Fibra Macquarie Announces Financial and Operating Results for the First Quarter 2015

  • AFFO increases 28.9% to Ps.295.5 million driven primarily by growth through acquisitions
  • Continued increase in portfolio wide occupancy
  • 93,900 square meters (1,010,000 square feet) of industrial space leased; 4,200 square meters (45,100 square feet) of retail space leased
  • Distribution of Ps.0.3625 per certificate authorized, in line with guidance

MEXICO CITY--()--FIBRA Macquarie México (FIBRA Macquarie) (BMV:FIBRAMQ) today announced its financial results for the quarter ended March 31, 2015, including year-on-year growth in revenue and Adjusted Funds from Operations (AFFO) of 23.1% and 28.9%, respectively. AFFO is a measure of the cash generating capacity of the FIBRA. The increases in both metrics were driven by acquisitions made during the previous twelve months.

“Mexico’s economy performed better in the first quarter of this year than in 2014 and, as a result, we are speaking to a number of tenants who are considering possible lease expansions in support of their growth.”

"I'm pleased to be reporting on an active first quarter for FIBRA Macquarie," said Jaime Lara, chief executive officer, FIBRA Macquarie. "We made solid progress in two key areas during the period – first, with respect to deployment of capital and the acquisition of a large industrial property in Monterrey, and second, with respect to improved operating results as reflected in both increased occupancy levels and rental rates." Lara noted that he was encouraged by the continued strengthening of industrial property markets in the northern states and with conditions in specific sectors such as the automotive industry.

Distribution for First Quarter 2015

On April 29, 2015, FIBRA Macquarie declared a distribution for the quarter ended March 31, 2015, of Ps.0.3625 per certificate for the period, payable on May 15, 2015 to holders of record on May 14, 2015. FIBRA Macquarie certificates will commence trading ex-distribution on May 12, 2015. FIBRA Macquarie also reaffirmed its distribution guidance for the full year 2015 of between Ps.1.45 and Ps.1.50 per certificate based on a payout ratio of between 95% and 100% of the AFFO generated by FIBRA Macquarie’s existing portfolio.

FIBRA Macquarie’s current distribution policy is to pay quarterly cash distributions. The payment of a cash distribution is at all times subject to the approval of the board of directors of the Manager, the continued stable performance of the properties in the portfolio and prevailing economic conditions.

Results for the Quarter Ended March 31, 2015

FIBRA Macquarie reported a 23.1% increase in proportionately combined revenues to Ps.656.5 million for the quarter ended March 31, 2015 compared with Ps.533.2 million in the prior comparable period. The increase primarily reflects contributions from acquisitions completed during the past year.

AFFO increased 28.9% to Ps.295.5 million in the first quarter compared with Ps.229.2 million in the prior comparable period. AFFO per certificate was lower reflecting the issuance of 206.6 million certificates in the third quarter of 2014.

         
Figures in millions  

Quarter Ended
March 2015

 

Quarter Ended
March 2014

  Variance Ps.   Variance %
Total revenues   Ps.656.5   Ps.533.2*   Ps.123.3   23.1%

Net operating income
(NOI)

  Ps.545.8   Ps.465.8   Ps.80.0   17.2%
EBITDA   Ps.483.3   Ps.413.9   Ps.69.4   16.8%

Funds from Operations
(FFO)

  Ps.338.5   Ps.266.1   Ps.72.4   27.2%

Adjusted Funds from
 Operations (AFFO)

  Ps.295.5   Ps.229.2   Ps.66.3   28.9%

* 1Q2014 Total revenue results have been conformed to reflect the current period presentation.

 

Net operating income (NOI) includes lease-related income and other variable income, less property operating expenses (including property administration fees and expenses). Earnings before interest, tax, depreciation and amortization (EBITDA) includes NOI less Fund-level management fees, corporate expenses, administrative expenses, professional fees and legal expenses. Funds from Operations (FFO) is equal to EBITDA plus interest income less interest expense. FIBRA Macquarie derives AFFO by adjusting FFO for normalized capital expenditure, tenant improvements and leasing commissions. AFFO may be calculated in a different manner by other market participants thereby limiting its use as a comparative measure. Use of AFFO in the analysis of the financial performance of FIBRA Macquarie should be in addition to and not in lieu of other financial measures as required under International Financial Reporting Standards.

Gross Leasable Area (GLA)

FIBRA Macquarie’s portfolio comprised GLA of approximately 3,160,000 square meters (34,000,000 square feet) as of March 31, 2015, including approximately:

  • 2,720,000 square meters (29,200,000 square feet) of industrial properties
  • 251,000 square meters (2,700,000 square feet) of wholly owned retail/office properties
  • 192,500 square meters (2,100,000 square feet) of retail/office properties held through the 50/50 joint venture with Grupo Frisa.

For purposes other than FIBRA Macquarie’s consolidated financial statements prepared under International Financial Reporting Standards (IFRS), FIBRA Macquarie reports revenue and other financial metrics on a proportionately combined basis, including the results for the joint venture with Grupo Frisa in proportion to its 50% interest.

Industrial Segment

As of March 31, 2015, FIBRA Macquarie owned 260 industrial properties located in 21 cities across 15 Mexican states. Industrial segment operating highlights include:

     

Industrial Segment
Metrics

 

As at
March 31, 2015

 

As at
March 31, 2014

Gross Leasable Area
(Square Meters)

  2.7 million   2.7 million
Occupancy rate  

90.1%

  90.0%

Rolling average
occupancy rate (YTD)

 

89.9%

  89.9%

Average monthly rent per
leased square meter

  US$4.50   US$4.49

Rolling average lease
rate per square meter
(YTD)

  US$4.51   US$4.48
Tenant retention rate   72%   82%

Weighted average lease
term (by annualized base
rent)

  3.4 years   3.1 years
 

"I’m pleased with the continued momentum in recent activity across our industrial segment," stated Lara. "This was the third consecutive quarter of improvement in occupancy, and speaks to the effectiveness of our internal property administration platform and the attractiveness of the Mexican market overall."

Improvements in occupancy and rental rates were aided by the acquisition of a 100% leased, 59,200 square meter (637,000 square foot) two-building industrial property located in Monterrey, Nuevo León that closed on February 18, 2015. Excluding the impact of that acquisition, FIBRA Macquarie’s first quarter 2015 occupancy would have been 89.9%.

"The industrial property we acquired in February is indicative of the sort of opportunities we are pursuing in the market," noted Lara. "Specifically, we are seeking high-quality properties in major industrial markets that have a strong tenant base and can command market level rental rates. We are currently reviewing a number of industrial opportunities which meet these criteria and expect to make additional announcements in the coming months."

Industrial Segment Leasing Activity

New and renewed industrial leases totaling approximately 93,900 square meters (1,010,000 square feet) were signed during the first quarter. Highlights include:

  • 5.5-year lease for 19,000 square meters (208,000 square feet) in Ciudad Juarez
  • 5-year lease for 3,000 square meters (32,300 square feet) in Mexico City

"We continue to see strong interest and activity across the northern markets," stated Lara. "Interest in Ciudad Juarez has been particularly strong in the first part of this year and we remain optimistic about the outlook for leasing activity over the remainder of the year."

Retail/Office Segment

As of March 31, 2015, FIBRA Macquarie owned 17 retail/office properties in six cities, nine of which are held through the 50/50 JV with Grupo Frisa. Approximately 72.2% of FIBRA Macquarie’s retail/office GLA is located in the Mexico City Metropolitan Area, increasing to 90.4% when adding the key retail markets of Monterrey, Guadalajara and Cancun.

     

Retail/Office Segment
Metrics

 

As at
March 31, 2015

 

As at
March 31, 20141/

Gross Leasable Area
(square meters)2/

  443,700   445,000
Occupancy rate   94.1%   93.9%

Average monthly rent
per leased square meter

  3/ Ps.140.84

US$9.24

  4/ Ps.136.38

US$10.42

Average lease rate per
square meter (YTD)

  5/ Ps.140.39

US$9.35

  6/ Ps.131.61
US$9.94

Weighted average lease
term (by annualized
base rent)

  5.7 years   6.3 years
 

1/ During 2Q14 approximately 1,700 square meters of GLA was converted to common area

2/ Includes 100% of the retail/office GLA held by the 50/50 JV with Grupo Frisa

3/ FX 15.2427 Peso/USD

4/ FX 13.3066 Peso/USD

5/ FX 15.0155 Peso/USD

6/ FX 13.2371 Peso/USD

 

Peso denominated retail rental rates increased when compared with the prior corresponding quarter, largely driven by the lease up of higher yielding spaces for speciality and small shop retailers.

"I am pleased with the level of activity we are seeing across our retail segment," said Lara. "Mexico’s economy performed better in the first quarter of this year than in 2014 and, as a result, we are speaking to a number of tenants who are considering possible lease expansions in support of their growth."

Retail/Office Segment Leasing Activity

FIBRA Macquarie reported signing 45 new and renewed retail/office leases totaling 4,200 square meters (45,100 square feet) during the quarter.

Disclosures Relating to Leverage

In accordance with the applicable FIBRA regulations:

  • FIBRA Macquarie complies with the leverage limit of 50%, with leverage of 40.0% as of March 31, 2015
  • FIBRA Macquarie complies with the minimum debt service coverage ratio (DSCR) of 1.0x, with a DSCR of 4.7x as of March 31, 2015

Please refer to the Supplementary Financial Information for details of how the above ratios are calculated together with detailed disclosures regarding FIBRA Macquarie’s portfolio-level debt facilities. FIBRA Macquarie’s annual report and audited financial statements for the year ended December 31, 2014 were published on April 28, 2015 and are available on FIBRA Macquarie’s website, www.mmreit.com.

Webcast and Conference Call

FIBRA Macquarie will host an earnings conference call and webcast presentation on Thursday, April 30, 2015 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.mmreit.com or by dialing toll free +1-877-304-8957. Call participants from outside the United States may dial +1-973-638-3235. Please ask for the FIBRA Macquarie First Quarter 2015 Earnings Call.

An audio replay will be available two hours after the call’s completion through midnight ET on May 2, 2015, by dialing +1-855-859-2056 or +1-404-537-3406 for callers outside the United States. The pass code for the replay is 17261888. A webcast archive of the conference call and a copy of FIBRA Macquarie’s financial information for the first quarter 2015 will also be available on FIBRA Macquarie’s website, www.mmreit.com.

About FIBRA Macquarie

FIBRA Macquarie México (FIBRA Macquarie) (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) 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 260 industrial properties and 17 retail/office properties, located in 24 cities across 19 Mexican states (as of March 31, 2015). Nine of the retail/office properties are held through a 50/50 joint venture with Grupo Frisa. 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 more information please visit www.mmreit.com.

MIRA 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. MIRA has significant expertise over the entire investment lifecycle, with capabilities in investment sourcing, investment management, investment realization and investor relationships. Established in 1996, MIRA has approximately US$100 billion of total assets under management as of December 31, 2014 with more than 400 employees managing 50 listed and unlisted funds worldwide.

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 14,100 people and has assets under management of over US$372 billion (as of September 30, 2014).

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.

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.

All figures in this release are subject to rounding. Any arithmetic inconsistencies are due to rounding.

 

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT MARCH 31, 2015
(UNAUDITED) AND DECEMBER 31, 2014

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

 
Mar 31, 2015 Dec 31, 2014
#REF! $’000
 
Current assets
Cash and cash equivalents 4,621,771 5,425,062
Restricted cash 7,766 31,617
Trade and other receivables, net 115,706 116,944
Value added tax receivable 96,873 199,129
Other assets 73,828 99,925
Total current assets 4,915,944 5,872,677
 
Non-current assets
Restricted cash 113,240 147,155
Other assets 72,338 58,682
Equity accounted investees 936,800 930,415
Goodwill 931,605 931,605
Investment properties 29,262,217 27,612,778
Total non-current assets 31,316,200 29,680,635
Total assets 36,232,144 35,553,312
 
Current liabilities
Trade and other payables 254,064 248,555
Other liabilities 68,749 93,598
Tenant deposits 16,132 15,474
Total current liabilities 338,945 357,627
 
Non-current liabilities
Tenant deposits 261,690 251,025
Interest-bearing liabilities 14,488,334 14,091,738
Total non-current liabilities 14,750,024 14,342,763
Total liabilities 15,088,969 14,700,390
     

Net assets

21,143,175 20,852,922
 
Equity
Contributed equity 18,369,957 18,376,480
Retained earnings 2,773,218 2,476,442

Total equity

21,143,175 20,852,922
 
 

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE
MONTHS ENDED MARCH 31, 2015 (UNAUDITED)AND 2014

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

 
3 months ended 3 months ended
Mar 31, 2015 Mar 31, 2014
$’000 $’000
 
Property related income 610,123 531,373
Property related expenses   (106,929) (72,117)
Net property income   503,194 459,256
 
Management fees (51,744) (34,630)
Transaction related expenses (5,548) (28,302)
Professional, legal and other fees and expenses   (10,477) (17,331)
Total expenses   (67,769) (80,263)
 
Finance costs (180,796) (176,881)
Financial income 43,856 14,227
Share of profits from equity accounted investees 14,110 893
Foreign exchange loss (379,653) (7,603)

Net unrealized foreign exchange gain on foreign currency denominated investment
 property measured at fair value

651,091

14,300

Profit for the period

 

584,033

223,929

 
Other comprehensive income
Other comprehensive income for the period   - -

Total comprehensive income for the period

 

584,033

223,929

 
Earnings per CBFI*
Basic earnings per CBFI (pesos) 0.72 0.37
Diluted earnings per CBFI (pesos)   0.72 0.37
*Real Estate Trust Certificates (Certificados Bursátiles Fiduciarios Inmobiliarios)
 
 

 

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2015 (UNAUDITED) AND 2014

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

   
$’000 $’000 $’000
Total equity at January 1, 2014 13,673,801 342,243 14,016,044
Total comprehensive income for the period - 223,929 223,929
Total comprehensive income for the period - 223,929 223,929
 
Transactions with equity holders in their capacity as equity holders:
- Distributions to CBFI holders - (284,233) (284,233)
Total transactions with equity holders in their capacity as equity holders - (284,233) (284,233)
           

Total equity at March 31, 2014

13,673,801

 

281,939

 

13,955,740

Total equity at January 1, 2015 18,376,480 2,476,442 20,852,922
Total comprehensive income for the period - 584,033 584,033
Total comprehensive income for the period - 584,033 584,033
 
Transactions with equity holders in their capacity as equity holders:
- Costs directly attributable to follow-on equity placement (6,523) - (6,523)
- Distributions to CBFI holders - (287,257) (287,257)
Total transactions with equity holders in their capacity as equity holders (6,523)   (287,257)   (293,780)

Total equity at March 31, 2015

18,369,957

 

2,773,218

 

21,143,175

 
 

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE THREE MONTHS ENDED MARCH 31, 2015 (UNAUDITED) AND 2014

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

 
Mar 31, 2015 Mar 31, 2014
$’000 $’000
Inflows / (Outflows) Inflows / (Outflows)
Operating activities:
Profit for the period 584,033 223,929
Adjustments for:

Net unrealized foreign exchange gain on foreign currency
 denominated investment property measured at fair value

(651,091) (14,300)
Straight line rental income adjustment (13,223) (2,760)
Tenant improvements amortization 3,004 2,928
Leasing commissions amortization 4,531 2,757
Provision for bad debts 15,494 2,730
Net foreign exchange loss 390,449 7,603
Finance costs recognized in profit for the period 180,796 176,881
Share of profits from equity accounted investees (14,110) (893)
Movements in working capital:
Decrease/(increase) in receivables 113,664 (119,523)
Increase in payables 11,881 30,780
Net cash flows from operating activities 625,428 310,132
Investing activities:
Investment property and capital expenditure (999,579) (563,674)
Investment in equity accounted investees - (691,684)
Distributions received from equity accounted investees 7,725 -
Net cash flows used in investing activities (991,854) (1,255,358)
Financing activities:
Proceeds from interest-bearing liabilities, net of facility fees - 255,851
Payment of interest-bearing liabilities - (138,481)
Interest paid (171,956) (150,211)
Capital raising costs (follow-on offering) (24,622) -
Distributions to CBFI holders (287,257) (284,233)
Net cash flows from financing activities (483,835) (317,074)
Net increase/(decrease) in cash and cash equivalents (850,261) (1,262,300)
Cash, cash equivalents at the beginning of the period 5,603,834 2,347,932
Effect of exchange rate changes on cash and cash equivalents   (10,796)   (1,127)
    4,742,777   1,084,505

*Included in the cash and cash equivalent balance at the end of the period is restricted cash of $121.0 million (2014: $178.8 million).

Contacts

FIBRA Macquarie México
Investor Relations contact:
Investor Relations, FIBRA Macquarie México
investors@mmreit.mx
or
For press queries outside of Mexico, please contact:
Macquarie Group
Paula Chirhart, +1 212-231-1239
Corporate Communications
paula.chirhart@macquarie.com
or
For press queries in Mexico, please contact:
CarralSierra PR & Strategic Communications
Jose Manuel Sierra
Cel: +52 1 (55) 5105 5907
Tel: +52 (55) 5286 0793
jmsierra@carralsierra.com.mx
or
Diego Arrazola
Cel: +52 1 (55) 3977 2778
Tel: +52 (55) 5286 0793
darrazola@carralsierra.com.mx

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