	425	452	-5.9%
Occupancy EOP	91.4%	93.8%	-234 bps	91.4%	93.8%	-234 bps
Average Occupancy	91.7%	93.8%	-206 bps	92.5%	93.5%	-95 bps
Average monthly rent per leased (Ps/sqm) EOP	$154.86	$163.10	-5.0%	$154.86	$163.10	-5.0%
Customer retention LTM	49.8%	82.6%	-3277 bps	49.8%	82.6%	-3277 bps
Weighted Avg Lease Term Remaining (years) EOP	3.6	4.1	-13.7%	3.6	4.1	-13.7%

With respect to the ongoing impact of COVID-19 on FIBRAMQ’s retail portfolio:

• All of FIBRAMQ’s shopping centers are supermarket anchored and have remained open since the onset of the pandemic. While most non-essential businesses have reopened, many are operating at reduced hours and/or capacity limits, providing for challenging trading conditions.
• Through January 26, 70.5% of GLA and 68.1% of ABR is open
• Cash collections continued to gain momentum, with fourth quarter collections of Ps. 136.6 million, up 24.4% from the prior quarter
• Through January 31, 2021, 89.2% of scheduled fourth quarter rents have been collected
• Total quarterly rent concessions eased for the second consecutive quarter, lower sequentially by 49.8% to Ps 12.9 million. In respect of current quarter rents, FIBRAMQ granted rent discounts of Ps. 11.7 million, lower by 48.6% QoQ, and rent deferrals of Ps. 1.1 million, lower by 59.5% compared to the prior quarter
• Cumulative contracted rent relief now totals Ps. 81.6 million, comprised of Ps. 8.2 million in rent deferrals and Ps. 73.4 million in rent discounts
• Deferred rents scheduled for collection in 4Q20 totaled Ps. 1.0 million and Ps. 7.2 million are scheduled for collection in FY21
• As of December 31, 2020, trade receivables net of provisions were Ps. 15.5 million (excl. VAT), lower by 9.4% QoQ, with 86.7% of gross account receivables being prudently provisioned.

For the quarter ended December 31, 2020, FIBRAMQ’s retail portfolio delivered NOI of Ps. 90.6 million, lower by 35.1% compared to the prior comparable period. FIBRAMQ’s retail portfolio average rental rates decreased by 5.0% over the prior comparable period as contractual increases and positive new and renewal rental rate spreads were offset by the impact of a lease termination of a prime Mexico City property in the first quarter of 2020. Excluding the impact of that move-out, average rental rates increased 0.6% year over year. Occupancy at the end of the fourth quarter 2020 was 91.7%, down 234 basis points from the prior year and 70 basis points from the third quarter, driven in part by the first quarter lease termination previously discussed, along with additional vacancy primarily due to the impact of COVID-19.

During the fourth quarter of 2020, FIBRAMQ signed 37 retail leases, representing 56.7 thousand square feet. This activity included 10 new leases and 27 renewals.

For detail on FIBRAMQ’s same store retail portfolio results, please refer to Fourth Quarter 2020 Supplementary Information materials located at www.fibramacquarie.com/investors/bolsa-mexicana-de-valores-filings

PORTFOLIO ACTIVITY

Industrial Development Program

Apodaca, Nuevo Leon Metropolitan Area

On December 18, FIBRAMQ acquired a 20.6-hectare land parcel located in Apodaca, Nuevo Leon. FIBRAMQ expects to develop more than 900k square feet of industrial GLA on the site. The investment forms part of FIBRAMQ’s broader strategy to continue to enhance its industrial portfolio by investing in class “A” assets in core markets demonstrating strong performance and a positive economic outlook. FIBRAMQ intends to commence construction on the first building in the first half of 2021.

Ciudad Juárez

During the fourth quarter, FIBRAMQ delivered its 217k square foot new industrial building in Ciudad Juárez. The building was fully leased during the quarter.

Mexico City Metropolitan Area

FIBRAMQ is continuing pre-construction work at its development project in the Mexico City Metropolitan market announced last quarter. FIBRAMQ expects to develop more than 700k square feet of industrial logistics GLA on the site and anticipates commencing construction in the first half of 2021.

BALANCE SHEET AND LIQUIDITY

As of December 31, 2020, FIBRAMQ had approximately Ps 15.8 billion of debt outstanding on a 100% fixed rate basis and with a weighted-average debt tenor remaining of 5.1 years. FIBRAMQ does not have any material commitments with respect to capital expenditures and does not have any scheduled loan maturities until 2023.

Further, liquidity levels remain high at Ps. 5.8 billion, with Ps. 4.9 billion available on its undrawn revolving credit facility and Ps. 0.9 billion of unrestricted cash on hand. FIBRAMQ continues to maintain a stable Real Estate Net LTV to 37.6% (up 120 bps YoY) and steady Net Debt/EBITDA multiple of 4.6x (unchanged from prior year). FIBRAMQ’s CNBV regulatory debt to total asset ratio was 35.4% and its CNBV debt service coverage ratio was 5.7x, incorporating the recently updated CNBV regulations that now require a forward-looking calculation period of four quarters (compared to six quarters, pursuant to the prior rules).

CERTIFICATE BUYBACK FOR CANCELLATION PROGRAM

FIBRAMQ did not repurchase any certificates during the fourth quarter. FIBRAMQ’s certificate repurchase for cancellation program has a total remaining capacity of Ps. 1.0 billion through to June 25, 2021. Since launching the program in June 2017, FIBRA Macquarie has repurchased 49.7 million certificates. All repurchased certificates have or will be cancelled.

DISTRIBUTION

On February 4, 2021, FIBRAMQ declared a cash distribution for the quarter ended December 31 of Ps. 0.4750 per certificate. The distribution is expected to be paid on March 12, 2021 to holders of record on March 11, 2021. FIBRAMQ’s certificates will commence trading ex-distribution on March 10, 2021.

SUSTAINABILITY

FIBRAMQ remains committed to sustainability including protecting the environment, prioritizing governance, and developing its employees, serving its customers and the community. As a key benchmark to measure ongoing progress and align with leading ESG ratings agencies and reporting frameworks, FIBRAMQ participates in the Global Real Estate Sustainability Benchmark (GRESB). FIBRAMQ received its 2020 GRESB score and was awarded three GRESB Green Stars, an improvement of one star vs. the prior year, which reflects the ongoing enhancements to its ESG initiatives. Since its initial rating in 2018, FIBRAMQ’s GRESB score has improved to above peer average. Key noted areas of strength include the implementation of portfolio-wide improvement strategies to its ESG program, strong tenant engagement, incorporating sustainability requirements into design and development, and waste management during construction. Reflecting on these results, FIBRAMQ has developed an action plan to improve these scores over the medium term.

Additionally, in 2020, FIBRAMQ pursued green building certifications for its properties under the LEED (Leadership in Energy and Environmental Design) and BOMA BEST Certification programs (Building Owners and Managers Association, Building Environmental Standards), which are two of the world's leading programs for the certification of existing buildings. FIBRAMQ was awarded LEED Silver and LEED Gold certifications for its two Ciudad Juárez industrial development projects delivered in 2019 and 2020, respectively. All six of FIBRAMQ’s retail properties submitted for BOMA BEST review received a Bronze certification. In conjunction with this certification, FIBRAMQ has a strategic program in place with objectives for the short, medium, and long term, in each of the BOMA BEST categories. These categories include energy conservation, waste management, and tenant communications.

FIBRAMQ intends to publish a comprehensive updated sustainability report in mid-2021.

FY21 GUIDANCE

AFFO per certificate

FIBRA Macquarie is introducing FY21 AFFO per certificate guidance of between Ps. 2.27 to Ps. 2.32. This guidance takes into account key items which are expected to impact FIBRAMQ’s performance in FY21:

• an average exchange rate of Ps. 20.0 per US dollar for FY21, which represents a 7.0% reduction as compared to the average exchange rate in FY20;
• In FY20, COVID-19 related impacts to AFFO totaled Ps. 0.17 per certificate, comprised of rent discounts and elevated provisioning for doubtful debts. Our FY21 guidance assumes ongoing COVID-19 challenges, in particular with regards to FIBRAMQ’s non-essential retail customer base. This is expected to result in a continuation in FY21 of a similar COVID-related impact to AFFO per certificate as that recorded in FY20; and
• ongoing vacancy at a 17k sqm property in Mexico City, where the lease terminated in the first quarter of FY20. FIBRAMQ is currently pursuing strategic options of the asset, as described earlier.

This guidance also takes into account the additional assumptions:

• No further deterioration in broader economic and market conditions
• Timely collection of in-place scheduled rents, including contracted or expected deferred and discounted rents
• No new acquisitions or divestments
• No change to outstanding certificates

Distribution per certificate

FIBRAMQ is introducing its guidance of cash distributions for FY21 of Ps. 1.90 per certificate, with distributions expected to be paid in equal instalments of Ps. 0.475 per certificate.

Based upon an assumed 7.0% appreciation in the average annual Peso exchange rate for FY21, in USD equivalent terms the expected FY21 cash distribution of USD 0.095 per certificate represents a 7.5% YoY increase compared to FY20.

DISTRIBUTION ANALYSIS	FY21 Guidance	FY20 Actual	Variance
Distribution per certificate (Ps.)	Ps 1.90	Ps 1.90	0.0%
Average annual USD foreign exchange rate	20.0	21.5	-7.0%
Distribution per certificate (USD equivalent)	USD 0.095	USD 0.088	7.5%

The payment of cash distributions is subject to the approval of the board of directors of the Manager, stable market conditions and the prudent management of FIBRAMQ’s capital requirements.

WEBCAST AND CONFERENCE CALL

FIBRAMQ will host an earnings conference call and webcast presentation on Friday, February 5, 2021 at 7:30 a.m. CT / 8:30 a.m. ET. The conference call, which will also be webcast, can be accessed online at www.fibramacquarie.com or by dialing toll free [phone]. Callers from Mexico may dial 01-800-926-9157 and other callers from outside the United States may dial [phone]. Please ask for the FIBRA Macquarie Fourth Quarter 2020 Earnings Call with conference number 4792497. An audio replay will be available by dialing [phone] or [phone] for callers from outside the United States. The passcode for the replay is 4792497. A webcast archive of the conference call and a copy of FIBRA Macquarie’s financial information for the fourth quarter 2020 will also be available on FIBRA Macquarie’s website, www.fibramacquarie.com.

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 236 industrial properties and 17 retail properties, located in 20 cities across 16 Mexican states as of December 31, 2020. Nine of the retail properties are held through a 50/50 joint venture. For additional information about FIBRA Macquarie, please visit www.fibramacquarie.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.

THIS ANNOUNCEMENT IS NOT FOR RELEASE IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA.