FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ), owner of one of the largest portfolios of industrial and retail/office property in Mexico, announced its financial and operating results for the quarter ended June 30, 2016.

HIGHLIGHTS

  • Generated AFFO per certificate of Ps 0.4871, a 19.1% increase from the prior comparable period
  • Achieved overall occupancy of 93.0%, a record for FIBRAMQ
  • Completed 2.25 million square feet of industrial leasing
  • Delivered 6,800 square meter shell to Fábricas de Francia at the Tecamac retail center
  • Successfully refinanced US$717 million of debt
  • Declared a distribution of Ps 0.4400 per certificate, representing a 15.8% increase over the prior corresponding period

“FIBRA Macquarie delivered another successful quarter of financial and operating results, demonstrating the team’s commitment to delivering on our initiatives, and highlighting the benefits of our internal property management platform. Our considerable leasing activity should enhance both our cash flow and ability to support a strong and sustainable distribution policy,” said Juan Monroy, FIBRA Macquarie’s chief executive officer. “In addition, we enhanced our financial flexibility by converting our secured debt to a predominately unsecured structure while extending our weighted average maturity and diversifying our capital sources. Our operational excellence, coupled with our improved capitalization, positions FIBRA Macquarie to continue delivering value for investors.”

FINANCIAL RESULTS

For the quarter ended June 30, 2016, FIBRAMQ reported:

  • Earnings before interest, tax, depreciation and amortization (EBITDA) of Ps 677.5 million, compared to Ps 553.7 million for the same period in 2015
  • Funds from operations (FFO) of Ps 461.8 million, or Ps 0.5692 per certificate, compared to Ps 389.9 million, or Ps 0.4805 per certificate, for the same period in 2015
  • Adjusted funds from operations (AFFO) of Ps 395.2 million, or Ps 0.4871 per certificate, compared to Ps 331.8 million, or Ps 0.4090 per certificate, for the same period in 2015

For the six months ended June 30, 2016, FIBRAMQ reported:

  • EBITDA of Ps 1,357.3 million, compared to Ps 1,037.1 million for the same period in 2015
  • FFO of Ps 928.1 million, or Ps 1.1439 per certificate, compared to Ps 728.4 million, or Ps 0.8977 per certificate, for the same period in 2015
  • AFFO of Ps 804.1 million, or Ps 0.9911 per certificate, compared to Ps 614.1 million, or Ps 0.7569 per certificate, for the same period in 2015

OPERATING RESULTS

FIBRAMQ’s total portfolio results were as follows:

TOTAL PORTFOLIO             2Q16       2Q15       Variance       1H16       1H15       Variance
Net Operating Income (NOI) Ps 733.1m Ps 611.8m 19.8% Ps 1,472.2m Ps 1,157.6m 27.1%
FFO Ps 461.8m Ps 389.9m 18.5% Ps 928.1m Ps 728.4m 27.4%
AFFO Ps 395.2m Ps 331.8m 19.1% Ps 804.1m Ps 614.1m 30.9%
GLA (’000s sqm) EOP 3,436 3,162 8.7% 3,436 3,162 8.7%
Occupancy EOP             93.0%       90.9%       210 bps       93.0%       90.9%       210 bps
 

FIBRAMQ’s same store portfolio results were as follows:

TOTAL PORTFOLIO - SAME STORE             2Q16       2Q15       Variance
Net Operating Income Ps 690.3m Ps 611.8m 12.8%
GLA (’000s sqm) EOP 3,168 3,162 0.2%
Occupancy EOP 92.7% 90.9% 180 bps
Retention (LTM) 71% 77% -7.7%
Weighted average lease term (years)             3.8       3.9       -3.1%

Note: GLA in FIBRAMQ’s same store portfolio includes expansions completed at same store sites.

 

Industrial Portfolio

The following table summarizes the results of operations for the industrial segment during the quarter ended June 30, 2016.

            2Q16       2Q15       Variance
Net Operating Income Ps 599.4m Ps 479.9m 24.9%
GLA (’000s sqft) EOP 32,192 29,248 10.1%
GLA (’000s sqm) EOP 2,991 2,717 10.1%
Occupancy EOP 92.6% 90.3% 230 bps
Average monthly rent per leased sqm (US$) $4.43 $4.51 -1.8%
Retention (LTM) 69% 77% -800 bps
Weighted average lease term (years)             3.4       3.3       3.0%
 

The industrial portfolio occupancy rate at the end of the second quarter was 92.6 percent, up 230 basis points over the prior comparable period and up 100 basis points sequentially, raising the industrial portfolio occupancy level to the highest since FIBRAMQ´s inception in 2012.

FIBRAMQ’s “Customer First” initiative, an internal program to develop best practices in customer service, continues to be successful. The internal leasing team has been able to lease 4.3 million square feet in new and renewed leases, comfortably exceeding the 1.3 million square feet of move outs that have occurred year-to-date. During the second quarter, FIBRAMQ signed 13 new leases totaling 794 thousand square feet. The average lease term increased to 3.4 years. In addition, FIBRAMQ completed 12 lease renewals, for 754 thousand square feet of GLA. The strong leasing performance was somewhat offset by move outs due primarily to tenant-specific conditions, resulting in a 69 percent retention rate over the last twelve months.

Notable new leases included a 353 thousand square foot lease with an international logistics company across two buildings in Monterrey totaling 238 thousand square feet and one in Puebla totaling 114 thousand square feet. Additionally, FIBRAMQ renovated and leased a 114 thousand square foot building in Ciudad Juarez to an industrial packaging manufacturer. FIBRAMQ also leased 84 thousand square feet to a plastic injection molding manufacturer in Querétaro. Leasing for the third quarter of 2016 is expected to be challenging with 1.2 million square feet of leases expiring during what has traditionally been the quietest quarter of the year.

Active asset management resulted in the recent announcement of the expansion of Belden de Sonora’s industrial facility in Nogales, Sonora by approximately 55 percent, or 215 thousand square feet. The lease, which has been extended for an additional 10 years to 2026, now totals 607 thousand square feet. The expansion is expected to be completed by the end of 2016. Year-to-date, FIBRAMQ has completed over 54,000 square feet of pre-leased, value-accretive expansions.

Retail/Office Portfolio

The following table summarizes the results of operations for the retail/office segment during the quarter ended June 30, 2016.

            2Q16       2Q15       Variance
Net Operating Income Ps 133.8m Ps 131.9m 1.4%
GLA (’000 sqm) 445 445 0.0%
Occupancy 95.2% 94.4% 80 bps
Average monthly rent per leased sqm (Ps) Ps 143.47 Ps 141.95 1.1%
Retention (LTM) 77% 80% -300 bps
Weighted Average Lease Term (years)             5.5       5.5       0.0%
 

At the end of the quarter, the portfolio was 95.2% occupied, consistent with the prior quarter but up 80 bps on the comparable period. FIBRAMQ continues to make meaningful strides on development and expansion efforts in its retail/office portfolio.

Construction of Fábricas de Francia’s two new retail stores will expand retail GLA by 11,700 square meters. FIBRAMQ delivered a 6,800 square meter shell building to Fábricas de Francia in Tecamac in May 2016 for an expected store opening, and lease income generation, by the end of the fourth quarter of 2016. An additional 1,200 square meters has also been constructed as part of this project and is being, or expected to be, leased to other high quality tenants. Leasing of this space is proceeding well with interest from several high quality tenants.

In addition, FIBRAMQ signed its first lease for 372 square meters in its newly expanded office area which repurposed underutilized space in City Shops Valle Dorado. Construction of the new space is expected to be completed in the third quarter. FIBRAMQ also expects to deliver a new 6,254 square meter space to Fábricas de Francia at Tuxtepec during the third quarter of 2016. The delivery of this space involved the construction of a 3,800 square meter expansion.

PORTFOLIO ACTIVITY

FIBRAMQ continues to evaluate accretive acquisitions of high quality industrial and retail/office assets in core markets across Mexico. In addition, it continues to focus on investing in expansions or redevelopment of existing properties as well as pursuing a select number of development opportunities driven by tenant requirements and market dynamics.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

As previously announced, FIBRAMQ successfully achieved its strategic objective of transitioning to a predominately unsecured capital structure during the second quarter. On June 30, 2016, FIBRAMQ retired US$717 million of secured financing that was due to mature in December 2017 with a combination of unsecured debt totaling US$655 million and US$62 million of cash on hand.

Its US$685 million of unsecured debt is comprised of:

  • US$250 million of unsecured notes
  • US$220 million non-amortizing term loan, and
  • US$183 million drawn under a revolving credit facility with US$32 million available to draw.

The new and remaining debt carries a weighted average interest rate of 5.16%, similar to that before the secured debt was retired, but importantly, the weighted average maturity has extended to 4.2 years from 1.4 years. The financing has also diversified the types of debt instruments used as well as FIBRAMQ’s sources of debt, which includes participation from local and international money center banks as well as US-based insurance companies.

As of June 30, 2016, FIBRAMQ had approximately Ps. 17.5 billion of debt outstanding. FIBRAMQ had Ps. 752.9 million of unrestricted cash on hand and Ps. 594.8 million available on its credit facility. A large portion of this cash is anticipated to fund quarterly cash distributions.

FIBRAMQ’s CNBV regulatory debt to total asset ratio was 39.1% and the DSCR ratio was 1.4x.

FIBRAMQ is evaluating opportunities to repay amounts outstanding under the revolving credit facility and other upcoming secured debt maturities, and to further increase liquidity.

DISTRIBUTION

On July 27, 2016, FIBRAMQ declared a cash distribution for the quarter ended June 30, 2016, of Ps. 0.4400 per certificate. The distribution is expected to be paid on August 10, 2016 to holders of record on August 9, 2016. FIBRAMQ’s certificates will commence trading ex-distribution on August 5, 2016. The distribution of Ps.0.4400 per certificate reflects a 15.8% increase over the second quarter of 2015 and an AFFO payout ratio of 90.3% for the second quarter.

FIBRAMQ re-affirms its annual distribution guidance of between Ps.1.74 and 1.84 per certificate. Subsequent distributions in 2016 are expected to remain broadly in line with the second quarter.

WEBCAST AND CONFERENCE CALL

FIBRAMQ will host an earnings conference call and webcast presentation on Thursday, July 28, 2016 at 7:30 a.m. CT / 8:30 a.m. ET.

The conference call, which will also be audio webcast, can be accessed online at www.fibramacquarie.com or by dialing toll free +1 (877) 304 8957. Callers from outside the United States may dial +1 (973) 638 3235. Please ask for the FIBRA Macquarie Second Quarter 2016 Earnings Call.

An audio replay will be available by dialing +1-855-859-2056 or +1-404-537-3406 for callers outside the United States. The passcode for the replay is 45902215. A webcast archive of the conference call and a copy of FIBRAMQ’s financial information for the second quarter 2016 will also be available on FIBRAMQ’s website, http://www.fibramacquarie.com.

ADDITIONAL INFORMATION

For detailed charts, tables and definitions, please refer to the Second Quarter 2016 Supplementary Information materials located at http://www.fibramacquarie.com/investors/bolsa-mexicana-de-valoresfilings.

About FIBRA Macquarie

FIBRA Macquarie México (FIBRAMQ) (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. FIBRAMQ’s portfolio consists of 277 industrial properties and 17 retail/office properties, located in 24 cities across 19 Mexican states as of June 30, 2016. Nine of the retail/office properties are held through a 50/50 joint venture with Grupo Frisa. FIBRAMQ 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 FIBRAMQ, please visit http://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$104.6 billion of total assets under management as of March 31, 2016.

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 14,400 people and has assets under management of $367 billion (as of March 31, 2016). For more information, please visit http://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.

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

 

FIBRA MACQUARIE MÉXICO AND ITS CONTROLLED ENTITIES

       
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT JUNE 30, 2016 (UNAUDITED) AND DECEMBER 31, 2015

CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)

 
Jun 30, 2016 Dec 31, 2015
$’000 $’000
 
Current assets
Cash and cash equivalents 719,631 2,223,294
Restricted cash 9,928 9,033
Trade and other receivables, net 108,077 102,431
Value added tax receivable 96,875 287,020
Other assets 149,221 96,422
Total current assets 1,083,732 2,718,200
 
Non-current assets
Restricted cash 49,366 162,099
Other assets 158,970 132,854
Equity-accounted investees 1,020,806 959,363
Goodwill 931,605 931,605
Investment properties 39,188,212 35,639,298
Total non-current assets   41,348,959 37,825,219
Total assets   42,432,691 40,543,419
 
Current liabilities
Trade and other payables 423,776 350,300
Interest-bearing liabilities 939,009 937,621
Tenant deposits 20,545 18,925
Total current liabilities 1,383,330 1,306,846
 
Non-current liabilities
Tenant deposits 333,077 306,804
Interest-bearing liabilities 15,658,768 15,409,369
Total non-current liabilities   15,991,845 15,716,173
Total liabilities   17,375,175 17,023,019
       
Net assets   25,057,516 23,520,400
 
Equity
Contributed equity 18,369,994 18,369,994
Retained earnings   6,687,522 5,150,406
Total equity   25,057,516 23,520,400
 
 
FIBRA MACQUARIE MÉXICO AND ITS CONTROLLED ENTITIES
                 
CONDENSED UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015

CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)

     
3 months ended 6 months ended
Jun 30,
2016		 Jun 30,
2015 		Jun 30,
2016		 Jun 30,
2015
$’000 $’000 $’000 $’000
 
Property related income 800,093 656,892 1,637,211 1,267,015
Property related expenses         (116,150) (86,268) (253,506) (193,197)
Net property income         683,943 570,624 1,383,705 1,073,818
 
Management fees (44,499) (49,608) (90,586) (101,352)
Transaction related expenses (15,553) (3,305) (15,507) (8,853)
Professional, legal and other expenses         (11,104) (8,656) (24,230) (19,133)
Total expenses         (71,156) (61,569) (130,323) (129,338)
 
Finance costs (261,146) (186,369) (479,371) (367,165)
Financial income 14,128 31,103 26,586 74,959
Share of profits from equity-accounted investees 48,557 15,175 60,618 29,285
Foreign exchange loss (1,257,206) (361,043) (1,414,558) (740,696)
Net unrealized foreign exchange gain on foreign currency denominated investment property measured at fair value 2,507,125 626,947 2,806,397 1,278,038
Unrealized revaluation gain on investment property measured at fair value 14,712 - 14,712 -
Income tax expense         (423) - (423) -
Profit for the period         1,678,534 634,868 2,267,343 1,218,901
 
Other comprehensive income
Other comprehensive income for the period         - - - -
Total comprehensive income for the period         1,678,534 634,868 2,267,343 1,218,901
Earnings per CBFI*
Basic earnings per CBFI (pesos) 2.07 0.78 2.79 1.50
Diluted earnings per CBFI (pesos)         2.07 0.78 2.79 1.50
*Real Estate Trust Certificates (Certificados Bursátiles Fiduciarios Inmobiliarios)
 
 
FIBRA MACQUARIE MÉXICO AND ITS CONTROLLED ENTITIES
 
CONDENSED UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2016 AND 2015

CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)

 
Contributed Retained
equity earnings Total
$’000 $’000 $’000
Total equity at January 1, 2015 18,376,480 2,476,442 20,852,922
Total comprehensive income for the period - 1,218,901 1,218,901
Total comprehensive income for the period - 1,218,901 1,218,901
 
Transactions with equity holders in their capacity as equity holders:
- Cost directly attributable to follow-on equity placement (6,486) - (6,486)
- Distributions to CBFI holders - (581,376) (581,376)
Total transactions with equity holders in their capacity as equity holders (6,486) (581,376) (587,862)
           
Total equity at June 30, 2015     18,369,994 3,113,967 21,483,961
 
Total equity at January 1, 2016 18,369,994 5,150,406 23,520,400
Total comprehensive income for the period - 2,267,343 2,267,343
Total comprehensive income for the period - 2,267,343 2,267,343
 
Transactions with equity holders in their capacity as equity holders:
- Distributions to CBFI holders - (730,227) (730,227)
Total transactions with equity holders in their capacity as equity holders - (730,227) (730,227)
           
Total equity at June 30, 2016     18,369,994 6,687,522 25,057,516
 
 
FIBRA MACQUARIE MÉXICO AND ITS CONTROLLED ENTITIES
             
CONDENSED UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2016 AND 2015

CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)

   
6 months ended
Jun 30, 2016 Jun 30, 2015
$’000 $’000
Inflows/(Outflows) Inflows/(Outflows)
Operating activities:
Profit for the period 2,267,343 1,218,901
Adjustments for:
Net unrealized foreign exchange gain on foreign currency denominated investment property measured at fair value
(2,806,397) (1,278,038)
Unrealized revaluation gain on investment property measured at fair value (14,712) -
Straight line rental income adjustment (22,262) (29,606)
Tenant improvements amortization 10,867 6,041
Leasing expense amortization 15,917 14,838
Financial income (26,586) (74,959)
Provision for bad debt 19,049 17,726
Net foreign exchange loss 1,546,507 762,767
Finance costs recognized in profit for the period 479,372 367,165
Share of profits from equity-accounted investees (60,618) (29,285)
Income tax expense 423 -
Movements in working capital:
Decrease in receivables 108,701 85,813
Increase/(decrease) in payables 188,467 (16,083)
Net cash flows from operating activities 1,706,071 1,045,280
Investing activities:
Investment property - asset acquisitions (396,408) (1,072,155)
Maintenance capital expenditure and other capitalized costs (277,273) -
Distributions received from equity-accounted investees - 21,372
Investment in equity-accounted investees (825) -
Net cash flows used in investing activities (674,506) (1,050,783)
Financing activities:
Financial income 26,586 74,959
Repayment of interest-bearing liabilities (13,551,963) -
Interest paid (480,282) (341,350)
Proceeds from interest-bearing liabilities, net of facility charges 12,220,770 -
Capital raising costs (follow-on equity placement) - (29,445)
Distributions to CBFI holders (730,227) (581,376)
Net cash flows used in financing activities (2,515,116) (877,212)
Net decrease in cash and cash equivalents (1,483,551) (882,715)
Cash, cash equivalents at the beginning of the period 2,394,426 5 ,603,834
Foreign exchange gain on cash and cash equivalents     (131,950) (22,071)
Cash and cash equivalents at the end of the period*     778,925 4,699,048
*Included in the cash and cash equivalent balance at the end of the period is restricted cash of $59.3 million (June 30, 2015: $177.6 million).