Alberto Chretín
Director General
Terrafina
/
View from the Top

Fibra Dominates the Industrial Real Estate Sector

Wed, 11/01/2017 - 16:23

Q: What role should Fibras play in the development of more sustainable cities and industrial infrastructure?

A: Developers must invest in infrastructure, land acquisition, building construction and promotion and must also attract investment. By financing these, Fibras create investment opportunities for industrial developers and allow smaller investors to invest in real estate. Historically, real estate investment could only be carried out with extremely large sums. With the issuance of CBFIs, Fibras make real estate investment available to a wider segment of the population, giving them access to profitable, stabilized cash flows with interesting returns adjusted to risk.

The government’s goal in modifying the Mexican income tax law for the introduction of structured instruments, such as Fibras and CKDs, into the public market was to support the development of real estate. Fibras have greatly supported industrial developers by allowing them to speed up projects, especially in the industrial sector. Fibras are an important instrument to attract investment and allow property managers and developers to continue increasing their activities and to build more. The development of sustainable portfolios will depend on how the market values them. All of Terrafina’s buildings comply with environmental regulations, and some are green buildings.

Q: How will Terrafina differentiate itself, given that experts predict there will be more than 40 Fibras in the market by 2050?

A: Terrafina has one of the largest and the best industrial portfolio in Mexico because it is spread across many locations and has a diverse range of lessees from many sectors, including electronics, medical devices, logistics, automotive and aerospace. We focus mostly in industrial real estate for maquila exports, which involves solid companies with long-term growth strategies. These companies are also influencing the sector by allying with academia to modify study programs for the aerospace industry. There is a strong connection between Mexican manufacturers creating a stable business environment for all manufacturing sectors, including aerospace. Terrafina works closely with property managers such as American Industries, Intermex, O’Donnell,

RMC Real Estate and Amistad Real Estate, to develop solutions that meet their real estate needs.

Q: How has Terrafina’s relationship with PGIM impacted 179 its success in the market and what new partnerships are
required to reach its goals?

A: Without a doubt, Terrafina has the best corporate government of all Fibras thanks to having PGIM as an external advisor. In 2013, PGIM had a 19 million ft2 portfolio in two closed funds, which the company brought to Terrafina. When Terrafina was launched as an independent firm, PGIM stayed onas an external adviser for real estate, portfolio management, compliance, treasury and capital markets.

Our collaboration with PGIM has allowed us to double our portfolio in less than five years. We have distributed almost US$300 million to our shareholders and also enjoyed a successful capital-raising campaign that was 2.5 times oversubscribed, meaning that while we raised US$300 million we had orders for US$750 million. Terrafina had a dividend yield of 10.3 percent during the first quarter of 2017 and 7.1 percent in the second quarter due to dilution. Our strategy is fully aligned with the interests of our investors and has allowed us to become leaders in acquisitions. We bought American Industries’ portfolio in 2013, which included 84 excellently located properties totaling 11 million ft2 for US$600 million. We also bought 45 properties representing almost 6 million ft2, including new buildings for the automotive, medical and aerospace industries, from Intermex.