HR Ratings Confirms FIBRA Danhos’ HR AAA, HR+1 Ratings

HR Ratings confirmed FIBRA Danhos’ HR AAA rating with a Stable Outlook and HR+1 rating, highlighting the continued growth in leasing operations. The rating agency anticipates that the addition of new assets will positively impact the trust’s income, net operating income (NOI), and free cash flow.

According to HR Ratings FIBRA Danhos’ growth is reflected in its total income levels, which align with the firm’s projections. It also saw an increase in free cash-flow, which reached MX$3.8 billion (US$187 million) in 3Q24, compared to MX$3.2 billion in HR Ratings’ base scenario.

The firm notes that during 3Q24, FIBRA Danhos integrated Phase I of the Danhos Cuautitlan Industrial Park property into its portfolio, marking its first industrial asset addition. This move increased FIBRA Danhos’ portfolio to 16 properties with a gross leasable area (GLA) of 1 million m². According to HR Ratings’ projections, FIBRA Danhos is expected to continue its growth trajectory in revenue generation, NOI, and FLE, driven by increased rental operations and the expansion of its portfolio, particularly in the industrial sector. By 2029, the leasable area is expected to reach 1.5 million m², up from 937,823m² at the end of 2023.

HR Ratings expects FIBRA Danhos to refinance its outstanding bond certificates as they mature. Additionally, a committed credit line of up to MX$3 billion with BBVA provides further financial flexibility, the firm notes. HR Ratings forecasts that the Debt Service Coverage Ratio (DSCR) will remain at an average of 5x from 2024 to 2029, supported by projected FLE generation and debt levels.

For the remainder of 2024 and beyond, HR Ratings expects continued positive performance, with total revenue projections reaching MX$9.1 billion in 2029, compared to MX$6.2 billion in 2023. Its occupancy rate is anticipated to reach 89.7% in 2029, up from 86.4% in 2023. Free cash flow is also projected to increase, with FLE reaching MX$3.7 billion by 2029, compared to MX$3.5 billion in 2023.

HR Ratings also incorporated the impact of refinancing for the DANHOS 16, DANHOS 17, and DANHOS 23L bond issues in its estimates, which would reduce mandatory amortization for the DSCR calculation. Furthermore, the strength of the MX$3 billion credit line with BBVA, which was fully available at the close of 3Q24, contributes to the positive outlook. However, HR Ratings noted that a potential downgrade in the ratings could occur if FIBRA Danhos increases its debt levels, resulting in a DSCR below 2.1x, which would create pressure on debt servicing.

FIBRA Danhos’ CBFIs Performance

FIBRA Danhos’ 3Q24 report shows that its net asset value per real estate trust certificate (NAV/CBFI) is MX$39.63/CBFI. However, at the time of writing, FIBRA Danhos’ CBFIs are traded at MX$20.87, about 47.34% below their theoretical price. FIBRA Danhos’ CBFIs have also performed below their 2023 levels, as on Dec. 27, 2023, they were traded at MX$21.34 and MX$21.4 at the beginning of 2024, marking a 2.3% and 2.5% drop, respectively.