FIBRA Macquarie México Reports First Quarter 2023 Results

• Record high occupancy for industrial portfolio and consolidated portfolio of 98.2% and 97.3%, respectively
• Industrial portfolio customer retention at record 92.5% for the last twelve months
• NOI per certificate up 12.2% YoY, in underlying USD terms
• 1Q23 AFFO per certificate up 13.8% YoY, in underlying USD terms
• FY23 Distribution per certificate guidance reaffirmed at Ps. 2.10, representing a 15.1% YoY increase in underlying USD terms

MEXICO CITY–(BUSINESS WIRE)–FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ) announced its financial and operating results for the first quarter ended March 31, 2023.

FIRST QUARTER 2023 HIGHLIGHTS

• AFFO per certificate was Ps. 0.6799 (US$0.0363) for the quarter, compared with Ps. 0.6558 (US$0.0320) for the prior corresponding quarter in 2022
• 1Q23 cash distribution of Ps. 0.5250 per certificate authorized
• FY23 distribution guidance of Ps. 2.10 per certificate represents ~US$0.12 per certificate based on current FX levels
• Consolidated occupancy at 97.3%, up 50 bps QoQ and up 117 bps YoY
• Industrial occupancy at a record 98.2%, up 57 bps QoQ and up 115 bps YoY
• Positive releasing renewal spreads of 15.0% and 5.7% for industrial and retail portfolios, respectively
• Six industrial buildings under development with a focus on capturing nearshoring opportunities and the demand for logistics space in central markets

“We commenced 2023 with strong momentum, delivering underlying US dollar-denominated earnings growth representing a 13.8% increase in AFFO per CBFI in the first quarter, and we have continued to deploy capital into sustainable Class A industrial development to position our platform for future growth and capture nearshoring opportunities,” said Simon Hanna, FIBRA Macquarie’s chief executive officer. “With a portfolio of high-quality industrial assets primarily located in the high demand northern markets of Mexico, we are benefiting from strong demand and low vacancy rates. We realized a quarter of record industrial lease revenues and record occupancy as well as solid rent spreads, including a 15.0% lease renewal spread in our industrial portfolio, helping to drive an 10.1% YoY increase in Industrial NOI per certificate. We are also seeing the ongoing recovery of our retail portfolio, with a continued rebound in foot traffic and robust leasing activity, which allowed us to deliver a 17.0% YoY increase in NOI per certificate.”

“Additionally, we are executing on our development pipeline supported by the tailwind of accelerating nearshoring activity into Mexico. We currently have a total of approximately 1.8 million square feet of new GLA under construction across seven markets, which should contribute to FIBRAMQ’s accelerated growth in the quarters to come. Our balance sheet remains well positioned to capitalize on opportunities and deliver value to our investors supported by an attractive market backdrop and a culture of excellence.”

FINANCIAL AND OPERATING RESULTS

Consolidated Portfolio

FIBRAMQ’s consolidated results were as follows:

TOTAL PORTFOLIO		(millions of Pesos unless otherwise stated)						(millions of Dollars, unless otherwise stated)
		1Q23		1Q22		Variance		1Q23		1Q22		Variance
Net Operating Income (NOI)		Ps. 950.4m		Ps. 929.6m		2.2%		US$ 50.8m		US$ 45.3m		12.2%
EBITDA		Ps. 877.6m		Ps. 861.9m		1.8%		US$ 46.9m		US$ 42.0m		11.7%
Funds From Operations (FFO)		Ps. 640.8m		Ps. 624.5m		2.6%		US$ 34.3m		US$ 30.4m		12.6%
FFO per certificate		0.8418		0.8204		2.6%		US$ 0.0450		US$ 0.0400		12.6%
Adjusted Funds From Operations (AFFO)		Ps. 517.6m		Ps. 499.2m		3.7%		US$ 27.7m		US$ 24.3m		13.8%
AFFO per certificate		Ps. 0.6799		Ps. 0.6558		3.7%		US$ 0.0363		US$ 0.0320		13.8%
NOI Margin		87.1%		88.2%		(114 bps)		87.1%		88.2%		(114 bps)
AFFO Margin		47.4%		47.4%		4 bps		47.4%		47.4%		4 bps
GLA (’000s square feet) EOP		35,055		34,461		1.7%		35,055		34,461		1.7%
GLA (’000s sqm) EOP		3,257		3,202		1.7%		3,257		3,202		1.7%
Occupancy EOP		97.3%		96.1%		117 bps		97.3%		96.1%		117 bps
Average Occupancy		96.9%		95.4%		151 bps		96.9%		95.4%		151 bps

Industrial Portfolio

The following table summarizes the results for FIBRAMQ’s industrial portfolio:

INDUSTRIAL PORTFOLIO		(millions of Pesos, unless otherwise stated)						(millions of Dollars, unless otherwise stated)
		1Q23		1Q22		Variance		1Q23		1Q22		Variance
Net Operating Income (NOI)		Ps. 824.4m		Ps. 821.9m		0.3%		US$ 44.1m		US$ 40.0m		10.1%
NOI Margin		90.4%		91.7%		(134 bps)		90.4%		91.7%		(134 bps)
GLA (’000s square feet) EOP		30,452		29,884		1.9%		30,452		29,884		1.9%
GLA (’000s sqm) EOP		2,829		2,776		1.9%		2,829		2,776		1.9%
Occupancy EOP		98.2%		97.1%		115 bps		98.2%		97.1%		115 bps
Average Occupancy		97.8%		96.3%		154 bps		97.8%		96.3%		154 bps
Average monthly rent per leased (US$/sqm) EOP		$5.63		$5.26		7.0%		US$ 5.63		US$ 5.26		7.0%
Customer retention LTM		92.5%		83.5%		897 bps		92.5%		83.5%		897 bps
Weighted Avg Lease Term Remaining (years) EOP		3.2		3.3		-3.0%		3.2		3.3		(3.0%)

FIBRAMQ’s industrial portfolio performance remains robust, with solid increases in occupancy and rental rates YoY. For the quarter ended March 31, 2023, FIBRAMQ’s industrial portfolio delivered quarterly NOI of US$44.1 million, a 10.1% increase when compared to the prior year. This result was driven by record quarterly industrial revenues of US$48.8 million, up 11.7%. At quarter-end, occupancy increased to 98.2%, up 115 basis points year over year. New leasing activity comprised 271 thousand square feet of GLA, exceeding quarterly moveouts of 99 thousand square feet. New leases featured a US-based metal machining manufacturer in Tijuana, a Japanese-based auto parts manufacturer in Querétaro and a US-based truck bed manufacturer in Saltillo. Renewal leases comprised 12 contracts and 0.8 million square feet, driving a record retention rate of 92.5% over the last 12 months.

Retail Portfolio

The following table summarizes the proportionally combined results for FIBRAMQ’s retail portfolio:

RETAIL PORTFOLIO		1Q23		1Q22		Variance
Net Operating Income (incl. SLR)		Ps. 126.0m		Ps. 107.7m		17.0%
Net Operating Income (excl. SLR)		Ps. 134.0m		Ps. 114.8m		16.7%
NOI Margin (%, inc. SLR)		70.3%		68.4%		195 bps
NOI Margin (%, exc. SLR)		74.8%		72.9%		190 bps
GLA (’000s square feet) EOP		4,603		4,577		0.6%
GLA (’000s sqm) EOP		428		425		0.6%
Occupancy EOP		91.0%		89.8%		124 bps
Average Occupancy		91.0%		89.8%		121 bps
Average monthly rent per leased (Ps./sqm) EOP		$169.69		$160.13		6.0%
Customer retention LTM		82.1%		76.9%		514 bps
Weighted Avg Lease Term Remaining (years) EOP		3.1		3.2		(3.4%)

• Total revenues were Ps. 179.2 million, up 13.8% year over year
• Retail portfolio cash collections during the quarter trended up to Ps. 178.3 million, an increase of 10.6% versus the prior corresponding period
• During the first quarter, recorded foot traffic at FIBRAMQ’s shopping centers was approximately 14.5% above the prior comparable period, and approximately 14.2% below pre-pandemic levels

FIBRAMQ signed 72 new and renewal leases during the quarter totaling 17.8 thousand square meters of GLA. Leasing highlights included a new lease for a Smart Fit gym (1.3 thousand square meters) and two renewals for Cinépolis (3.9 and 2.7 thousand square meters, respectively) . The Retail portfolio also benefited from strong retention of 82.1% over the last 12 months.

As of March 31, 2023, trade receivables net of provisions were Ps. 4.3 million (excl. VAT), lower 36.6% over the prior corresponding period.

Lease Rental Rate Summary

In the industrial portfolio, a weighted average positive releasing spread of 15.0% was achieved across 12 leases representing 839 thousand square feet of GLA.

In the retail portfolio, a weighted average positive release spread of 5.7% was achieved across 48 leases across 13.5 thousand square meters of GLA.

Based on FIBRAMQ’s consolidated lease portfolio, 59.8% of leases (as measured by annualized base rent) are directly linked to either Mexican or US CPI.

For further details please about FIBRA Macquarie’s First Quarter 2023 results, please refer to the Supplementary Information materials located at BMV Filings (fibramacquarie.com).

CAPITAL ALLOCATION

FIBRAMQ continues to pursue a strategy of investing in and developing class “A” industrial assets in core markets that demonstrate strong performance and a positive economic outlook.

Industrial Portfolio Growth Capex Program

FIBRAMQ has approximately 1.8 million square feet of new GLA under development, including six ground-up developments and two build-to-suit expansion projects. FIBRAMQ’s total investment attributable to GLA under construction is approximately US$134 million, with an expected next twelve months cash deployment of US$100 million (this includes remaining building construction costs as well as deferred consideration for land and certain project-wide infrastructure costs).

FIBRA Macquarie is targeting a stabilized NOI yield of 9% to 11% on its industrial development program.

Apodaca, Nuevo Leon

• FIBRAMQ currently anticipates completion of a 211 thousand square feet building in Apodaca, Nuevo Leon in 1H23.
• FIBRAMQ’s long-term development plan considers a phased, multi-year construction of a multi-property Class A industrial park, with a total potential additional GLA of approximately 410 thousand square feet, excluding the building already under construction.

Cuautitlán, Mexico City Metropolitan Area

• In the strategic industrial submarket of Cuautitlán, FIBRAMQ is currently constructing two buildings totaling 735 thousand square feet, with expected delivery in 1H23.

Ciudad Juárez, Chihuahua

• FIBRAMQ has an ongoing development of a 267 thousand square feet GLA building in the southeast market of Ciudad Juárez with an expected delivery date in 2H23.
• FIBRAMQ’s long term development plan in Ciudad Juárez considers a phased, multi-year construction of a 10-property Class A industrial park with a total potential GLA of approximately 2.5 million square feet.

Reynosa, Tamaulipas

• FIBRAMQ continues advancing construction of a 144 thousand square feet building in Reynosa, utilizing an existing land parcel, with an expected delivery date in 2H23.

Tijuana, Baja California

• Works are ongoing for the development of the first building comprising 406 thousand square feet of GLA. The first phase of the project is scheduled for delivery in 1H24.
• FIBRAMQ’s long-term development plan considers a phased, multi-year construction of a multi-property Class A industrial park, with a total potential GLA of approximately [873] thousand square feet, excluding the building already under construction.

Build-to-suit expansions

• FIBRAMQ is progressing on two build-to-suit expansions totaling 69 thousand square feet of GLA in respect of existing leased buildings located at San Luis Potosí and Querétaro, with expected deliveries in 1H23.

CERTIFICATE REPURCHASE PROGRAM

FIBRAMQ has a Ps. 1,000 million CBFI repurchase-for-cancellation program was recently approved by investors to be available through to June 25, 2024. No certificates were repurchased during the quarter.

BALANCE SHEET

As of March 31, 2023, FIBRAMQ had approximately Ps. 16.0 billion of debt outstanding, Ps. 5.9 billion available on its undrawn committed revolving credit facility and Ps. 0.4 billion of unrestricted cash on hand. FIBRAMQ is well-positioned to refinance scheduled FY2023 maturities prior to loan expirations, with an anticipated neutral impact to its weighted average cost of debt.

As of the date of this release, FIBRAMQ’s indebtedness was 95.9% fixed rate, with 3.5 years of weighted average term remaining. This follows certain interest rate SWAP transactions closed after March 31, 2023. In addition, FIBRAMQ is now benefiting from a 5 bps discount on the applicable margin of ESG-linked loans. For more detail on debt please see FIBRAMQ’s 1Q23 Supplementary Information package.

FIBRAMQ’s CNBV regulatory debt to total asset ratio was 32.3% and the debt service coverage ratio was 1.3x.

On a consolidated basis, NAV per certificate was Ps. 39.9 as at March 31, 2023.

SUSTAINABILITY

During the first quarter, FIBRA Macquarie achieved the EDGE certification on two industrial buildings. Cumulative green building certification coverage on FIBRAMQ’s consolidated portfolio now represents 33.5% of GLA.

DISTRIBUTION

Scheduled Distribution

On April 27, 2023, FIBRAMQ declared a cash distribution of Ps. 0.5250 per certificate for the quarter ended March 31, 2023. The distribution is expected to be paid on or about June 16, 2023, to holders of record on June 14, 2023. FIBRAMQ’s certificates are expected to commence trading ex-distribution on June 15, 2023.

FY23 GUIDANCE

AFFO per certificate

On February 2, 2023, FIBRAMQ launched its initial FY23 AFFO per certificate guidance with a range of Ps. 2.70 to 2.75, using an assumed average exchange rate of Ps. 19.40 per US dollar for FY23. FIBRAMQ’s operational performance and underlying natural currency cashflows remain robust and consistent with the prior forecast. Reflecting FIBRAMQ’s highly dollarized cashflows and the appreciation of the Mexican Peso against the US dollar, FIBRAMQ has revised its average exchange rate assumption for the remainder of FY23 to Ps. 18.25 per US dollar, which results in a revised FY23 AFFO per certificate guidance range of between Ps. 2.60 and Ps. 2.65 per certificate. This revised FY23 guidance assumes:

• an average exchange rate of Ps. 18.25 per US dollar for the remainder of FY23, compared to the prior assumption of Ps. 19.4 per US dollar;
• no new acquisitions or divestments of stabilized properties;
• no issuances or repurchases of certificates; and
• no deterioration in broader economic and market conditions.

Distribution per certificate

FIBRAMQ is reaffirming its guidance for cash distributions in FY23 of Ps. 2.10 per certificate, paid in equal quarterly instalments of Ps. 0.5250 per certificate. The guidance is supported by an expected FY23 AFFO payout ratio of approximately 80%, based on the midpoint of FIBRAMQ’s revised AFFO guidance per certificate.

The payment of cash distributions is subject to the approval of the Manager, stable market conditions and prudent management of FIBRAMQ’s capital position.

WEBCAST AND CONFERENCE CALL

FIBRAMQ will host an earnings conference call and webcast presentation on Friday, April 28, 2023, at 11:00 a.m. CT / 1:00 p.m. ET. The conference call, which will also be webcast, can be accessed online at www.fibramacquarie.com or by dialing toll free +1-877-407-2988. Callers from Mexico may dial 01-800-522-0034 and other callers from outside the United States may dial +1-201-389-0923. Please ask for the FIBRA Macquarie First Quarter 2023 Earnings Call. An audio replay will be available by dialing +1-877-660-6853 or +1-201-612-7415 for callers from outside the United States. A webcast archive of the conference call and a copy of FIBRA Macquarie’s financial information for the first quarter 2023 will also be available on FIBRAMQ’s website, www.fibramacquarie.com.

About FIBRA Macquarie

FIBRA Macquarie México (FIBRA Macquarie) (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. FIBRA Macquarie’s portfolio consists of 238 industrial properties and 17 retail properties, located in 20 cities across 16 Mexican states as of March 31, 2023. Nine of the retail properties are held through a 50/50 joint venture. For additional information about FIBRA Macquarie, please visit www.fibramacquarie.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.

Other than Macquarie Bank Limited ABN 46 008 583 542 (“Macquarie Bank”), any Macquarie Group entity noted in this document is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these other Macquarie Group entities do not represent deposits or other liabilities of Macquarie Bank. Macquarie Bank does not guarantee or otherwise provide assurance in respect of the obligations of these other Macquarie Group entities. In addition, if this document relates to an investment, (a) the investor is subject to investment risk including possible delays in repayment and loss of income and principal invested and (b) none of Macquarie Bank or any other Macquarie Group entity guarantees any particular rate of return on or the performance of the investment, nor do they guarantee repayment of capital in respect of the investment.

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.

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