FIBRAs Lean on Debt to Harness Nearshoring Momentum
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FIBRAs Lean on Debt to Harness Nearshoring Momentum

Photo by:   Alexander Schimmeck , Unsplash
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Fernando Mares By Fernando Mares | Journalist & Industry Analyst - Thu, 09/21/2023 - 15:28

With nearshoring attracting more investment each day and demanding more industrial space, Mexican Real Estate Investment Trusts (FRIBRAs) are looking to harness this dynamism, expanding their gross leasable area (GLA). To achieve expansion goals, FIBRAs see debt emission as a viable option. 

Companies looking to establish operations in Mexico are demanding more industrial space. According to Sergio Argüelles, President, Mexican Association of Private Industrial Parks (AMPIP), over 22% of the absorption of industrial space among AMPIP members was a consequence of nearshoring, representing over 3 million m², adding that between 2023 and 2024, there will be a demand for 2.5 million m² of warehouses, nearly doubling what was absorbed in 2022, as reported by MBN. 

The 15 existing FIBRAs listed on BMV have issued over MX$30 billion (US$1.7 billion) in debt through bank lines, syndicated loans and sustainability-linked bonds, a Bloomberg Línea report says

FIBRAs have a wide variety of options for raising debt: follow-on offerings, capital raising or credit lines. For instance, Fibra Monterrey (Fibra MTY), one of the main FIBRAs in terms of industrial portfolio, announced the successful syndication of a US$300 million unsecured loan. The company used US$150 million to cover the first payment for the acquisition of the Zeus portfolio, which consists of 46 industrial buildings spanning 11 states. Fibra MTY reported that it would keep the remaining US$150 million to harness potential future opportunities in the market, as reported in its Apr. 18, 2023 report. Furthermore, on Sep. 11, 2023, the company announced it accessed an unsecured US$63 million loan. Fibra MTY said that the resources would be used for the expansion of some of its properties. 

Similarly, Fibra Nova, with a portfolio of 60% industrial properties, announced a successful follow-up offering via the GBM+ digital platform obtaining MX$2.7 billion (US$158.4 million) with a total of 93,854,356 Real Estate Trust Certificates (CBFIs). The company said it would use the resources to construct more industrial warehouses in Northern Mexico. 

On Sep. 8, 2023, MBN reported that Fibra UNO (FUNO), the first and largest FIBRA, announced its intention to discuss the possibility of launching an IPO to create another FIBRA registered with BMV. According to FUNO’s latest report, the goal is to concentrate its industrial investments on one single instrument, as the industrial sector represents 54.5% of its portfolio.

Is it Risky for FIBRAs to Acquire Debt? 

Despite the large amount of resources FIBRAs have been asking for over the past few years, experts believe that they can easily meet their obligations. Furthermore, when applying for credit lines, FIBRAs outline the project to be developed or the acquisition of the land or building. Therefore, while they conclude their obligations, the property remains as collateral.

Fitch Ratings has granted positive ratings to some FIBRAs like Fibra Danhos, which holds a AAA rating, and Fibra MTY with AA+. Similarly, FIBRA Prologis announced that S&P Global Ratings assigned it a long-term credit rating of BBB+ with a stable outlook. 

However, according to Fitch Ratings, speculative leasing is a risk for real estate markets with unusually strong fundamentals. Furthermore, it noted that a potential US slowdown and the upcoming electoral processes in both the US and Mexico could impact the pace of nearshoring, as reported by MBN.

Photo by:   Alexander Schimmeck , Unsplash

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