PowerPoint Presentation
Cabrera, Hector
FIBRAPL Financial Report 3Q20 English Third Quarter 2020
FIBRA Prologis Financial Information
Toluca Building #2 , Mexico City, Mexico
Table of Contents
Interim Condensed Financial Statements
Supplemental Financial Information
Otay Industrial Center #1, Tijuana, Mexico
Copyright © 2020 FIBRA Prologis
FIBRA Prologis Announces Third Quarter 2020 Earnings Results
MEXICO CITY (October 21, 2020) FIBRA Prologis (BMV:FIBRAPL 14), a leading owner and operator of Class-A industrial real estate in Mexico, today reported results for the third quarter of 2020.
HIGHLIGHTS FROM THE QUARTER:
Rent collections were 98.5 percent. Period-end occupancy was 96.4 percent. Net effective rent on rollovers increased 16.3 percent. Weighted average customer retention was 98.3 percent. Same store cash NOI decreased 6.0 percent. Received VAT refund of Ps. 1.1 billion (US$48.1 million) related to second quarter
acquisition.
Net earnings per CBFI was Ps. 1.7357 (US$0.0779) for the quarter compared with Ps. 0.7087 (US$0.0367) for the same period in 2019.
Funds from operations (FFO) per CBFI as defined by FIBRA Prologis was Ps. 0.9699 (US$0.0434) for the quarter compared with Ps. 0.7741 (US$0.0401) for the same period in 2019.
STRONG OPERATING RESULTS CONTINUE
"Our third quarter performance exceeded our expectations, resulting in terrific operating and financial results," said Luis Gutiérrez, CEO, Prologis Property Mexico. "Rent change on rollover was a record 16.3 percent, while occupancy exceeded 96 percent. We remain focused on delivering consistent and, sustainable results as we continue to support our customers."
Operating Portfolio Period End Occupancy Leases Commenced
Customer Retention Net Effective Rent Change
Same Store Cash NOI
Same Store NOI
3Q20 96.4%
3.8 MSF
98.3% 16.3%
-6.0%
2.4%
3Q19 96.8%
0.8 MSF
95.4% -1.4%
2.4%
1.5%
Notes Three of six markets above 96% 82% of leasing activity related to Mexico City, Tijuana and Guadalajara; less than 2% of the portfolio GLA expires in the fourth quarter
All six markets recorded positive net effective rent change; five of six markets had at least 10% Higher concessions, the result of longer lease terms along with a weaker peso and lower average occupancy partly offset by higher rents
SOLID FINANCIAL POSITION
At September 30, 2020, FIBRA Prologis' leverage was 28.2 percent and liquidity was Ps. 7.6 billion (US$341.0 million), which included Ps. 7.2 billion (US$320.0 million) of available capacity on its unsecured credit facility and Ps. 460.0 million (US$20.6 million) of unrestricted cash.
"I am proud of our performance and expect a strong finish to the year," said Jorge Girault, senior vice president, Finance, Prologis Property Mexico. "Our balance sheet remains in excellent shape, with significant liquidity and low leverage, that puts us in the position to act on opportunities as they arise."
WEBCAST & CONFERENCE CALL INFORMATION
FIBRA Prologis will host a live webcast/conference call to discuss quarterly results, current market conditions and future outlook. Here are the event details:
· Thursday, October 22, 2020, at 9 a.m. CT/10 a.m. ET. · Live webcast at www.fibraprologis.com, in the Investor Relations section, by clicking News
& Events. · Dial in: +1 833 714-0919 (U.S. and Canada), 01 800 853 0234 (Mexico) or +1 778 560-2663
(all other countries) and enter Passcode 8120419.
A telephonic replay will be available October 22October 29 at +1 800 585-8367 from the U.S. and Canada or at +1 416 621-4642 from all other countries using conference code 8120419. The replay will be posted in the Investor Relations section of the FIBRA Prologis website.
ABOUT FIBRA PROLOGIS
FIBRA Prologis is a leading owner and operator of Class-A industrial real estate in Mexico. As of September 30, 2020, FIBRA Prologis was comprised of 201 logistics and manufacturing facilities in six industrial markets in Mexico totaling 39.0 million square feet (3.6 million square meters) of gross leasable area.
FORWARD-LOOKING STATEMENTS
The statements in this release that are not historical facts are forward-looking statements. These forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which FIBRA Prologis operates, management's beliefs and assumptions made by management. Such statements involve uncertainties that could significantly impact FIBRA Prologis financial results. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future -- including statements relating to rent and occupancy growth, acquisition activity, development activity, disposition activity, general conditions in the geographic areas where we operate, our debt and financial position, are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect outcomes and results include, but are not limited to: (i) national, international, regional and local economic climates, (ii) changes in financial markets, interest rates and foreign currency exchange rates, (iii) increased or unanticipated competition for our properties, (iv) risks associated with acquisitions, dispositions and development of properties, (v) maintenance of real estate investment trust ("FIBRA") status and tax structuring, (vi) availability of financing and capital, the levels of debt that we maintain and our credit ratings, (vii) risks related to our investments (viii) environmental uncertainties, including risks of natural disasters, (ix) risks related to the coronavirus pandemic, and (x) those additional factors discussed in reports filed with the "Comisión Nacional Bancaria y de Valores" and the Mexican Stock Exchange by FIBRA Prologis under the heading "Risk Factors." FIBRA Prologis undertakes no duty to update any forward-looking statements appearing in this release.
Non-Solicitation - Any securities discussed herein or in the accompanying presentations, if any, have not been registered under the Securities Act of 1933 or the securities laws of any state and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the Securities Act and any applicable state securities laws. Any such announcement does not constitute an offer to sell or the solicitation of an offer to buy the securities discussed herein or in the presentations, if and as applicable.
MEDIA CONTACTS Kosta Karmaniolas, Tel: +1 415 733 9592, kkarmani@prologis.com, San Francisco Montserrat Chavez, Tel: +52 55 1105 2941, mchavez@prologis.com, Mexico City
Fideicomiso Irrevocable 1721 Banco Actinver, S. A., Institución de Banca Múltiple, Grupo Financiero Actinver, División Fiduciaria
Interim Condensed Financial Statements as of September 30, 2020 and for the three and nine month periods then ended
Contents
Page
Third Quarter 2020 Earnings Report
1
Third Quarter 2020 Management Overview
2
Independent auditors' limited review report on interim condensed financial statements
10
Interim condensed statements of financial position as of September 30, 2020 and
December 31, 2019
12
Interim condensed statements of comprehensive income for the three and nine month periods
ended September 30, 2020 and 2019
13
Interim condensed statements of changes in equity for the nine months ended
September 30, 2020 and 2019
14
Interim condensed statements of cash flows for the nine months ended
September 30, 2020 and 2019
15
Notes to interim condensed financial statements as of September 30, 2020 and for the three and
nine month periods then ended, and December 31, 2019
16 - 34
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Third Quarter 2020 Earnings Report
The statements in this release that are not historical facts are forward-looking statements. These forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which FIBRA Prologis operates, management's beliefs and assumptions made by management. Such statements involve uncertainties that could significantly impact FIBRA Prologis financial results. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future -- including statements relating to rent and occupancy growth, acquisition activity, development activity, disposition activity, general conditions in the geographic areas where we operate, our debt and financial position, are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect outcomes and results include, but are not limited to: (i) national, international, regional and local economic climates, (ii) changes in financial markets, interest rates and foreign currency exchange rates, (iii) increased or unanticipated competition for our properties, (iv) risks associated with acquisitions, dispositions and development of properties, (v) maintenance of real estate investment trust ("FIBRA") status and tax structuring, (vi) availability of financing and capital, the levels of debt that we maintain and our credit ratings, (vii) risks related to our investments (viii) environmental uncertainties, including risks of natural disasters, and (ix) those additional factors discussed in reports filed with the "Comisión Nacional Bancaria y de Valores" and the Mexican Stock Exchange by FIBRA Prologis under the heading "Risk Factors." FIBRA Prologis undertakes no duty to update any forward-looking statements appearing in this release.
Non-Solicitation - Any securities discussed herein or in the accompanying presentations, if any, have not been registered under the Securities Act of 1933 or the securities laws of any state and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the Securities Act and any applicable state securities laws. Any such announcement does not constitute an offer to sell or the solicitation of an offer to buy the securities discussed herein or in the presentations, if and as applicable.
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4
Third Quarter 2020 Management Overview
Letter from Luis Gutiérrez, Chief Executive Officer, Prologis Property Mexico
FIBRA Prologis continued to expand on our internal growth capabilities in the third quarter, driving occupancy and releasing spreads higher, resulting in outstanding operating and financial results. Leasing volume was 3.8 million square feet, with renewals accounting for 91 percent of this activity. Occupancy reached 96.4 percent. Net effective rents on rollover increased a record 16.3 percent. Cash same store NOI declined 6.0 percent on higher concessions which are a function of longer lease terms, a weaker peso and lower average occupancy, offset partly by higher rents. Same store NOI on a net effective basis, which straight-lines the rent increases and free rent component over the lease term, increased 2.4 percent. Thanks to our efforts to reduce risk across our portfolio, less than 2 percent of leases will expire in the fourth quarter of 2020 and just 11 percent will expire in 2021.
We remain highly focused on engaging with our customers and are working diligently O to help them adapt to changes to their businesses in real time. Through the first nine months of the year, we have granted rent deferrals totaling 1.8 percent of annual revenues. In the third quarter, and notably, in line with expectations, we collected more than 98 percent of rents due. Our property managers work daily to inspect and service our properties while strictly adhering to mandated social distancing guidelines and other safety measures. While we all look forward to working shoulder-to-shoulder again, the FIBRA Prologis' team of seasoned professionals has transitioned seamlessly to working remotely, and they have exceeded expectations of performance.
Logistics real estate demand in Mexico outpaced supply in the third quarter. Net absorption in our six main logistics markets was 3.3 million square feet exceeding new deliveries by 1.1 million square feet. Accelerated demand in Mexico City is primarily due to the expansion of e-commerce.
Development pipelines remain low across Mexico. Approximately 12 million square feet of modern logistics space is currently under construction, more than 40 percent of which is build-to-suit. Of the approximately 7 million square feet of speculative development, nearly 78 percent is in Mexico City, Ciudad Juarez and Monterrey, each of which have seen a surge in demand in 2020.
2
4
With demand accelerating, market vacancy for modern-grade product in our six main logistics markets dropped 30 basis points from last quarter to a historic low 3.1 percent. The border markets remain severely constrained with market vacancy below 2.0 percent. Mexico City reached a record low vacancy of less than 1 percent, driving market rents higher after a slight drop in the second quarter. While operating fundamentals are sound, , headline economic growth and the pandemic are key risks to monitor. We are cautiously optimistic in our outlook due to the acceleration of e-commerce and the nearshoring of manufacturing operations through 2020 an acceleration that shows no signs of slowing. In closing, given the unprecedented conditions we all face, I am very proud of our performance. Our commitment to disciplined growth and our flexible balance sheet have put us in a position to act on opportunities as they arise. Our investment strategy remains a priority, as does executing on both internal and external growth opportunities to create long-term value for our certificate holders. I continue to wish you and your loved ones good health and safety during these challenging times. Thank you for your continued support. Sincerely, Luis Gutiérrez Chief Executive Officer
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4
The interim condensed financial statements included in this report were prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB"). Please read this in conjunction with the interim condensed financial statements.
Management Overview
FIBRA Prologis (BMV: FIBRAPL 14) is a leading owner and operator of Class-A logistics real estate in Mexico. As of September 30, 2020, FIBRA Prologis owned 201 logistics and manufacturing facilities in six strategic markets in Mexico totaling 39.0 million square feet (3.6 million square meters) of gross leasable area (GLA). These properties were leased to 224 customers, including third-party logistics providers, transportation companies, retailers and manufacturers.
Approximately 69.6 percent of our net effective rents are in consumption-driven markets and the remaining 30.4 percent are in manufacturing-driven markets. Consumptiondriven markets include Mexico City, Guadalajara and Monterrey. These markets are highly industrialized and benefit from proximity to principal highways, airports and rail hubs. Their presence in highly populated areas offers tangible benefits from the sustained growth of the middle class. Manufacturing-driven markets include Ciudad Juarez, Tijuana and Reynosa. Industrial centers for the automotive, electronics, medical and aerospace industries, among others. These markets benefit from a ready and qualified workforce as well as proximity to the U.S. border.
The operating results that follow are consistent with how management evaluates the performance of the portfolio.
Our third quarter financial information includes results from July 1, 2020, through September 30, 2020. During the quarter ended September 30, 2020, and through the date of this report, the following activity supported our business priorities and strategy:
4
4
· Operating results:
Operating Portfolio Period End Occupancy Leases Commenced
Customer Retention Net Effective Rent Change
Same Store Cash NOI
Turnover Cost on Leases Commenced (per square foot)
3Q 2020 96.4%
3.8MSF
98.3% 16.3%
-6.0%
US$1.33
3Q 2019 96.8%
0.8MSF
95.4% -1.4%
2.4%
US$1.95
Notes
Three of six markets recorded occupancy above 96% 82% of leasing activity related to Mexico City, Tijuana and Guadalajara; less than 2% of portfolio GLA expires in the fourth quarter
All six markets recorded positive net effective rent change; five of six markets had at least 10% Higher concessions related to a longer lease term along with a weaker peso and lower average occupancy partly offset by higher rents Decrease driven primarily by lower leasing commissions as renewals comprised a higher percentage of leasing volume as well as lower property improvements
We use a same store analysis to evaluate the performance of our owned operating properties. The population of the properties in this analysis is consistent from period to period, which eliminates the effects of changes in portfolio composition on performance metrics. In our view, the factors that affect rental revenues, rental expenses and NOI in the same store portfolio are generally the same as they are across the total portfolio. Our same-store performance is measured in U.S. dollars and includes the effect of year-overyear movements in the Mexican peso. The decrease in cash same-store NOI of 840 basis points year-over-year is mainly due to higher concessions related to longer lease terms, a weaker peso and lower average occupancy offset partly by higher rents.
Operational Outlook
Net absorption in Mexico's six main logistics markets was 3.3 million square feet, outpacing new deliveries of 2.2 million square feet. Demand accelerated in Mexico City, due primarily to the ongoing expansion e-commerce.
5
4
Development pipelines remain low across our six main markets in Mexico, with 12 million square feet of modern space currently under construction more than 40 percent of which is build-to-suit. Of the approximately 7 million square feet of speculative product under construction, nearly 78 percent is located in Mexico City, Ciudad Juarez and Monterrey, all of which have seen demand surge in 2020.
Market vacancy for modern product declined 30 basis points quarter-over-quarter to reach a historic low of 3.1 percent. Border markets remain severely constrained, with market vacancy at 1.9 percent. Mexico City reached record low vacancy of less than 1 percent, driving market rents higher after a slight drop last quarter.
Although logistics demand continues to advance across all six of our markets, headline economic growth and the pandemic remain key risks going forward. We remain cautiously optimistic given that the structural drivers of Mexican logistics real estate chiefly, adoption of e-commerce and nearshoring of manufacturing operations continue to advance in 2020.
COVID-19
In December 2019, COVID-19 was reported to have surfaced in Wuhan, China and has continued to spread globally. The World Health Organization and certain national and local governments have characterized COVID-19 as a pandemic. The COVID-19 outbreak has disrupted financial markets and the ultimate impact on global, national and local economies is uncertain. Existing customers and potential customers of our logistics facilities may be adversely affected by the decrease in economic activity, which in turn could temporarily disrupt their businesses and have a negative impact on FIBRA Prologis. Given the ongoing and dynamic nature of these circumstances, we cannot predict the extent to which the COVID-19 outbreak may impact our business. Any prolonged economic downturn, escalation of the outbreak or disruption in the financial markets may have an adverse effect on our business.
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4
As of September 30, 2020, we had received rent relief requests totaling 3.2 percent of our estimated annual revenue. We review all requests; if we see evidence of financial distress, we may provide relief that is mutually beneficial to the customer and to FIBRA Prologis. As of September 30, 2020, we had granted rent relief requests, in the form of deferrals, totaling 1.8 percent of our estimated annual revenue. Our expectation is that 85 percent of these deferrals will be repaid prior to December 31, 2020, followed by the remainder in 2021.
During the third quarter, FIBRA Prologis collected 98.5 percent of rent due compared with 99.7 percent for the same period last year.
Acquisitions
Our exclusivity agreement with Prologis gives us access to an important proprietary acquisition pipeline. As of the end of the third quarter, Prologis had 1.7 million square feet under development or pre-stabilization, of which 88.4 percent was leased or preleased. This exclusive access to the Prologis pipeline is a competitive advantage for FIBRA Prologis as it gives us the option to acquire high-quality buildings in our existing markets. While third-party acquisitions are also possible for FIBRA Prologis, they depend on the availability of product that meets our stringent criteria for quality and location. All potential acquisitions, regardless of source, are evaluated by management, factoring in real estate and capital market conditions, and are subject to approval by FIBRA Prologis' Technical Committee.
Currency Exposure At quarter end, our U.S.-dollar-denominated revenues represented 63.8 percent of annualized net effective rents, resulting in peso exposure in the third quarter of approximately 36.2 percent. This increase in peso exposure was the result of renewal activity in Mexico City and new leases in Guadalajara. In the near term, we expect pesodenominated revenues to be approximately 36 percent of annualized net effective rents.
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4
Liquidity and Capital Resources Overview We believe our ability to generate cash from operating activities and available financing sources (including our line of credit), as well as our balance sheet management, will allow us to meet anticipated acquisition, operating, debt service and distribution requirements. Near-Term Principal Cash Sources and Uses As a FIBRA, we are required to distribute at least 95 percent of our taxable income. In addition to distributions to CBFI holders, we expect our primary cash uses will include:
· asset management fee payment; and · capital expenditures and leasing costs on properties in our operating portfolio
We expect to fund our cash needs principally from the following sources, all of which are subject to market conditions:
· available unrestricted cash balances of Ps. 460.4 million (approximately US$20.6 million) as of September 30, 2020, the result of cash flow from operating properties; and
· borrowing capacity of Ps. 7.2 billion (US$320.0 million) under our unsecured credit facility
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Debt As of September 30, 2020, we had approximately Ps. 17.4 billion (US$777.0 million) of debt at par value with a weighted average effective interest rate of 4.3 percent (a weighted average coupon rate of 4.4 percent) and a weighted average maturity of 3.1 years. According to the CNBV regulation for the calculation of debt ratios, our loan-to-value and debt service coverage ratios as of September 30, 2020, were 28.6 percent and 9.0 times, respectively.
9
Independent Auditors' Report on Review of Interim Financial Information
To the Technical Committee and Trustors Fideicomiso Irrevocable 1721 Banco Actinver, S. A., Institución de Banca Múltiple, Grupo Financiero Actinver, División Fiduciaria
Introduction
We have reviewed the accompanying September 30, 2020 condensed interim financial information of Fideicomiso Irrevocable 1721 Banco Actinver, S. A., Institución de Banca Múltiple, Grupo Financiero Actinver, División Fiduciaria, which comprises:
· The condensed statement of financial position as of September 30, 2020;
· The condensed statements of comprehensive income for the three- month and ninemonth periods ended September 30, 2020;
· The condensed statements of changes in equity for the nine-month period ended September 30, 2020;
· The condensed statements of cash flows for the nine-month period ended September 30, 2020; and
· Notes to the interim condensed financial information.
Management is responsible for the preparation and presentation of this condensed interim financial information in accordance with International Accounting Standards (IAS) 34, Interim Financial Reporting. Our responsibility is to express a conclusion on this condensed interim financial information based on our review.
Scope of Review
We conducted our review in accordance with the International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
(Continued)
Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying September 30, 2020 condensed interim financial information is not prepared, in all material respects, in accordance with IAS 34, Interim Financial Reporting.
KPMG CARDENAS DOSAL, S. C.
Mexico City, October 16, 2020.
Alberto Vazquez Ortiz
4
Interim condensed statements of financial position
As of September 30, 2020 and December 31, 2019
in thousands Mexican Pesos
Assets Current assets:
Cash Trade receivables Other receivables Prepaid expenses Current portion of exchange rate options
Non-current assets: Investment properties Other investment properties Exchange rate options Other assets
Total assets ..... Liabilities and equity Current liabilities:
Trade payables Value added tax payable Due to affiliates Current portion of long term debt Current portion of hedge instruments
Non-current liabilities: Long term debt Security deposits Hedge instruments
Total liabilities
Equity: CBFI holders' capital Other equity accounts and retained earnings
Total equity .
Total liabilities and equity
Note
$ 8 9 10 16
11 12 16
$
September 30, 2020
460,391 $ 78,263
8,707 37,720 41,789 626,870
60,041,895 37,546 6,752 33,452
60,119,645
60,746,515 $
$ 15 13 16
13 16
14
$
85,516 $ 17,411 23,857 33,873 130,661 291,318
17,337,229 366,959 -
17,704,188 17,995,506
22,369,174 20,381,835 42,751,009
60,746,515 $
December 31, 2019
182,792 56,870 10,301 3,295 7,338 260,596
44,611,642 10,778 43,386
44,665,806
44,926,402
69,159 356
49,161 29,298
147,974
14,522,030 280,342 61,683
14,864,055 15,012,029
14,124,954 15,789,419 29,914,373
44,926,402
The accompanying notes are an integral part of these interim condensed financial statements.
12
4
Interim condensed statements of comprehensive income
For the three and the nine month periods ended September 30, 2020 and 2019
in thousands Mexican Pesos, except per CBFI amounts
Revenues: Lease rental income Rental recoveries Other property income
Costs and expenses: Operating expenses: Operating and maintenance Utilities Property management fees Real estate taxes Non-recoverable operating
Gross profit
(Gain) loss on valuation of investment properties Asset management fees Incentive fee Professional fees Finance cost Net loss on early extinguishment of debt Unused credit facility fee Unrealized loss (gain) on exchange rate hedge instruments Realized (gain) loss on exchange rate hedge instruments Net exchange gain Tax recovered Other general and administrative expenses
Net income
Other comprehensive income: Items that are not reclassified subsequently to profit or loss: Translation loss (gain) from functional currency to reporting currency Items that are or may be reclassified subsequently to profit or loss: Unrealized (gain) loss on interest rate swaps
Total comprehensive income for the period Earnings per CBFI
Note
For the three months ended September 30,
2020
2019
For the nine months ended September 30,
2020
2019
$
1,099,178 $
118,956
18,272
1,236,406
838,379 $ 92,580 12,522 943,481
3,044,109 $ 349,518 44,544
3,438,171
2,541,147 280,770 52,295
2,874,212
73,327
5,653
15
34,482
19,841
13,952
147,255
1,089,151
11
(711,196)
15
110,532
15
-
15,344
214,117
-
10,824
16
22,776
16
(10,200)
(41,511)
9
-
4,497
(384,817)
1,473,968
72,798 15,222 30,363 18,112 15,878 152,373
791,108
34,935 85,839
12,751 185,459
9,838 1,135
221 (1,695)
2,518 331,001
460,107
196,464 23,990 100,110 58,057 67,591 446,212
2,991,959
1,369,059 316,537 40,843 638,135 30,676 (11,866)
(111,124) (17,290) (40,463) 7,874
2,222,381
769,578
179,991 39,313 86,871 53,489 44,422 404,086
2,470,126
(224,228) 252,620 172,627 27,955 559,700 18,638 26,373 12,138 640 (4,588) 9,953 851,828
1,618,298
16
$ 7 $
1,389,216
(64,732) 1,324,484
149,484 $ 1.74 $
(761,201)
24,408 (736,792) 1,196,899 $
0.71 $
(5,102,129)
69,656 (5,032,473) 5,802,051 $
0.97 $
73,440
152,773 226,213 1,392,085
2.50
The accompanying notes are an integral part of these interim condensed financial statements.
13
4
Interim condensed statements of changes in equity
For the nine months ended September 30, 2020 and 2019
in thousands Mexican Pesos
Balance as of January 1, 2019 Dividends CBFIs issued
CBFI holders' capital
$
13,952,327 $
-
172,627
Comprehensive income:
Translation loss from functional currency to reporting currency
-
Unrealized loss on interest rate swaps
-
Net income
-
Total comprehensive (loss) income
-
Balance as of September 30, 2019
$
14,124,954 $
Balance as of January 1, 2020 Dividends CBFIs issued Right Offering Issuance Costs Repurchase of CBFIs
$
14,124,954 $
-
8,300,000
(55,780)
-
Comprehensive income:
Translation gain from functional currency to reporting currency
Unrealized loss on interest rate swaps Net income Total comprehensive income
Balance as of September 30, 2020
$
-
22,369,174 $
Other equity accounts 9,222,542 $ -
(73,440) (152,773)
(226,213)
8,996,329 $
7,632,670 $ -
5,102,129 (69,656) -
5,032,473
12,665,143 $
Repurchase of CBFIs - $ -
- $
- $ -
(5,000)
(5,000) $
Retained earnings 7,524,308 $ (1,141,933)
-
1,618,298 1,618,298
8,000,673 $
8,156,749 $ (1,204,635)
-
769,578 769,578
7,721,692 $
Total 30,699,177 (1,141,933)
172,627
(73,440) (152,773) 1,618,298 1,392,085
31,121,956
29,914,373 (1,204,635)
8,300,000 (55,780) (5,000)
5,102,129 (69,656) 769,578
5,802,051
42,751,009
The accompanying notes are an integral part of these interim condensed financial statements.
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4
Interim condensed statements of cash flows
For the nine months ended September 30, 2020 and 2019
in thousands Mexican Pesos Operating activities: Net income
Adjustments for: Loss (gain) on valuation of investment properties Incentive fee Allowance for uncollectible trade receivables Finance cost Net loss on early extinguishment of debt Realized (gain) loss on exchange rate hedge instruments Unrealized loss on exchange rate hedge instruments Heading Instruments Net unrealized exchange (gain) loss Rent leveling
Change in: Trade receivables Other receivables Prepaid expenses Other assets Trade payables Value added tax payable Due to affiliates Security deposits
Net cash flow provided by operating activities
Investing activities: Funds for acquisition of investment properties Funds from disposition of investment properties Cost related with acquisition of investment properties Cost related with disposition of investment properties Capital expenditures on investment properties Net cash flow (used in) provided by investing activities
Financing activities: Dividends paid Long term debt borrowings Long term debt payments Interest paid CBFIs issued Right Offering Issuance Costs Repurchase of CBFIs
Net cash flow provided by (used in) financing activities Net (decrease) increase in cash
Effect of foreign currency exchange rate changes on cash Cash at beginning of the period
Cash at the end of the period
Non-cash transactions: Credit facility borrowings in exchange for term loan paydown CBFIs issued
Total non-cash transactions
For the nine months ended September 30,
2020
2019
$
769,578 $
1,618,298
1,369,059 -
12,294 638,135
(111,124)
(11,866) -
82,361 (194,219)
(224,228) 172,627 20,608 559,700 18,638 640 12,138 (13,080) 3,714 (13,712)
25,913 3,510
(33,808) 17,955 3,555 16,993
(34,389) 34,837
2,588,784
(7,104) 106,528 (28,360)
2,913 (40,036)
(42,706)
(6,747) 2,139,831
(8,713,152) -
(111,382) -
(443,196) (9,267,730)
1,363,020
(15,310) (289,010) 1,058,700
(1,204,635) 2,725,087
(2,656,976) (457,013) 8,300,000 (55,780) (5,000) 6,645,683 (33,263)
(1,141,933) 1,545,463
(2,901,852) (548,748) -
(3,047,070) 151,461
310,862 182,792
(80,801) 339,276
$
460,391 $
409,936
$
- $
4,484,364
-
172,627
$
- $
4,656,991
The accompanying notes are an integral part of these interim condensed financial statements.
15
4
Notes to interim condensed financial statements
As of September 30, 2020 and for the three and nine month periods then ended and December 31, 2019 In thousands of Mexican Pesos, except per CBFI
1. Main activity, structure, and significant events
Main activity FIBRA Prologis ("FIBRAPL") is a trust formed according to the Irrevocable Trust Agreement No. F/1721 dated August 13, 2013 ("Date of Inception"). Such agreement was signed between Prologis Property México, S. A. de C. V. as Trustor and Deutsche Bank México, S. A., Institución de Banca Múltiple, División Fiduciaria as Trustee. On December 14, 2017, FIBRAPL completed a trustee substitution from Deutsche Bank México, S. A., Institución de Banca Múltiple to Banco Actinver, S. A., Institución de Banca Múltiple as approved by its Technical Committee and certificate holders in September 2017.
FIBRAPL is a Mexican real estate investment trust authorized by Mexican law (Fideicomiso de Inversión en Bienes Raices, or FIBRA, as per its name in Spanish) with its address on Paseo de los Tamarindos No. 90, Torre 2, Piso 22, Bosques de las Lomas, Cuajimalpa de Morelos, C. P. 05120. The primary purpose of FIBRAPL is the acquisition or construction of industrial real estate in Mexico generally with the purpose of leasing such real estate to third parties under long-term operating leases.
Structure FIBRAPL's parties are:
Trustor: Prologis Property México, S. A. de C. V. First beneficiaries: Certificate holders
Trustee:
Banco Actinver, S.A., Institución Actinver, División Fiduciaria
de
Banca
Múltiple,
Grupo
Financiero
Common representative: Monex Casa de Bolsa, S. A. de C. V., Monex Grupo Financiero Manager: Prologis Property México, S. A. de C. V.
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4
Significant events
i. Long term debt transactions:
in millions
Borrowings: Citibank, NA Credit facility (Unsecured) Citibank, NA Credit facility (Unsecured) Citibank, NA Credit facility (Unsecured) Total borrowings
* LIBOR (London Interbank Offered Rate)
in millions
Payments: Citibank, NA Credit facility (Unsecured) Citibank, NA Credit facility (Unsecured) Citibank, NA Credit facility (Unsecured) Citibank, NA Credit facility (Unsecured) Citibank, NA Credit facility (Unsecured) Citibank, NA Credit facility (Unsecured) Citibank, NA Credit facility (Unsecured) Citibank, NA Credit facility (Unsecured) Total payments
* LIBOR (London Interbank Offered Rate)
Date
Denomination
Interest rate(*)
April 2, 2020 March 11, 2020 January 30, 2020
U. S. dollars U. S. dollars U. S. dollars
LIBOR +250bps
$
LIBOR +250bps
LIBOR +250bps
$
Date
Denomination
Interest rate(*)
September 29, 2020 August 25, 2020 July 30, 2020 July 17, 2020 July 6, 2020 June 12, 2020 March 25, 2020 February 28, 2020
U. S. dollars U. S. dollars U. S. dollars U. S. dollars U. S. dollars U. S. dollars U. S. dollars U. S. dollars
LIBOR +250bps
$
LIBOR +250bps
LIBOR +250bps
LIBOR +250bps
LIBOR +250bps
LIBOR +250bps
LIBOR +250bps
LIBOR +250bps
$
Mexican pesos
1,836.9 $ 420.5 467.7
2,725.1 $
Mexican pesos
112.3 $ 329.8 219.9 669.1 112.1 112.1 1,004.7
97.0 2,657.0 $
ii. Distributions:
in millions, except per CBFI
Distributions:
Dividends Dividends Dividends
Total distributions
Date
July 14, 2020
$
February 25, 2020
January 23, 2020
$
Mexican pesos
383.7 442.6 378.3 1,204.6 $
U. S. dollars
17.1 23.8 20.1 61.0
Mexican pesos per CBFI
0.4518 0.6818 0.5828
U. S. dollars
75.0 20.0 25.0 120.0
U. S. dollars
5.0 15.0 10.0 30.0
5.0 5.0 40.0 5.0 115.0
U. S. dollars per CBFI
0.0201 0.0368 0.0310
iii. Acquisitions:
in millions, except lease area
Acquisitions: Guadalajara Downtown 1 Santa Maria 2 Grande, Building 1 Grande, Building 2 Grande, Building 3 Grande, Building 4 Grande, Building 5 Grande, Building 6 Grande, Building 7 Grande, Building 8
Total acquisitions
Date
Market
June 22, 2020
June 22, 2020 April 6, 2020 April 6, 2020 April 6, 2020 April 6, 2020 April 6, 2020 April 6, 2020 April 6, 2020 April 6, 2020
Guadalajara
Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico
Lease area square feet
47,685 $ 92,176 996,897 1,053,173 312,000 255,840 408,315 312,584 283,360 367,556
4,129,586 $
Mexican pesos
Including closing costs U. S. dollars
44.2 $ 149.8 2,202.0 2,445.3 639.7 534.7 837.1 632.3 557.5 781.8
8,824.4 $
2.1 6.7 89.2 99.1 25.9 21.7 33.9 25.6 22.6 31.7
358.5
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4
iv.
in millions, except per CBFI
Rights Offering:
On March 17, 2020, FIBRAPL issued an additional 200,000,000 CBFIs at $41.50
Mexican pesos per certificate through a subscription offering. Existing CBFI
holders were granted a preferential right to subscribe and pay for the
additional CBFIs. FIBRAPL received subscription requests in excess of the
offering and allocated all 200,000,000 CBFIs to holders. Proceeds from the
subscription offering were $8,300.0 million Mexican pesos.
Date
Mexican pesos
U. S. dollars
Mexican pesos per CBFI
U. S. dollars per CBFI
Rights Offering:
CBFIs Offering
March 17, 2020
$
8,300.0 $
378.5
41.5000
1.8925
v. Repurchase of CBFIs: On April 1, 2020, FIBRAPL recorded a CBFIs purchase reserve of $202.9 thousand U.S. dollars ($5.0 million Mexican pesos). See note 14.
vi. Pandemic crisis: In December 2019, COVID-19 was reported to have surfaced in Wuhan, China and has continued to spread globally. The World Health Organization and certain national and local governments have characterized COVID-19 as a pandemic. The COVID-19 outbreak has disrupted financial markets and the ultimate impact on global, national and local economies is uncertain. Existing customers and potential customers of our logistics facilities may be adversely affected by the decrease in economic activity, which in turn could temporarily disrupt their business and have a negative impact on FIBRAPL. Given the ongoing and dynamic nature of these circumstances, we cannot predict the extent to which the COVID-19 outbreak may impact our business. Any prolonged economic downturn, escalation of the outbreak or disruption in the financial markets may adversely affect our financial condition and results of operations.
2. Basis of presentation
a. Interim financial reporting - The accompanying interim condensed financial statements as of September 30, 2020 and 2019 and for the three and nine month periods then ended and December 31, 2019 have been prepared in accordance with the International Accounting Standard No. 34, interim financial reporting. Therefore, these financial statements do not include all the information required in a complete annual report prepared in accordance with International Financial Reporting Standards (hereinafter "IFRS or IAS"). The interim condensed financial statements should be read in conjunction with the annual financial statements as of December 31, 2019, and for the year then ended, prepared in accordance with IFRS.
FIBRAPL management believes that all adjustments and reclassifications that are required for a proper presentation of the financial information are included in these interim condensed financial statements.
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4
b. Functional currency and reporting currency The accompanying interim condensed financial statements are presented in thousands of Mexican pesos, the local currency in Mexico, unless otherwise indicated. FIBRAPL's functional currency is the U.S. dollar.
c. Critical accounting judgments and estimates The preparation of the interim condensed financial statements requires the use of certain critical accounting estimates and requires management to exercise its judgment in the process of applying FIBRAPL's accounting policies. The notes to the interim condensed financial statements discuss areas involving a higher degree of judgment or complexity, or areas where assumptions are significant to the financial statements.
Estimates and judgments are continually evaluated and are based on management experience and other factors, including reasonable expectations of future events. Management believes the estimates used in preparing the interim condensed financial statements are reasonable. Actual results in the future may differ from those reported and therefore it is possible, on the basis of existing knowledge, that outcomes within the next financial year are different from our assumptions and estimates and could result in an adjustment to the carrying amounts of the assets and liabilities previously reported.
d. Going concern basis of accounting FIBRAPL interim condensed financial statements as of September 30, 2020 and 2019 and for the three and nine month periods then ended have been prepared on a going concern basis, which assumes that FIBRAPL will be able to meet the mandatory repayment terms of the banking facilities disclosed in note 13. Management has a reasonable expectation that FIBRAPL has adequate resources to continue as a going concern and has the ability to realize its assets at their recognized values and to extinguish or refinance its liabilities in the normal course of business.
3. Summary of significant accounting policies
The significant accounting policies applied in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of, and disclosed in, FIBRAPL's audited financial statements as of December 31, 2019, except for the following:
When CBFIs recognized as equity are repurchased, the amount of the consideration paid, including directly attributable costs, is recognized as a deduction from equity. The repurchased CBFIs are classified as outstanding CBFIs and are presented in the reserve of the certificates portfolio. When the outstanding CBFIs are sold or reissued, subsequently, the amount received is recognized as an increase in equity, and the surplus or deficit of the transaction is presented under the heading of Repurchase of CBFIs.
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4
4. Reclassifications
During 2020, FIBRAPL modified the presentation of hedge instruments in its statement of financial position to classify hedge instruments as current or noncurrent according to their maturity date.
5. Rental revenues
Most of FIBRAPL´s lease agreements associated with the investment properties contain a lease term of three to ten years. Generally, these leases are based on minimal rental payments in U.S. dollars, plus maintenance fees and recoverable expenses.
Future minimum lease payments from base rent on leases with lease periods greater than one year, valued at the September 30, 2020 exchange rate in Mexican pesos, are as follows:
i n thous a nds Mexi ca n Pes os Rental revenues: 2020 (three months ) 2021 2022 2023 2024 Therea fter
Amount
$
816,858
3,172,505
2,816,396
2,403,059
1,919,122
4,204,534
$
15,332,474
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4
6. Segment reporting
Operating segment information is presented based on how management analyzes the business, which includes information aggregated by market. The results for these operating segments are presented for the three and the nine month periods ended September 30, 2020 and 2019, while assets and liabilities are included as of September 30, 2020 and December 31, 2019. FIBRAPL operates in six geographic markets that represent its reportable operating segments under IFRS 8 as follows: Mexico City, Guadalajara, Monterrey, Tijuana, Reynosa and Juarez.
in thousands Mexican Pesos
Revenues: Lease rental income Rental recoveries Other property income
.
Costs and expenses: Property operating expenses
. Gross Profit
Mexico City Guadalajara
Monterrey
Tijuana
For the three months ended September 30, 2020
Reynosa
Juarez
Total
$
481,521 $
152,809 $
114,312 $
121,907 $
143,375 $
49,331
11,863
13,353
15,736
14,823
15,918
710
836
69
739
546,770
165,382
128,501
137,712
158,937
66,019
18,188
7,496
25,033
17,435
$ 480,751 $ 147,194 $ 121,005 $ 112,679 $ 141,502 $
85,254 $ 13,850
99,104
13,084 86,020 $
1,099,178 118,956 18,272
1,236,406
147,255 1,089,151
in thousands Mexican Pesos
Revenues: Lease rental income Rental recoveries Other property income
.
Costs and expenses: Property operating expenses
. Gross Profit
Mexico City Guadalajara
Monterrey
For the three months ended September 30, 2019
Tijuana
Reynosa
Juarez
Total
$
305,767 $
133,607 $
102,140 $
34,225
10,618
12,016
3,511
7,011
1,359
343,503
151,236
115,515
63,651
23,803
14,503
$ 279,852 $ 127,433 $ 101,012 $
102,432 $ 12,701 -
115,133
16,212 98,921 $
120,737 $ 11,730 641
133,108
16,965 116,143 $
73,696 $ 11,290
84,986
17,239 67,747 $
838,379 92,580 12,522
943,481
152,373 791,108
in thousands Mexican Pesos
Revenues: Lease rental income Rental recoveries Other property income
.
Costs and expenses: Property operating expenses
. Gross Profit
Mexico City Guadalajara
Monterrey
For the nine months ended September 30, 2020
Tijuana
Reynosa
Juarez
Total
$ 1,263,260 $ 140,157 21,272
1,424,689
178,916 $ 1,245,773 $
440,525 $ 39,638 8,281
488,444
53,595 434,849 $
331,286 $ 39,404 11,102
381,792
55,578 326,214 $
348,839 $ 44,459 1,935
395,233
60,150 335,083 $
413,192 $ 44,076 1,818
459,086
55,244 403,842 $
247,007 $ 41,784 136
288,927
3,044,109 349,518 44,544
3,438,171
42,729 246,198 $
446,212 2,991,959
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4
in thousands Mexican Pesos
Revenues: Lease rental income Rental recoveries Other property income
.
Costs and expenses: Property operating expenses
. Gross Profit
Mexico City Guadalajara
Monterrey
Tijuana
For the nine months ended September 30, 2019
Reynosa
Juarez
Total
$
940,801 $
106,446
22,865
1,070,112
171,747 $ 898,365 $
401,456 $ 31,222 24,335
457,013
60,128 396,885 $
310,764 $ 35,045 2,556
348,365
39,260 309,105 $
304,688 $ 34,778 511
339,977
42,838 297,139 $
357,660 $ 34,613 2,028
394,301
44,690 349,611 $
225,778 $ 38,666 -
264,444
45,423 219,021 $
2,541,147 280,770 52,295
2,874,212
404,086 2,470,126
in thousands Mexican Pesos Investment properties: Land Buildings
Rent leveling Investment properties
Other investment properties
Long term debt
Mexico City Guadalajara
Monterrey
Tijuana
Reynosa
Juarez
As of September 30, 2020
Unsecured debt
Total
$ 5,714,173 $ 22,856,691
28,570,864 233,496
$ 28,804,360 $
1,599,368 $ 6,397,472
7,996,840 105,234
8,102,074 $
1,280,812 $ 5,123,247
6,404,059 87,885
6,491,944 $
1,246,816 $ 4,987,266
6,234,082 122,809
6,356,891 $
1,200,787 $ 4,803,146
6,003,933 75,697
6,079,630 $
832,127 $ 3,328,509
4,160,636 46,360
4,206,996 $
- $ 11,874,083
-
47,496,331
-
59,370,414
-
671,481
- $ 60,041,895
$
37,546 $
- $
- $
- $
- $
- $
- $
37,546
$
- $ 884,609 $ 1,501,575 $
- $
- $
- $ 14,984,918 $ 17,371,102
in thousands Mexican Pesos Investment properties: Land Buildings
Rent leveling Investment properties
Other investment properties
Long term debt
Mexico City Guadalajara
Monterrey
Tijuana
Reynosa
Juarez
As of December 31, 2019
Unsecured debt
Total
$ 3,618,893 $ 14,475,573
18,094,466 126,726
$ 18,221,192 $
1,395,740 $ 5,582,961
6,978,701 60,817
7,039,518 $
1,108,507 $ 4,434,027
5,542,534 70,960
5,613,494 $
986,101 $ 3,944,408
4,930,509 77,364
5,007,873 $
1,037,064 $ 4,148,255
5,185,319 44,306
5,229,625 $
691,930 $ 2,767,718
3,459,648 40,292
3,499,940 $
- $ 8,838,235
-
35,352,942
-
44,191,177
-
420,465
- $ 44,611,642
$
10,778 $
- $
- $
- $
- $
- $
- $
10,778
$
- $ 746,367 $ 1,266,918 $
- $
- $
- $ 12,538,043 $ 14,551,328
22
4
7. Earnings per CBFI
The calculated basic and diluted earnings per CBFI are the same, as follows:
in thousands Mexican Pesos, except per CBFI
Basic and diluted earnings per CBFI (pesos) Net income Weighted average number of CBFIs (`000)
For the three months ended September 30
2020
2019
$
1.74 $
1,473,968
849,186
0.71 $ 460,107
649,186
For the nine months ended September 30
2020
2019
0.97 $ 769,578
793,711
2.50 1,618,298
646,640
As of September 30, 2020, FIBRAPL had 849,185,514 CBFIs outstanding, which includes 200,000,000 CBFIs from the rights offering on March 17, 2020. See note 14.
8. Trade receivables
As of September 30, 2020 and December 31, 2019, trade receivables of FIBRAPL were as follows:
in thousands Mexican Pesos
Trade receivables Allowance for uncollectible trade receivables
September 30, 2020
$
88,036 $
(9,773)
$
78,263 $
December 31, 2019
80,614 (23,744)
56,870
9. Other receivables
FIBRAPL submits withholding taxes to the Mexican tax authorities as a result of interest paid to foreign creditors. Withholding tax payments are recognized as an expense unless they are expected to be reimbursed to FIBRAPL by the foreign creditor. If FIBRAPL does expect to be reimbursed, the amount is recorded as other receivables. As of September 30, 2020 and 2019 the balance of other receivables were $8,707.0 and $10,301.0, respectively.
On June 18, 2020, FIBRAPL received a reimbursement of $1,821.3 million U.S. dollars ($40,463.4 million Mexican Pesos) for withholding tax related to interest payments to foreign creditors which had been previously reserved as of December 31, 2019.
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4
10. Prepaid expenses
As of September 30, 2020 and December 31, 2019, prepaid expenses of FIBRAPL were as follows:
in thousands Mexican Pesos
Real estate tax Insurance Other prepaid expenses
September 30, 2020
December 31, 2019
$
21,698 $
-
14,239
601
1,783
2,694
$
37,720 $
3,295
11. Investment properties
FIBRAPL obtained a valuation from independent appraisers in order to determine the fair value of its investment properties which resulted in a loss of $1,369,059 and a gain of $224,228 for the nine months ended September 30, 2020 and 2019, respectively.
a) As of September 30, 2020, investment properties were as follows:
Market
Fair value as of September 30, 2020
# of properties
Lease area in thousands of
square feet
Mexico City Guadalajara Monterrey Tijuana Reynosa Juarez
Total
$
28,804,360
8,102,074
6,491,944
6,356,891
6,079,630
4,206,996
$
60,041,895
63
17,592
26
5,937
22
4,419
33
4,208
30
4,712
28
3,235
202
40,103
The table above includes an Intermodal facility in the Mexico City market with a leasable area of 1,092 square feet and a fair value of $371,173.
As of September 30, 2020, the fair value of investment properties includes excess land in the Monterrey market of $132,594.
As of September 30, 2020, 20 of the properties from FIBRAPL are encumbered by certain bank loans as described in note 13.
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4
As of September 30, 2020 and December 31, 2019, the balance of investment properties included rent leveling assets of $671,481 and $420,465, respectively.
Disclosed below is the valuation technique used to measure the fair value of investment properties, along with the significant unobservable inputs used.
i) Valuation technique
The valuation model considers the present value of net cash flows to be generated by the property, taking into account the expected rental growth rate, vacancy periods, occupancy rate, lease incentive costs such as rent-free periods and other costs not paid by tenants. The expected net cash flows are discounted using risk adjusted discount rates. Among other factors, the discount rate estimation considers the quality of a building and its location, tenant credit quality and lease terms.
ii) Significant unobservable inputs
Occupancy rate Risk adjusted discount rates Risk adjusted capitalization rates
September 30, 2020
96.4% from 8.0% to 12.0% Weighted average 8.75% from 6.75% to 10.50% Weighted average 7.36%
iii) Interrelationship between key unobservable inputs and fair value measurement
The estimated fair value would increase (decrease) if:
a. - Expected market rental income per market were higher (lower); b. Vacancy periods were shorter (longer); c. - The occupancy rate were higher (lower); d. - Rent-free periods were shorter (longer); or e. - The risk adjusted discount rate were lower (higher)
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4
b) The reconciliation of investment properties for the nine months ended September 30, 2020 and for the year ended December 31, 2019 are as follows:
in thousands Mexican Pesos
Beginning balance Assets held for sale realized Translation effect from functional currency Acquisition of investment properties Acquisition costs Disposition of investment properties Capital expenditures, leasing commissions and tenant improvements Rent leveling (Loss) gain on valuation of investment properties
Ending balance of investment properties
For the nine months ended September 30, 2020
$
44,611,642 $
-
7,280,566
8,713,152
111,382
-
443,196
251,016
(1,369,059)
$
60,041,895 $
For the year ended December 31, 2019
45,727,051 1,230,502
(1,836,253) 71,222 10,592
(1,363,020) 479,742 15,971 275,835
44,611,642
c) During the nine months ended September 30, 2020 and 2019, capital expenditures, leasing commissions and tenant improvements of FIBRAPL were as follows:
in thousands Mexican Pesos
Capital expenditures Leasing commissions Tenant improvements
For the nine months ended September 30,
2020
2019
$
108,535 $
130,466
116,258
71,004
218,403
87,540
$
443,196 $
289,010
12. Other investment properties
On June 22, 2020, FIBRAPL acquired an industrial property located in Mexico City Market with leasable area of 92,176 square feet including 17,350 office square feet.
On December 20, 2019, FIBRAPL acquired an industrial property located in Mexico City Market with leasable area of 41,779 square feet including 5,673 office square feet.
in thousands Mexican Pesos
Fair value as of
September 30,
Fair value as of
2020 December 31, 2019
Lease area in square feet
Santa Maria 1 Offices Santa Maria 2 Offices Total
$
10,643 $
10,778
26,903
-
$
37,546 $
10,778
5,673 17,350
23,023
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13. Long term debt
As of September 30, 2020 and December 31, 2019, FIBRAPL had long term debt comprised of loans from financial institutions denominated in U.S. dollars, as follows:
Citibank NA Credit facility (Unsecured)
Citibank (Unsecured) #2
Citibank (Unsecured) #3
Citibank (Unsecured) #4 Prudential Insurance Company and Metropolitan Life Insurance Co. (The Pru-Met Loan) 1st. Section (Secured) Prudential Insurance Company and Metropolitan Life Insurance Co. (The Pru-Met Loan) 2nd. Section (Secured)
Long term debt interest accrued Deferred financing cost
Less: Current portion of long term debt Total long term debt
Denomination
Maturity
date
Rate
USD
July 18, 2022
LIBOR + 250bps
USD
July 18, 2022
LIBOR + 245bps
USD
March 15, 2023
LIBOR+ 245bps
USD
February 6, 2024 LIBOR+ 235bps
USD
February 1, 2026
4.67%
USD
February 1, 2026
4.67%
Total
Total debt
September 30, 2020
thousands U. S. Dollars
thousands Mexican Pesos
5,000 $
111,799
150,000
3,353,970
225,000
5,030,955
290,000
6,484,342
53,500
1,196,249
53,500
777,000 1,514
(1,625) 776,889
1,514 775,375 $
1,196,249
17,373,564 33,873
(36,335) 17,371,102
33,873 17,337,229
December 31, 2019
thousands U. S. Dollars
thousands Mexican Pesos
- $
-
150,000
2,830,905
225,000
4,246,358
290,000
5,473,083
53,500
1,009,689
53,500
772,000 1,552
(2,527) 771,025
1,552 769,473 $
1,009,689
14,569,724 29,298
(47,694) 14,551,328
29,298 14,522,030
During the nine months ended September 30, 2020 and 2019, FIBRAPL paid interest on long term debt of $21,168 million U.S. dollars ($457,013 million Mexican Pesos) and $28,547 million U.S. dollars ($548,748 million Mexican Pesos) respectively, and principal of $115,000 million U.S. dollars ($2,656,976 million Mexican Pesos) and $151,000 million U.S. dollars ($2,901,852 million Mexican Pesos), respectively.
FIBRAPL has an unsecured $325.0 million U.S. dollars revolving credit facility (the "Credit Facility") with Citibank N.A. as the administrative agent; and $25.0 million U.S. dollars of the facility can be borrowed in Mexican pesos. FIBRAPL has an option to increase the Credit Facility by $150.0 million U.S. dollars. The Credit Facility can be used by FIBRAPL for acquisitions, working capital needs and general corporate purposes. The Credit Facility bears interest on borrowings outstanding at (i) LIBOR plus 250 basis points denominated in U. S. dollars and (ii) TIIE (Interbank Balance Interest Rate from its name in Spanish) plus 220 basis points denominated in Mexican pesos, subject to loan to value grid, and an unused facility fee of 60 basis points. This Credit Facility matures on July 18, 2022, and contains two separate oneyear extension options which may be extended at the borrower's option and with approval of the lender's Risk Committee.
On May 28, 2020, FIBRAPL took one option to extend one year of the maturity date. The financial commission regarding the extension amounted to $812.5 thousand U.S. dollars ($18.0 million Mexican Pesos). As of September 30, 2020, FIBRAPL has an outstanding balance of $5.0 million U.S. dollars ($111.8 million Mexican pesos) under the Credit Facility.
27
4
On February 6, 2019, FIBRA borrowed $290.0 million U.S. dollars ($5,620.0 million Mexican pesos) on a new senior unsecured term loan with Citibank ("Citibank (Unsecured) #4"), which matures on February 6, 2023, and carries an interest rate of LIBOR plus 235 basis points. The terms of the note contain a one-year extension option which may be extended at the borrower's option upon written notice to Administrative Agent. The borrowings were used to repay the unsecured term loan Citibank, N.A. ("Citibank (Unsecured) #1"), in the amount of $255.0 million U.S. dollars ($4,866.0 million Mexican pesos) with Citibank N.A. as the administrative agent. FIBRAPL recognized a loss due to the extinguishment of debt by $0.8 million U.S. dollars ($15.7 million Mexican pesos). The borrowings were used to pay down $35.0 million U.S. dollars ($667.9 million Mexican pesos) of the Credit Facility with Citibank N.A.
FIBRAPL has an unsecured term loan with Citibank ("Citibank (Unsecured) #3") of $225.0 million U.S. dollars ($5,030.9 million Mexican pesos), which matures on March 15, 2022, and carries an interest rate of LIBOR plus 245 basis points. The terms of the note contain one year extension option which may be extended at the borrower's option and with approval of the lender's Risk Committee. The borrowings were used to pay down the existing credit facility.
FIBRAPL has an unsecured term loan with Citibank ("Citibank (Unsecured) #2") of $150.0 million U.S. dollars ($3,353.9 million Mexican pesos), which matures on July 18, 2021, and carries an interest rate of LIBOR plus 245 basis points. The terms of the note contain two separate one-year extension options which may be extended at the borrower's option and with approval of the lender's Risk Committee. The borrowings were used to pay down the existing credit facility.
The loans described above are subject to certain affirmative covenants, including, among others, (i) reporting of financial information; and (ii) maintenance of corporate existence, the security interest in the properties subject to the loan and appropriate insurance for such properties. In addition, the loans are subject to certain negative covenants that restrict FIBRAPL's ability to, among other matters and subject to certain exceptions, incur additional indebtedness under or create additional liens on the properties subject to the loans, change its corporate structure, make certain restricted payments, enter into certain transactions with affiliates, amend certain material contracts, enter into derivative transactions for speculative purposes or form any new subsidiary.
The loans contain, among others, the following events of default: (i) non-payment; (ii) false representations; (iii) failure to comply with covenants; (iv) inability to generally pay debts as they become due; (v) any bankruptcy or insolvency event; (vi) disposition of the subject properties; or (vii) change of control of the subject properties.
As of September 30, 2020, FIBRAPL was in compliance with all of its covenants.
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4
14. Equity
As of September 30, 2020, total CBFIs outstanding were 849,185,514.
On April 3, 2020, FIBRAPL recorded a repurchase of $202.9 thousand U.S. dollars ($5.0 million Mexican pesos) of CBFIs.
On March 17, 2020, FIBRAPL recorded 200,000 CBFIs issued through the subscription rights offering. Qualified existing CBFI holders were granted a right to subscribe to the additional CBFIs. All 200,000 CBFIs were issued through subscriptions at a price of $41.50 Mexican Pesos. Proceeds from the subscription were $8,300 million Mexican Pesos. Issuance costs of $55.8 million Mexican Pesos were incurred for the issuance.
On December 11, 2019, FIBRAPL recorded 4,511,692 CBFIs issued based on the annual incentive fee approved in the ordinary holders meeting on July 2, 2019.
15. Related party information
The detail of transactions of FIBRAPL with its related parties is as follows:
a. Manager
Prologis Property Mexico, S. A. de C. V. (the "Manager"), in its capacity as the FIBRAPL Manager, is entitled to receive, according to a management agreement between FIBRAPL and the Manager (the "Management Agreement"), the following fees and commissions:
1. Asset Management Fee: annual fee equivalent to 0.75% of the current appraised value, calculated in accordance with the valuation policies approved by the Technical Committee under Section 14.1 of the Trust Agreement, based on annual appraisals, plus investment cost for assets that have not been appraised, plus the applicable VAT, paid quarterly. The asset management fee will be prorated with respect to any asset that has been owned less than a full calendar quarter.
2. Incentive Fee: annual fee equal to 10% of cumulative total CBFI holder returns in excess of an annual compound expected return of 9%, paid annually in CBFIs, must be approved at the ordinary holders meeting with each payment subject to a six-month lock-up, as established under the Management Agreement. The return measurement related to the incentive fee is based on a cumulative period. As of September 30, 2020, given the historical volatility and uncertainty of future CBFI performance, no incentive fee was generated to the Manager for the period of June 5, 2019 to June 4, 2020.
29
4
3. Development Fee: contingent fee equal to 4.0% of total project cost of capital improvements (including replacements and repairs to the properties managed by the Manager, including improvements by the lessor), excluding land or new property development payable upon completion of the project.
4. Property Management Fee: fee equal to 3.0% of the revenues generated by the properties, paid monthly.
5. Leasing Fee: fee equal to certain percentages of total rent under signed lease agreements as follows: (i) 5.0% in connection with years one through five of the respective lease agreements; (ii) 2.5% in connection with years six through ten of the respective lease agreements; and (iii) 1.25% in connection with years eleven and beyond of the respective lease agreements. For renewals of existing leases, percentages will be 2.5%, 1.25% and 0.62% for the periods mentioned in bullet points (i), (ii) and (iii), respectively. One half of each leasing fee is payable at signing or renewal and one half is payable at commencement of the applicable lease. The leasing fee will be paid in full to the Manager, unless a third-party listing broker provides the procuring or leasing, expansion or renewal service, in which case the Manager shall not be entitled to a leasing fee.
b. Due to Affiliates
As of September 30, 2020 and December 31, 2019, the outstanding balances due to related parties were as follows:
in thousands Mexican Pesos
Property management fees Leasing fee
September 30, 2020
$
23,857 $
-
$
23,857 $
December 31, 2019 9,363
39,798
49,161
30
4
c. Transactions with affiliates
Transactions with affiliated companies for the three and nine month periods ended September 30, 2020, and 2019, were as follows:
in thousands Mexican Pesos Dividends Asset management fee Property management fee Leasing commissions Development fee Maintenance costs Incentive Fee
For the three months ended September 30,
2020
2019
$
179,308 $
177,601 $
$
110,531 $
85,839 $
$
34,482 $
30,363 $
$
5,667 $
7,916 $
$
2,451 $
1,140 $
$
3,083 $
2,318 $
$
- $
- $
For the nine months ended September 30,
2020
2019
565,969 $
533,639
316,537 $
252,620
100,110 $
86,871
45,002 $
23,459
11,550 $
16,552
9,627 $
6,378
-
$
172,627*
*The transaction was executed with the Manager and 4,511,692 ($172.6 million Mexican pesos) in CBFIs issued on December 11, 2019.
16. Hedging activities
As of September 30, 2020, FIBRAPL has a liability of $130.7 million Mexican pesos related to interest rate swap contracts and an asset of $48.5 million Mexican pesos related to currency option contracts.
Interest Rate Swaps
As of September 30, 2020, FIBRAPL has three interest rate swap contracts with Bank of Nova Scotia and HSBC Bank USA. On July 11, 2019, FIBRAPL entered into two swap contracts to pay a fixed rate of interest of 1.7462% and receive a variable rate based on one month LIBOR. The swaps hedge the exposure to $240 million U.S. dollar of the variable interest payments on the $290 million U.S. dollar (each swap maintains a $120.0 million U.S. dollar notional amount) variable rate unsecured term loan with Citibank (Citibank (Unsecured) #4) maturing August 6, 2021. On April 15, 2020, FIBRAPL entered into a new swap contract with Bank of Nova Scotia for a notional amount of $50.0 million U.S. dollar with a fixed rate of interest of 0.325% to cover the remaining exposure of the variable interest rate payment on the $290.0 million U.S. dollar term loan with Citibank Citibank (Unsecured) #4) maturing April 6, 2021. See note 13.
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4
As of September 30, 2020, FIBRAPL has two interest rate swap contracts with Bank of Nova Scotia and HSBC Bank USA, whereby, FIBRAPL pays a fixed rate of interest of 2.486% and receives a variable rate based on one month LIBOR. The swaps mature on March 15, 2021 and they hedge the exposure to the variable interest rate payments on the $225.0 million U.S. dollar (each swap maintains a $112.5 million U.S. dollar notional amount) variable rate unsecured term loan with Citibank (Citibank (Unsecured) #3). See note 13.
As of September 30, 2020, FIBRAPL has two interest rate swap contracts with Bank of Nova Scotia and HSBC Bank USA, whereby, FIBRAPL pays a fixed rate of interest of 1.752% and receives a variable rate based on one month LIBOR. The swaps mature on October 18, 2020 and they hedge the exposure to the variable interest rate payments on the $150.0 million U.S. dollar (each swap maintains a $75.0 million U.S. dollar notional amount) variable rate unsecured term loan with Citibank (Citibank (Unsecured) #2). See note 13.
The interest rate swaps meet the criteria for hedge accounting and therefore have been designated as cash flow hedging instruments. Accordingly, the fair value of the swaps as of September 30, 2020, of ($130.7) million Mexican pesos has been recognized through other comprehensive income as unrealized loss on interest rate swaps.
Below is a summary of the terms and fair value of the interest rate swap agreements. The loans and interest rate swaps have the same critical terms.
in thousands Mexican Pesos Counterparty
Effective date
Maturity date
Bank of Nova Scotia HSBC Bank USA Bank of Nova Scotia HSBC Bank USA Bank of Nova Scotia HSBC Bank USA Bank of Nova Scotia
October 18, 2017 October 18, 2017
April 16, 2018 April 16, 2018 June 23, 2016 June 23, 2016 April 15, 2020
October 18, 2020 October 18, 2020
March 15, 2021 March 15, 2021 August 6, 2021 August 6, 2021
April 6, 2021
* (amount in million U.S. dollars)
Notional amount*
September 30, 2020
75.0 $ 75.0 112.5 112.5 120.0 120.0 50.0
$
(1,342) $ (1,342) (26,952) (26,952) (36,545) (36,545)
(983)
(130,661) $
December 31, 2019
(1,382) (1,382) (22,953) (22,952) (6,507) (6,507)
-
(61,683)
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4
In order to determine fair value, FIBRAPL calculates both current and potential future exposure, reflecting the bilateral credit risk present in many derivatives. The approach incorporates all of the relevant factors that can impact fair value calculations, including interest rate and foreign exchange forward curves and the market expectations of volatility around these curves, credit enhancements between counterparties (including collateral posting, mandatory cash settlements, and mutual puts), the term structure of credit spreads and the conditional cumulative probability of default for both counterparties.
Currency Option Contracts
On July 31, 2020 FIBRAPL entered into four foreign currency rate options with Bank of Nova Scotia of $3.4 million U.S. dollars ($75.0 million Mexican pesos) each, to fix an option rate over its quarterly Mexican peso transactions.
On December 20, 2019, FIBRAPL entered into a foreign currency rate option with HSBC Bank USA, National Association of $5.0 million U.S. dollars ($100.0 million Mexican pesos) to fix an option rate over its quarterly Mexican peso transactions.
Start date
July 1, 2020 October 1, 2020 January 4, 2021
April 1, 2021 July 1, 2021 October 1, 2021
End date Assets September 30, 2020 December 31, 2020 March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021
Settlement date
Notional amount in thousands of
Forward rate Fair Value Mexican pesos
October 2, 2020 January 5, 2021
April 5, 2021 July 2, 2021 October 4, 2021 January 4, 2022
19.5000 USD-MXN 19.5000 USD-MXN 22.0000 USD-MXN 22.0000 USD-MXN 22.0000 USD-MXN 22.0000 USD-MXN
Total
Level 2 $ Level 2 $ Level 2 $ Level 2 $ Level 2 $ Level 2 $
100,000 $ 100,000 $
75,000 $ 75,000 $ 75,000 $ 75,000 $
$
Fair value as of September 30, 2020
Thousands of Mexican pesos
13,394 $ 14,131 $
3,689 $ 4,785 $ 5,790 $ 6,752 $ 48,541 $
Thousands of U.S. dollars
599 632 165 214 259 302 2,171
FIBRAPL's exchange rate options do not qualify for hedge accounting. Therefore, the change in fair value related to the active contracts is recognized in the results of operations for the year within unrealized loss on exchange hedge instruments.
As of September 30, 2020, the fair value of the currency rate options was $48.5 million Mexican pesos.
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17. Commitments and contingencies
FIBRAPL had no significant commitments or contingencies other than those described in these notes as of September 30, 2020.
18. Financial statements approval
On October 16, 2020, the issuance of these interim condensed financial statements was authorized by Jorge Roberto Girault Facha, Finance SVP.
* * * * * * * * * *
34
Park GTroalnudcea Building #2, Mexico City, Mexico Altos #5, Guadalajara, Mexico
THIRD QUARTER 2020
FIBRA Prologis Supplemental Financial Information
Unaudited
U.S. Dollar Presentation
FIBRA Prologis' functional currency is the U.S. Dollar; therefore, FIBRA Prologis' management has elected to present actual comparative U.S. Dollars that represent the actual amounts included in our U.S. Dollar financial statements within this supplemental package, based on the following policies:
A. Transactions in currencies other than U.S. Dollars (Mexican Pesos) are recognized at the rates of exchange prevailing at the date of the transaction.
B. Equity items are valued at historical exchange rates.
C. At the end of each reporting period, monetary items denominated in Mexican Pesos are retranslated into U.S. Dollars at the rates prevailing at that date.
D. Non-monetary items carried at fair value that are denominated in Mexican Pesos are retranslated at the rates prevailing at the date when the fair value was determined.
E. Exchange differences on monetary items are recognized in profit or loss in the period in which they occur.
3Q 2020 Supplemental
ColoOnitaalyInIndduussttrriaiallCCeenntteerr##11R, eTyijnuoansaa,, MMeexxiiccoo
Copyright © 2020 FIBRA Prologis
1
Table of Contents
Highlights
3
Company Profile
5
Company Performance
6
Operating Performance
7
2020 Guidance
Financial Information
8
Interim Condensed Statements of Financial Position
9
Interim Condensed Statements of Comprehensive Income
10 Reconciliations of Net Income to FFO, AMEFIBRA FFO, AFFO, and EBITDA
Operation Overview
11 Operating Metrics - Owned and Managed 13 Investment Properties 14 Customer Information
Capital Deployment
15 Acquisitions
Capitalization
16 Debt Summary and Metrics
Sponsor
17 Prologis Unmatched Global Platform 18 Prologis Global Customer Relationships 19 Identified External Growth Pipeline
Notes and Definitions
20
Notes and Definitions (A)
A. Terms used throughout document are defined in the Notes and Definitions
3Q 2020 Supplemental
ApoAdpaocdaacBauBiludiilndigng6,#M1, oMnotnetrerrereyy, ,MMeexxiicco
Copyright © 2020 FIBRA Prologis
2
Highlights
Company Profile
3Q 2020 Supplemental
FIBRA Prologis is a leading owner and operator of Class-A industrial real estate in Mexico. As of September 30, 2020, FIBRA Prologis was comprised of 201(A) logistics and manufacturing facilities in six industrial markets in Mexico totaling 39.0 million square feet (3.6 million square meters) of GLA.
MARKET PRESENCE
96.4%(B) Occupancy
TOTAL MARKETS
% Net
GLA
Effective Rent
39.0 MSF 100%
Tijuana GLA 4.2 MSF 100.0% Occupancy
MANUFACTURING-DRIVEN MARKETS Ciudad Juarez, Reynosa, Tijuana
% Net
GLA
Effective Rent Occupancy
12.2 MSF 30.4%
98.2%
CONSUMPTION-DRIVEN MARKETS Guadalajara, Mexico City, Monterrey
% Net
GLA
Effective Rent Occupancy
26.8 MSF 69.6%
95.6%
Ciudad Juarez GLA 3.3 MSF 94.6% Occupancy
Guadalajara GLA 5.9 MSF 95.1% Occupancy
Reynosa GLA 4.7 MSF 99.0% Occupancy Monterrey GLA 4.4 MSF 92.7% Occupancy
Mexico City GLA 16.5 MSF 96.5% Occupancy
A. Includes one VAA property. B. Operating portfolio only.
Copyright © 2020 FIBRA Prologis
3
Highlights
Company Profile
FFO, AS MODIFIED BY FIBRA PROLOGIS
(in millions of US$)
$120
$106
$107
$107
$80
$40
$2017
2018
2019
$102 YTD 2020
3Q 2020 Supplemental
AFFO
(in millions of US$)
$90
$83
$83
$80
$75
$60 2017
2018
2019
YTD 2020
DISTRIBUTIONS
(in millions of US$)
$90
$81
$60
$30
$2017
$79 2018
$80 $61
2019
YTD 2020
ASSET MANAGEMENT FEES AND INCENTIVE FEE
(in millions of US$)
$30
$27
$27
$24
$20 $16
$17
$18
$14
$10
$8 $-
2017
$10 2018
Incentive fee paid in CBFIs
$9
2019
YTD 2020
Asset management fees
Copyright © 2020 FIBRA Prologis
4
Highlights
Company Performance
Included below are quarterly comparative highlights in Mexican pesos and U.S. Dollars as a summary of our company performance. in thousands, except per CBFI amounts
3Q 2020 Supplemental
Revenues Gross Profit Net Income (loss) AMEFIBRA FFO FFO, as modified by FIBRA Prologis AFFO Adjusted EBITDA
Net earnings (loss) per CBFI AMEFIBRA FFO per CBFI FFO, as modified by FIBRA Prologis per CBFI
September 30, 2020
Ps.
US$ (A)
1,236,406 1,089,151 1,473,968
835,180 823,584 630,292 1,048,525 1.7357 0.9835 0.9699
55,665 48,804 66,150 37,344 36,820 28,101 47,002 0.0779 0.0440 0.0434
June 30, 2020
Ps.
US$ (A)
1,223,139 1,065,795 (375,034)
789,354 775,408 562,469 975,796 (0.4416) 0.9295 0.9131
51,997 44,935 (16,080) 33,159 32,557 23,440 41,027 (0.0189) 0.0390 0.0383
March 31, 2020
Ps.
US$ (A)
978,626 837,013 (329,356) 622,353 610,140 403,369 813,159 (0.4833) 0.9133 0.8954
51,201 44,597 (15,015) 33,266 32,674 23,279 42,739 (0.0220) 0.0488 0.0479
December 31, 2019
Ps.
US$ (A)
For the three months ended
September 30, 2019
Ps.
US$ (A)
950,553 831,042 540,895 496,282 484,622 285,764 703,883 0.8332 0.7645 0.7465
48,914 42,690 27,172 24,862 24,255 13,977 36,101 0.0419 0.0383 0.0374
943,481 791,108 460,107 514,276 502,518 428,785 697,815 0.7087 0.7922 0.7741
48,551 40,818 23,836 26,628 26,021 22,232 36,063 0.0367 0.0410 0.0401
A. Amounts presented in U.S. Dollars, which is FIBRA Prologis´ functional currency, represent the actual amounts from our U.S. Dollar financial statements.
B. For a full definition of AMEFIBRA FFO, please refer to page 22 in the Notes and Definitions section.
Copyright © 2020 FIBRA Prologis
5
Highlights
Operating Performance
PERIOD END OCCUPANCY OPERATING PORTFOLIO
100% 95%
96.8%
97.6%
96.8%
95.5%
96.4%
90% Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
3Q 2020 Supplemental
WEIGHTED AVERAGE CUSTOMER RETENTION
100%
95.4%
75%
91.0%
94.9%
82.6%
98.3%
50% Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
SAME STORE CASH NOI CHANGE OVER PRIOR YEAR (A)
NET EFFECTIVE RENT CHANGE
5% 0% -5% -10% -15%
2.4% Q3 2019
2.5% Q4 2019
-0.2% Q1 2020
-11.4% Q2 2020
-6.0% Q3 2020
(A) Same store cash NOI change has been calculated based on actual U.S. Dollars
20%
16%
13.9%
12%
13.2%
16.3%
8%
6.6%
4%
0%
-4%
-1.4%
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Quartely Actual Trailing 4Q Average
Q3 2019 -1.4% 10.5%
Q4 2019 13.9% 11.0%
Q1 2020 6.6% 10.4%
Q2 2020 13.2% 10.6%
Q3 2020 16.3% 12.1%
Copyright © 2020 FIBRA Prologis
6
Highlights
2020 Guidance
US Dollars in thousands except per CBFI amounts
Financial Peformance Full year FFO per CBFI (A) Operations Year-end occupancy Same store cash NOI change Annual capex as a percentage of NOI Capital Deployment Building Acquisitions Other Assumptions G&A (Asset management and professional fees) (B) Full year 2020 distribution per CBFI (US Dollars)
3Q 2020 Supplemental
Low
High
$
0.1550 $
0.1650
95.0% -5.0% 13.0%
96.0% -3.0% 14.0%
$
350,000 $
400,000
$
19,000 $
21,000
$
0.0970 $
0.0970
(A) AMEFIBRA FFO guidance excludes the impact of peso movements as U.S. Dollar is the functional currency of FIBRA Prologis. (B) G&A excludes incentive fee
Copyright © 2020 FIBRA Prologis
7
Financial Information
Interim Condensed Statements of Financial Position
in thousands Assets:
Current assets: Cash Trade receivables (A) Other receivables Prepaid expenses Exchange rate options
Non-current assets: Investment properties(B) Other investment properties Exchange rate options Other assets
Total assets
Liabilities and Equity: Current liabilities: Trade payables Value added tax payables Due to affiliates Current portion of long term debt Current portion of hedge instruments
Non-current liabilities: Long term debt Security deposits Hedge Instruments
Total liabilities
Equity: CBFI holders capital Other equity accounts and retained earnings
Total equity Total liabilities and equity
Ps.
460,391 78,263 8,707 37,720 41,789 626,870
60,041,895 37,546 6,752 33,452
60,119,645 60,746,515
85,516 17,411 23,857 33,873 130,661 291,318
17,337,229 366,959 -
17,704,188
17,995,506
22,369,174 20,381,835 42,751,009 60,746,515
September 30, 2020 US$
20,590 3,499
389 1,686 1,869 28,033
2,685,261 1,679 302 1,495
2,688,737 2,716,770
3,825 779
1,067 1,514 5,844 13,029
775,374 16,412
791,786
804,815
1,401,608 510,347
1,911,955 2,716,770
(A) See calculation of Trade Receivables in Notes and Definitions. (B) As of September 30, 2020, the Gross Book Value under USGAAP of FIBRAPL is 2,488,104 thousands of U.S. dollars.
3Q 2020 Supplemental
Ps.
182,792 56,870 10,301 3,295 7,338 260,596
44,611,642 10,778 43,386
44,665,806 44,926,402
69,159 356
49,161 29,298
147,974
14,522,030 280,342 61,683
14,864,055
15,012,029
14,124,954 15,789,419 29,914,373 44,926,402
December 31, 2019 US$
9,687 3,012
546 174 389 13,808
2,363,819 571 -
2,298 2,366,688 2,380,496
3,666 19
2,605 1,552
7,842
769,473 14,854 3,268 787,595
795,437
1,025,477 559,582
1,585,059 2,380,496
Copyright © 2020 FIBRA Prologis
8
Financial Information
Interim Condensed Statements of Comprehensive Income
in thousands, except per CBFI amounts
Revenues: Lease rental income Rental recoveries Other property income
Cost and expenses: Property operating expenses: Operating and maintenance Utilities Property management fees Real estate taxes Non-recoverable operating
Gross profit
Other expenses (income): (Gain) loss on valuation of investment properties Asset management fees Incentive fee Professional fees Interest expense Amortization of deferred financing cost Net loss on early extinguishment of debt Unused credit facility fee Unrealized loss (gain) on exchange rate hedge instruments Realized (gain) loss on exchange rate hedge instruments Net Unrealized exchange loss (gain) Net Realized exchange (gain) loss Tax recovered Other general and administrative expenses
Net income
Other comprehensive income: Items that are not reclassified subsequently to profit or loss: Translation loss (gain) from functional currency to reporting currency Items that are or may be reclassified subsequently to profit or loss: Unrealized (gain) loss on interest rate swaps
Total comprehensive income (loss) for the period
Earnings per CBFI (A)
Ps.
1,099,178 118,956 18,272
1,236,406
73,327 5,653 34,482 19,841 13,952 147,255 1,089,151
(711,196) 110,532
15,344 202,521 11,596
10,824 22,776 (10,200) 38,036 (79,547)
4,497 (384,817)
1,473,968
1,389,216
(64,732) 1,324,484
149,484
1.7357
2020 US$
49,409 5,452
804 55,665
For the three months ended September 30,
2019
Ps.
US$
838,379 92,580 12,522 943,481
43,150 4,754
647 48,551
3,287 257
1,555 1,057
705 6,861
48,804
(32,177) 5,002 695 9,177 524 481 1,019 (457) 1,828 (3,648) 210
(17,346)
66,150
72,798 15,222 30,363 18,112 15,878 152,373
791,108
34,935 85,839
12,751 173,701 11,758
9,838 1,135
221 6,341 (8,036)
2,518 331,001
460,107
3,743 786
1,543 923 738
7,733
40,818 #
1,799 4,376
650 8,932 607
503 58 11 328 (413)
131 16,982
23,836
15,305
(2,895) 12,410 53,740 0.0779
(761,200)
24,408 (736,792) 1,196,899
0.7087
2,291
1,240 3,531 20,305 0.0367
Ps.
3,044,109 349,518 44,544
3,438,171
196,464 23,990 100,110 58,057 67,591 446,212 2,991,959
1,369,059 316,537 40,843 600,380 37,755 30,676 (11,866) (111,124) 82,361 (99,651) (40,463) 7,874
2,222,381
769,578
(5,102,129)
69,656 (5,032,473) 5,802,051
0.9696
3Q 2020 Supplemental
2020 US$
140,561 16,207 2,095 158,863
For the nine months ended September 30,
2019
Ps.
US$
2,541,147 280,770 52,295
2,874,212
131,658 14,537 2,720 148,915
8,997 1,095 4,453 3,093 2,889 20,527
138,336
63,619 14,386
1,879 27,501 1,718
1,319 (349) (4,559) 3,726 (4,509) (1,821)
371 103,281
35,055
179,991 39,313 86,871 53,489 44,422 404,086
2,470,126
(224,228) 252,620 172,627 27,955 518,295 41,405 18,638 26,373 12,138
640 3,714 (8,302)
9,953 851,828
1,618,298
9,323 2,041 4,532 2,724 2,299 20,919
127,996
(11,870) 13,196 8,736 1,451 26,916 2,162
969 1,372
628 33 191 (427)
519 43,876
84,120
38,653
2,575 41,228 (6,173) 0.0442
73,440
152,773 226,213 1,392,085 2.5026
(546)
7,869 7,323 76,797 0.1301
(A) See calculation of Earnings per CBFI in Notes and Definitions.
Copyright © 2020 FIBRA Prologis
9
Financial Information
Reconciliations of Net Income to FFO, AMEFIBRA FFO, AFFO and EBITDA
in thousands
Reconciliation of Net Income to FFO
Net Income
(Gain) loss on valuation of investment properties Unrealized loss (gain) on exchange rate hedge instruments Net Unrealized exchange loss (gain) Net loss on early extinguishment of debt Amortization of deferred financing costs Incentive fee paid in CBFIs AMEFIBRA FFO
Amortization of deferred financing costs FFO , as modified by FIBRA Prologis
Adjustments to arrive at Adjusted FFO ("AFFO") Straight-lined rents Property improvements Tenant improvements Leasing commissions Amortization of deferred financing costs
AFFO
Ps.
1,473,968
(711,196) 22,776 38,036 11,596 835,180
(11,596) 823,584
(73,430) (28,582) (70,224) (32,652) 11,596 630,292
2020 US$
66,150
(32,177) 1,019 1,828 524 37,344
(524) 36,820
(3,284) (1,292) (3,196) (1,471)
524 28,101
For the three months ended September 30,
2019
Ps.
US$
460,107
34,935 1,135 6,341
11,758
514,276
(11,758) 502,518
23,836
1,799 58 328 607 -
26,628
(607) 26,021
8,888 (40,019) (34,456) (19,904) 11,758
428,785
461 (2,068) (1,775) (1,014)
607
22,232
in thousands
Reconciliation of Net Income to Adjusted EBITDA
Net income (Gain) loss on valuation of investment properties Interest expense Amortization of deferred financing costs Net loss on early extinguishment of debt Unused credit facility fee Unrealized loss (gain) on exchange rate hedge instruments Net Unrealized exchange loss (gain) Pro forma adjustments for dispositions Incentive fee paid in CBFIs Tax recovered
Adjusted EBITDA
Ps.
1,473,968 (711,196) 202,521
11,596 -
10,824 22,776 38,036
-
1,048,525
2020 US$
66,150 (32,177)
9,177 524 481
1,019 1,828
-
47,002
For the three months ended September 30,
2019
Ps.
US$
460,107 34,935 173,701 11,758
9,838 1,135 6,341
-
697,815
23,836 1,799 8,932
607 -
503 58 328
-
36,063
Ps.
769,578
1,369,059 (11,866) 82,361 37,755 -
2,246,887
(37,755) 2,209,132
(207,561) (108,535) (218,403) (116,258)
37,755 1,596,130
Ps.
769,578 1,369,059
600,380 37,755
30,676 (11,866) 82,361
(40,463) 2,837,480
3Q 2020 Supplemental
2020 US$
35,055
63,619 (349) 3,726 1,718 -
103,769
(1,718) 102,051
(8,943) (4,773) (9,952) (5,281) 1,718 74,820
2020 US$
35,055 63,619 27,501 1,718
1,319 (349) 3,726
(1,821) 130,768
For the nine months ended September 30,
2019
Ps.
US$
1,618,298
(224,228) 12,138 3,714 18,638 41,405 172,627
1,642,592
(41,405) 1,601,187
84,120
(11,870) 628 191 969
2,162 8,736 84,936
(2,162) 82,774
(13,712) (130,466) (87,540) (71,004)
41,405
1,339,870
(784) (6,801) (4,550) (3,683) 2,162
69,117
For the nine months ended September 30,
2019
Ps.
US$
1,618,298 (224,228) 518,295
41,405 18,638 26,373 12,138 3,714 (28,315) 172,627
-
2,158,945
84,120 (11,870) 26,916
2,162 969
1,372 628 191
(1,464) 8,736
-
111,760
A. For a full definition of AMEFIBRA FFO, please refer to page 22 in the Notes and Definitions section.
Copyright © 2020 FIBRA Prologis
10
Operations Overview
Operating Metrics Owned and Managed
PERIOD ENDING OCCUPANCY - OPERATING PORTFOLIO
100%
97.7
96.0 95%
96.1
95.6
94.3
90% Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Consumption-Driven Markets
LEASING ACTIVITY square feet in thousands Square feet of leases commenced:
Renewals New leases Total square feet of leases commenced Average term of leases commenced (months) Operating Portfolio: Trailing four quarters - leases commenced Trailing four quarters - % of average portfolio
Rent change - cash
Rent change - net effective
3Q 2020 Supplemental
98.4
98.1 98.2 98.2
97.5
97.6
96.8
96.8
96.4
95.5
Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Manufacturing-Driven Markets
Q3 2019
653 126 779
37
6,182 17.6%
-0.7%
-1.4%
Q4 2019
2,109 630
2,739 75
7,118 20.3%
-2.4%
13.9%
Q3 19
Q4 19 Q1 20 Q2 20 Total Occupancy
Q3 20
Q1 2020
2,236 400
2,636 60
8,161 23.4%
0.3%
6.6%
Q2 2020
4,317 737
5,054 79
11,208 32.1%
1.2%
13.2%
Q3 2020
3,424 336
3,760 61
14,189 38.8%
7.5%
16.3%
Copyright © 2020 FIBRA Prologis
11
Operations Overview
Operating Metrics Owned and Managed
3Q 2020 Supplemental
CAPITAL EXPENDITURES INCURRED (A) IN THOUSANDS
in thousands
Ps.
Property improvements
40,019
Tenant improvements Leasing commissions Total turnover costs
Total capital expenditures
Trailing four quarters - % of gross NOI
34,456 19,904 54,360
94,379
Q3 2019 US$
2,068
1,775 1,014 2,789 4,857 13.7%
Ps. 70,647
48,998 71,087 120,085 190,732
Q4 2019 US$
3,644
2,546 3,668 6,214 9,858 14.6%
Ps. 56,859
61,118 33,081 94,199 151,058
Q1 2020 US$
2,498
3,068 1,624 4,692 7,190 15.6%
SAME STORE INFORMATION
Square feet of population Average occupancy Percentage change:
Rental income- cash Rental expenses- cash NOI - Cash NOI - net effective Average occupancy
Q3 2019 33,030 96.3%
4.2% 11.8%
2.4% 1.5% 0.4%
Q4 2019 33,024 96.6%
1.7% (1.5%)
2.5% 3.3% 0.1%
Q1 2020 34,508 96.7%
1.4% 9.7% (0.2%) 4.5% (5.0%)
Q2 2020 34,508 94.3%
(10.4%) (5.5%)
(11.4%) (6.0%) (5.7%)
Q3 2020 34,508 96.4%
(9.1%) (22.0%)
(6.0%) 2.4% 0.1%
Ps. 23,094
87,061 50,525 137,586 160,680
Q2 2020 US$ 983
3,688 2,186 5,874 6,857 17.0%
Ps. 28,582
70,224 32,652 102,876 131,458
Q3 2020 US$
1,292
3,196 1,471 4,667 5,959 16.9%
PROPERTY IMPROVEMENTS PER SQUARE FOOT (USD)
ESTIMATED TURNOVER COSTS ON LEASES COMMENCED (A)
$0.12 $0.10 $0.08 $0.06 $0.04 $0.02
$-
$0.06 Q3 2019
$0.10 Q4 2019
$0.09 Q1 2020
$0.03 Q2 2020
$0.03 Q3 2020
Quarterly total Trailing four quarter average
Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 $ 0.06 $ 0.10 $ 0.09 $ 0.03 $ 0.03 $ 0.07 $ 0.07 $ 0.08 $ 0.07 $ 0.06
$3.00 $2.50 $2.00 $1.50 $1.00 $0.50
$-
$1.95 Q3 2019
$2.33 Q4 2019
12%
10%
8%
6%
4%
$1.98
$1.58
$1.33
2%
0%
Q1 2020 Q2 2020 Q3 2020
USD per square foot As a % of lease value
Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020
$ 1.95 $ 2.33 $ 1.98 $ 1.58 $ 1.33
11.8%
6.7%
6.7%
4.3%
4.6%
A. The U.S. Dollar amount has been translated at the date of the transaction based on the exchange rate then in effect. Incurred turnover costs do not necessarily coincide with leases that commenced during the quarter.
Copyright © 2020 FIBRA Prologis
12
Operations Overview
Investment Properties
3Q 2020 Supplemental
square feet and currency in thousands
Consumption-Driven Markets Mexico City Guadalajara Monterrey
Total Consumption-Driven Markets
# of Building
61 26 22 109
Manufacturing-Driven Markets
Reynosa
30
Tijuana
33
Ciudad Juarez
28
Total Manufacturing-Driven Markets
91
Total operating portfolio
200
VAA Mexico City
1
Total operating properties
201
Intermodal facility (A) Excess land (B) Other investment properties (C)
Total investment properties
Square Feet
Total
% of Total
Occupied %
16,464
42.2
96.5
5,937
15.2
95.1
4,419
11.3
92.7
26,820
68.7
95.6
4,712 4,208 3,235 12,155
38,975
36
39,011
12.1 10.8 8.3 31.2
99.9
0.1
100.0
99.0 100.0 94.6 98.2
96.4
0.1
96.3
39,011
100.0
Leased %
96.7 95.2 92.7 95.7
Third Quarter NOI
Ps.
US$
Annualized
Ps.
US$
473,732 147,194 121,005 741,931
19,398 6,027 4,955 30,380
2,140,261 650,961 487,309
3,278,531
95,719 29,113 21,794 146,626
99.0 100.0 94.6 98.2
141,502 112,679 86,020 340,201
96.5 1,082,132
0.1
96.4 1,082,132
7,019
5,794 4,614 3,522 13,930
571,986 512,218 342,686 1,426,890
44,310 4,705,421
25,581 22,908 15,326 63,815
210,441
44,310 4,705,421 287
210,441
1,089,151
44,597
% of Total
45.4 13.8 10.4 69.6
12.2 10.9 7.3 30.4
100
100
Net Effective Rent
Per Sq Ft
Ps.
US$
Investment Properties Value
Total
% of Total
Ps.
US$
135
6.02 28,354,928 1,268,121
47.2
115
5.16 8,102,074
362,350
13.5
119
5.32 6,359,350
284,410
10.6
128
5.72 42,816,351 1,914,881
71.3
123
5.48 6,079,630
271,900
10.1
122
5.44 6,356,891
284,300
10.6
112
5.01 4,206,996
188,150
7.0
120
5.35 16,643,517 744,350
27.7
125
5.60 59,459,868 2,659,231
99.0
78,259
3,500
0.1
125
5.60 59,538,128 2,662,731
99.1
371,173 132,594 37,546
16,600 5,930 1,679
60,079,441 2,686,940
0.6 0.2 0.1
100.0
A. 100% occupied as of September 30, 2020. B. Fibra Prologis has 20.75 acres of land in Monterrey with an estimated build out of 305,948 square feet as of September 30, 2020. C. Office property located in Mexico City market with an area of 23,023 square feet.
Copyright © 2020 FIBRA Prologis
13
Operations Overview
Customer Information
square feet in thousands
Top 10 Customers as % of Net Effective Rent
% of Net
Effective Rent
1 Amazon
4.0%
2 Mercado Libre
3.7%
3 Geodis
3.7%
4 IBM de México, S. de R.L
2.9%
5 DHL
2.2%
6 LG
2.0%
7 Kuehne + Nagel
1.5%
8 Ryder System
1.4%
9 CEVA Logistics
1.3%
10 Uline
1.2%
Top 10 Customers
23.9%
Total Square Feet 1,371 1,053 1,225 1,222 827 770 574 510 453 501
8,506
square feet and currency in thousands Lease Expirations - Operating Portfolio
Year
2020 2021 2022 2023 2024 Month to month Thereafter
Lease Currency - Operating Portfolio
Leases denominated in Ps. Leases denominated in US$
Total
Occupied Sq Ft
679 4,301 5,977 5,298 3,004
82 18,227
37,568
Ps. 80,530 526,504 728,711 623,205 362,026
7,954 2,376,478
4,705,408
Total US$ 3,602 23,547 32,590 27,872 16,191 356 106,283
210,441
Annualized Net Effective Rent USD 76,178
134,263
210,441
% of Total
2% 11% 15% 13%
8% 0% 51%
100%
% of Total 36.2 63.8 100
3Q 2020 Supplemental
Ps. 118.66 122.42 121.91 117.64 120.53
97.11 130.37
125.3
Per Sq Ft US$ 5.31 5.47 5.45 5.26 5.39 4.34 5.83
5.60
Net Effective Rent
% Currency
% Ps.
% US$
28%
72%
49%
51%
51%
49%
27%
73%
19%
81%
0%
100%
34%
66%
36%
64%
Occupied Sq Ft 13,374 24,194
37,568
% of Total 35.6 64.4
100
USE OF SPACE BY CUSTOMER INDUSTRY % of Portfolio NER
25.0% 21%
20.0%
15.0%
15%
16%
10.0%
10%
9%
7%
8%
5.0%
3%
4%
0.0%
Multicustomer IT & Electronics Auto & Parts 3PL
Packaging Paper
Healthcare
Industrial
Retailer
Apparel Home Goods
Distribution, Retail and B2B - 56.3%
Manufacturing - 28.9%
E-Commerce & Transport - 14.8%
A. Include food, beverage & consumer goods.
CUSTOMER TYPE % of Portfolio NER
24%
7% 15%
Goods (A)
24% 37%
Logistic Services Manufacturing E- Commerce Retail
Copyright © 2020 FIBRA Prologis
14
Capital Deployment
Acquisitions
square feet and currency in thousands
BUILDING ACQUISITIONS Consumption-Driven Markets
Mexico City Guadalajara Monterrey Total Consumption-Driven Markets
Manufacturing-Driven Markets Reynosa Tijuana Ciudad Juarez Total Manufacturing-Driven Markets
Total Building Acquisitions Weighted average stabilized cap rate
3Q 2020 Supplemental
Sq Ft
-
-
Q3 2020
Acquisition Price (A)
Ps.
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sq Ft
4,082 48
4,130
4,130
FY 2020
Acquisition Price (A)
Ps.
US$
8,780,325 44,210
8,824,534
-
8,824,534
6.7%
356,340 2,060
358,400
-
358,400
A. The U.S. Dollar amount has been translated at the date of the transaction based on the exchange rate in the sales agreement. B. Office property located in Mexico City market with an area of 23,023 square feet.
Copyright © 2020 FIBRA Prologis
15
Capitalization
Debt Summary and Metrics
currency in millions Maturity
2020 2021 2022 2023 2024 Thereafter
Subtotal- debt par value Interest payable and deferred financing cost
Total debt
Weighted average cash interest rate (A) Weighted average effective interest rate (B) Weighted average remaining maturity in years
currency in millions Liquidity Aggregate lender commitments Less:
Borrowings outstanding Outstanding letters of credit Current availability Unrestricted cash Total liquidity
Debt Metrics (C) Debt, less cash and VAT, as % of investment properties Fixed charge coverage ratio Debt to Adjusted EBITDA ratio
Credit Facility
Ps.
US$
-
-
-
-
112
5
-
-
-
-
-
-
112
5
-
-
112
5
2.7% 2.7% 1.8
Ps. -
3,354 5,031 6,484
14,869
-
14,869
Unsecured Senior US$ 150 225 290 665 -
665
4.3% 4.3% 2.7
Ps.
US$
7,267
325
-
-
112
5
-
-
7,155
320
460
21
7,615
341
Third Quarter
28.2% 5.12x 4.02x
2020 Second Quarter
29.0% 4.41x 4.68x
3Q 2020 Supplemental
Secured
Mortgage Debt
Ps.
US$
-
-
-
-
-
-
-
-
-
-
2,392
107
2,392
107
-
-
2,392
107
4.7% 4.7% 5.3
Ps. -
3,466 5,031 6,484 2,392 17,373
-
17,373
Total US$ 155 225 290 107 777 -
Wtd Avg. Cash Interest Rate (A)
4.2% 4.9% 3.8% 4.6%
777
4.3%
4.3% 4.4% 3.1
Wtd Avg. Effective Interest Rate (B)
4.1% 5.0% 3.9% 4.7%
FIXED VS. FLOATING DEBT (D)
Floating Debt 7%
4.4%
Fixed 93%
SECURED VS. UNSECURED DEBT
Secured 14%
Unsecured 86%
ENCUMBERED VS. UNENCUMBERED ASSETS POOL (E)
Encumbered 9%
A. Interest rates are based on the cash rates associated with the respective weighted average debt amounts outstanding. B. Interest rate is based on the effective rate, which includes the amortization of related premiums (discounts) and finance costs.
The net premiums (discounts) and finance costs associated with the respective debt were included in the maturities by year. C. These calculations are based on actual U.S. Dollars as described in the Notes and Definitions section and are not calculated in
accordance with the applicable regulatory rules. D. Includes the interest rate swap contract. E. Based on fair market value as of September 30, 2020.
Unencumbered 91%
Copyright © 2020 FIBRA Prologis
16
Sponsor
Prologis Unmatched Global Platform
3Q 2020 Supplemental
Prologis, Inc., is the global leader in logistics real estate with a focus on high-barrier, high-growth markets. As of September 30, 2020, the company owned or had investments in, on a wholly owned basis or through co-investment ventures, properties and development projects expected to total approximately 976 million square feet (91 million square meters) in 19 countries. Prologis leases modern logistics facilities to a diverse base of approximately 5,500 customers principally across two major categories: business-to-business and retail/online fulfillment.
4,679
Buildings
U.S. 611M SF 81% of NOI*(A)
Other Americas 64M SF 5% of NOI*(A)
976M
Square Feet
~5,500 Customers
Europe 204M SF 11% of NOI*(A)
Asia 97M SF 3% of NOI*(A)
· For a definition of Prologis' NOI please refer to the Supplemental Financial Report available at the Investor Relations section of www.prologis.com.
A. NOI calculation based on Prologis share of the Operating Portfolio.
Copyright © 2020 FIBRA Prologis
17
Sponsor
Prologis Global Customer Relationships (A)
(% Net Effective Rent)
Amazon Geodis
DHL FedEx XPO Logistics Home Depot
UPS DSV Panalpina A/S
Kuehne + Nagel CEVA Logistics
Wal-Mart Hitachi
U.S. Government DB Schenker J Sainsburys BMW
Cainiao (Alibaba) ZOZO, Inc.
Sumitomo Corporation Ingram Micro PepsiCo Panasonic
Ryder System Inc. Performance Team
Staples
0
4.0 1.3 1.3 1.3 1.2 1.2 0.9 0.8 0.8 0.7 0.6 0.6 0.5 0.5 0.5 0.5 0.5 0.4 0.4 0.4 0.4 0.4 0.3 0.3 0.3
1
2
3
4
(A) Data as of September 30, 2020. The shading represents customers who are also customers of FIBRA Prologis.
3Q 2020 Supplemental
Copyright © 2020 FIBRA Prologis
18
Sponsor
Identified External Growth Pipeline
3Q 2020 Supplemental
EXTERNAL GROWTH VIA PROLOGIS DEVELOPMENT PIPELINE
(MSF) (A)
FIBRAPL Portfolio
Prologis and FIBRAPL Development Pipeline
Prologis and FIBRAPL Land Bank and Expansion Land (B)
· 19% growth potential in the next 3 to 4 years, subject to market conditions and availability of financing
39.0 46.4
1.7
5.7
· Proprietary access to Prologis development pipeline at market values
· Exclusive right to third-party acquisitions sourced by Prologis
Prologis Land Bank And FIBRAPL Expansion Land Based On Buildable SF
GLA (MSF) % Leased
Monterrey
0.9 89.1%
Ciudad Juarez
0.4 77.0%
1.0
0.6
1.5
Mexico City
Monterrey
Reynosa
1.9 Juarez
0.7 Tijuana
Tijuana Total
0.4 100.0% 1.7 88.4%
A. Million square feet as of September 30, 2020. B. Based on buildable square feet
Copyright © 2020 FIBRA Prologis
19
Notes and Definitions
3Q 2020 Supplemental
Toluca BTuoildluincag B#u2i,ldMinegxi#co2,CMitye,xMicoexCiictoy Copyright © 2020 FIBRA Prologis
Notes and Definitions
3Q 2020 Supplemental
Please refer to our financial statements as prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and filed with the Mexican National Banking and Securities Commission (Comision Nacional Bancaria y de Valores ("CNBV")) and other public reports for further information about us and our business.
Acquisition price, as presented for building acquisitions, represents economic cost. This amount includes the building purchase price plus 1) transaction closing costs, 2) due diligence costs, 3) immediate capital expenditures (including two years of property improvements and all leasing commissions and tenant improvements required to stabilize the property), 4) the effects of marking assumed debt to market and 5) the net present value of free and discounted rent, if applicable.
Calculation Per CBFI Amounts is as follows:
For the three months ended
in thousands, except per share amounts
September 30, 2020 September 30, 2019
Ps.
US$
Ps.
US$
Earnings
Net income
1,473,968 66,150 460,107 23,836
Weighted average CBFIs outstanding - Basic and Diluted
849,186 849,186 649,186 649,186
Earnings per CBFI- Basic and Diluted
1.7357 0.0779 0.7087 0.0367
FFO
AMEFIBRA FFO
835,180 37,344 514,276 26,628
For the nine months ended
September 30, 2020 September 30, 2019
Ps.
US$
Ps.
US$
769,578. 793,711
0.9696
35,055 793,711 0.0442
1,618,298 646,640 2.5026
84,120 646,640 0.1301
2,246,887 103,769 1,642,592 84,936
Adjusted EBITDA. We use Adjusted EBITDA, a non-IFRS financial measure, as a measure of our operating performance. The most directly comparable IFRS measure to Adjusted EBITDA is net income (loss).
Weighted average CBFIs outstanding - Basic and Diluted AMEFIBRA FFO per CBFI Basic and Diluted
849,186 849,186 649,186 649,186 0.9835 0.0440 0.7922 0.0410
793,711 793,711 646,640 646,640 2.8309 0.1307 2.5402 0.1313
We calculate Adjusted EBITDA beginning with net income (loss) and removing the effect of financing cost, income taxes and similar adjustments we make to our FFO measures (see definition below). We also include a pro forma adjustment to reflect a full period of NOI on the operating properties we acquire during the quarter and to remove NOI on properties we dispose of during the quarter, assuming all transactions occurred at the beginning of the quarter.
We believe Adjusted EBITDA provides investors relevant and useful information because it permits investors to view our operating performance, analyze our ability to meet interest payment obligations and make CBFI distributions on an unleveraged basis before the effects of income tax, non-cash amortization expense, gains and losses on the disposition of investments in real estate unrealized gains or losses from mark-to-market adjustments to investment properties and revaluation from Pesos into our functional currency to the U.S. dollar, and other items (outlined above), that affect comparability. While all items are not infrequent or unusual in nature, these items may result from market fluctuations that can have inconsistent effects on our results of operations. The economics underlying these items reflect market and financing conditions in the short-term but can obscure our performance and the value of our long-term investment decisions and strategies.
While we believe Adjusted EBITDA is an important measure, it should not be used alone because it excludes significant components of our net income (loss), such as our historical cash expenditures or future cash requirements for working capital, capital expenditures, distribution requirements, contractual commitments or interest and principal payments on our outstanding debt and is therefore limited as an analytical tool.
Our computation of Adjusted EBITDA may not be comparable to EBITDA reported by other companies in both the real estate industry and other industries. We compensate for the limitations of Adjusted EBITDA by providing investors with financial statements prepared according to IFRS, along with this detailed discussion of Adjusted EBITDA and a reconciliation to Adjusted EBITDA from net-income (loss).
FFO, as modified by FIBRA Prologis Weighted average CBFIs outstanding - Basic and Diluted FFO, as modified by FIBRA Prologis per CBFI
823,584 36,820 502,518 26,021 849,186 849,186 649,186 649,186 0.9699 0.0434 0.7741 0.0401
2,209,132 102,051 1,601,187 82,774 793,711 793,711 646,640 646,640 2.7833 0.1286 2.4762 0.1280
Debt Metrics. We evaluate the following debt metrics to monitor the strength and flexibility of our capital structure and evaluate the performance of our management. Investors can utilize these metrics to make a determination about our ability to service or refinance our debt. See below for the detailed calculations for the respective period:
in thousands
Debt, less cash and VAT, as a % of investment properties Total debt - at par Less: cash Less: VAT receivable
For the three months ended
September 30, 2020
June 30, 2020
Ps.
US$
Ps.
US$
17,373,564 (460,391) -
777,000 (20,590)
-
19,477,566 (657,972)
(1,062,713)
842,000 (28,444) (45,940)
Total debt, net of adjustments Investment properties and Other investment properties
16,913,173 60,079,441
756,410 17,756,881 2,686,940 61,191,939
767,616 2,645,280
Debt, less of cash and VAT, as a % of investment properties
28.2%
28.2%
29.0%
29.0%
Fixed Charge Coverage ratio Adjusted EBITDA Interest expense Fixed charge coverage ratio
1,048,525 202,521 5.18x
47,002 9,177 5.12x
975,796 217,556
4.49x
41,027 9,310 4.41x
Debt to Adjusted EBITDA Total debt, net of adjustments Adjusted EBITDA annualized Debt to Adjusted EBITDA ratio
16,913,173 4,194,100
4.03x
756,410 188,008
4.02x
17,756,881 3,903,184
4.55x
767,616 164,108
4.68x
Copyright © 2020 FIBRA Prologis
21
Notes and Definitions (continued)
AMEFIBRA FFO; AFFO (collectively referred to as "FFO"). FFO is a non-IFRS financial measure that is commonly used in the real estate industry. The most directly comparable IFRS measure to FFO is net income.
AMEFIBRA (Asociación Mexicana de FIBRAs Inmobiliarias) FFO is conceptualized as a supplementary financial metric, in addition to those the accounting itself provides. It is in the use of the overall set of metrics, and not in substitution of one over the other, that AMEFIBRA considers greater clarity and understanding is achieved in assessing the organic performance of real estate entities managing investment property activities. For the same reason, attempting to compare the operational performance of different real estate entities through any one single metric would be insufficient. AMEFIBRA considers that achieving such purpose is of merited interest to facilitate and improve the comprehension of results reported in the financial reports of its members within the overall public investing community, and also to facilitate comparing the organic performance of the different entities (see below).
The specific purpose of this metric, as in other markets where the "FFO" designator is used is with respect to the profitability derived from management of investment properties in a broad organic frame of performance. The term "investment properties" is used in the sense International Financial Reporting Standards, "IFRS" uses it, that is, real estate that is developed and operated with the intention of earning a return on the investment either through rental income activities, the future resale of the property, or both. This term is used herein to distinguish it from real estate entities that develop, acquire and sell properties mainly to generate transactional profit in the activity of development/purchase and sale. The AMEFIBRA FFO metric is not intended to address the organic performance of these type of entities.
The AMEFIBRA FFO metric is supplementary to other measures that the accounting provides as it focuses on the performance of the lease activities within the broad frame of the entity that manages it, that is, also takes into account among others the costs of its management structure (whether internal or external), its sources of funding (including funding costs) and if applicable fiscal costs. This better illustrates the term "organic performance" referred to herein. AMEFIBRA FFO parts from the comprehensive income of the IFRS normativity segregating the different valuation and other effects hereinafter described, and that are not part of the organic performance of the lease activity referred to in this document.
To arrive at AMEFIBRA FFO, we begin with net income and adjust to exclude: i. mark-to-market adjustments for the valuation of investment properties; ii. foreign currency exchange gains and losses from the remeasurement (based on current foreign currency exchange rates) of assets and liabilities denominated in Pesos; iii. Gains or losses from the early extinguishment of debt; iv. Unrealized gain or loss on exchange rate forwards; v. Income tax expense related to the sale of real estate; vi. Tax on profits or losses on disposals of properties;
vii. Amortization of any financial costs associated with debt (deferred financing costs and debt premium) and
viii. Incentive fees paid in CBFI's.
Our FFO Measures
3Q 2020 Supplemental
allocation decisions; (iii) evaluate the performance of our management; (iv) budget and forecast future results to assist in the allocation of resources; (v) provide guidance to the financial markets to understand our expected operating performance; and (v) evaluate how a specific potential investment will impact our future results.
AFFO
To arrive at AFFO, we adjust FFO, as modify by FIBRA Prologis to further exclude (i) straight-line rents; (ii) recurring capital expenditures and discounts and financing cost, net of amounts capitalized; and (iii) incentive fees paid in CBFIs.
We use AFFO to (i) assess our operating performance as compared to similar real estate companies and the industry in general, (ii) evaluate our performance and the performance of our properties in comparison with expected results and results of previous periods, relative to resource allocation decisions, (iii) evaluate the performance of our management, (iv) budget and forecast future results to assist in the allocation of resources, and (v) evaluate how a specific potential investment will impact our future results.
We analyze our operating performance primarily by the rental revenue of our real estate, net of operating, administrative and financing expenses. This income stream is not directly impacted by fluctuations in the market value of our investments in real estate or debt securities. Although these items discussed above have had a material impact on our operations and are reflected in our financial statements, the removal of the effects of these items allows us to better understand the core operating performance of our properties over the long term.
We use FFO, as modify by FIBRA Prologis and AFFO to: (i) evaluate our performance and the performance of our properties in comparison to expected results and results of previous periods, relative to resource allocation decisions; (ii) evaluate the performance of our management; (iii) budget and forecast future results to assist in the allocation of resources; (iv) provide guidance to the financial markets to understand our expected operating performance; (v) assess our operating performance as compared to similar real estate companies and the industry in general; and (vi) evaluate how a specific potential investment will impact our future results. Because we make decisions with regard to our performance with a long-term outlook, we believe it is appropriate to remove the effects of items that we do not expect to affect the underlying long-term performance of the properties we own. As noted above, we believe the long-term performance of our properties is principally driven by rental revenue. We believe investors are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in planning and executing our business strategy.
Limitations on the use of our FFO measures
While we believe our FFO measures are important supplemental measures, neither AMEFIBRA´s nor our measures of FFO should be used alone because they exclude significant economic components of net earnings computed under IFRS and are, therefore, limited as an analytical tool. Accordingly, these are only a few of the many measures we use when analyzing our business. Some of these limitations are:
To arrive at FFO,as modified by FIBRA Prologis we begin with AMEFIBRAFFO and adjust to include · amortization of deferred financing costs and debt premium. We use FFO, as modify by FIBRA Prologis to: (i) assess our operating performance as compared to similar real estate companies and the industry in general, (ii) evaluate our performance and the performance of our properties in comparison with expected results and results of previous periods, relative to resource
Mark-to-market adjustments to the valuation of investment properties and gains or losses from property acquisitions and dispositions represent changes in value of the properties. By excluding these gains and losses, FFO does not capture realized changes in the value of acquired or disposed properties arising from changes in market conditions.
Copyright © 2020 FIBRA Prologis
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Notes and Definitions (continued)
3Q 2020 Supplemental
· The foreign currency exchange gains and losses that are excluded from our modified FFO measures are generally recognized based on movements in foreign currency exchange rates through a specific point in time. The ultimate settlement of our foreign currency-denominated net assets is indefinite as to timing and amount. Our FFO measures are limited in that they do not reflect the current period changes in these net assets that result from periodic foreign currency exchange rate movements.
· The gains and losses on extinguishment of debt that we exclude from our defined FFO measures may provide a benefit or cost to us as we may be settling our debt at less or more than our future obligation.
· Refers to non-realized profits or losses in the reasonable value of financial instruments (includes debt and equity related instruments)
· The current income tax expenses that are excluded from our modified FFO measures represent the taxes that are payable.
· Refers to amortization of any financial costs associated with debt obtention and to the non-realized accounting gains or losses resulting from changes in the determination of the reasonable value of debt.
· Refers to the impact of compensation that is payable in CBFIs and consequently to its dilutive implications.
We compensate for these limitations by using our FFO measures only in conjunction with net income computed under IFRS when making our decisions. This information should be read with our complete consolidated financial statements prepared under IFRS. To assist investors in compensating for these limitations, we reconcile our FFO measures to our net income computed under IFRS.
Fixed Charge Coverage is a non-IFRS financial measure we define as Adjusted EBITDA divided by total fixed charges. Fixed charges consist of net interest expense adjusted for amortization of finance costs and debt discount (premium) and capitalized interest. We use fixed charge coverage to measure our liquidity. We believe that fixed charge coverage is relevant and useful to investors because it allows fixed income investors to measure our ability to make interest payments on outstanding debt and make dividends to holders of our CBFIs. Our computation of fixed charge coverage may not be comparable to fixed charge coverage reported by other companies and is not calculated in accordance with applicable regulatory rules.
Incentive Fee an annual fee payable under the management agreement to Manager when cumulative total CBFI holder returns exceed an agreed upon annual expected return, payable in CBFIs.
Market Classification
· Consumption-Driven Markets include the logistics markets of Mexico City, Guadalajara and Monterrey. These markets feature large population centers with high per-capita consumption and are located near major seaports, airports, and ground transportation systems.
· Manufacturing-Driven Markets include the manufacturing markets of Tijuana, Reynosa and Ciudad Juarez. These markets benefit from large population centers but typically are not as tied to the global supply chain, but rather serve local consumption and are often less supply constrained.
Net Effective Rent ("NER") is calculated at the beginning of the lease using estimated total cash (including base rent and expense reimbursements) to be received over the term and annualized. The per square foot number is calculated by dividing the annualized net effective rent by the occupied square feet of the lease.
Net Operating Income ("NOI") is a non-IFRS financial measure used to evaluate our operating performance and represents rental income less rental expenses.
Operating Portfolio includes stabilized industrial properties.
Property Improvements are the addition of permanent structural improvements or the restoration of a building's or property's components that will either enhance the property's overall value or increase its useful life. Property improvements are generally independent of any particular lease as part of general upkeep over time (but may be incurred concurrent with a lease commitment).
Rent Change- Cash represents the percentage change in starting rental rates per the lease agreement, on new and renewed leases, commenced during the periods compared with the previous ending rental rates in that same space. This measure excludes any short-term leases of less than one-year, holdover payments, free rent periods and introductory (teaser rates) defined as 50% or less of the stabilized rate.
Rent Change - Net Effective represents the percentage change in net effective rental rates (average rate over the lease term), on new and renewed leases, commenced during the period compared with the previous net effective rental rates in that same space. This measure excludes any short-term leases of less than one year and holdover payments.
Retention is the square footage of all leases commenced during the period that are rented by existing tenants divided by the square footage of all expiring and in-place leases during the reporting period. The square footage of tenants that default or buy-out prior to expiration of their lease and short-term leases of less than one year are not included in the calculation.
Same Store. Our same store metrics are non-IFRS financial measures, which are commonly used in the real estate industry and expected from the financial community, on both a net-effective and cash basis. We evaluate the performance of the operating properties we own and manage using a "same store" analysis because the population of properties in this analysis is consistent from period to period, which allows us to analyze our ongoing business operations.
We have defined the same store portfolio, for the three months ended June 30, 2020, as those properties that were owned by FIBRA Prologis as of January 1, 2018 and have been in operations throughout the same three-month periods in both 2019 and 2020. The same store population excludes properties acquired or disposed of to third parties during the period. We believe the factors that affect lease rental income, rental recoveries and property operating expenses and NOI in the same store portfolio are generally the same as for our total operating portfolio.
Copyright © 2020 FIBRA Prologis
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Notes and Definitions (continued)
3Q 2020 Supplemental
As our same store measures are non-IFRS financial measures, they have certain limitations as analytical tools and may vary among real estate companies. As a result, we provide a reconciliation of lease rental income, rental recoveries and property operating expenses from our financial statements prepared in accordance with IFRS to same store property NOI with explanations of how these metrics are calculated. In addition, we further remove certain non-cash items, such as straight-line rent adjustments, included in the financial statements prepared in accordance with IFRS to reflect a cash same store number. To clearly label these metrics, they are categorized as Same Store NOI Net Effective and Same Store NOI Cash.
The following is a reconciliation of our lease rental income, rental recoveries and property operating expenses, as included in the Statements of Comprehensive Income, to the respective amounts in our same store portfolio analysis:
in thousands of U.S. Dollars Rental income
Per the statements of comprehensive income Properties not included in same store and other adjustments (a) Direct Billables Revenues from Properties included same store pool Straight-lined rent from properties included in the same store Same Store - Rental income - cash
Rental expense Per the statements of comprehensive income Properties not included in same store and other adjustments Direct Billables Expenses from Properties included same store pool Same Store - Rental expense - cash
NOI Per the statements of comprehensive income Properties not included in same store Straight-lined rent from properties included in the same store Same Store - NOI - cash Straight-lined rent from properties included in same store Same Store NOI - Net Effective
2020
55,665 (8,465)
1,658 (2,917) 45,941
6,861 (819) 1,658 7,700
48,804 (7,646) (2,917) 38,241
2,917 41,158
2019 Change (%)
48,551 (841) 2,348 500
50,558
-9.1%
7,733 (210) 2,348 9,871
40,818 (631) 500
40,687 (500)
40,187
-22.0%
-6.0% 2.4%
a) To calculate Same Store rental income, we exclude the net termination and renegotiation fees to allow us to evaluate the growth or decline in each property's rental income without regard to onetime items that are not indicative of the property's recurring operating performance.
Same Store Average Occupancy represents the average occupied percentage of the Same Store portfolio for the period.
Tenant Improvements are the costs to prepare a property for lease to a new tenant or release to an existing tenant. Tenant improvements are reasonably expected to provide benefit beyond the lease term of the pending lease for future tenants, and are generally deemed to be consistent with comparable buildings in the market place.
Total Expected Investment ("TEI") represents total estimated cost of development or expansion, including land, development and leasing costs. TEI is based on current projections and is subject to change.
Trade Receivables represents total trade receivables less allowance for uncollectible trade receivables:
in thousands
Trade receivables Allowance for uncollectible trade receivables
Total % of allowance
September, 2020
Ps.
US$
88,036 (9,773)
3,936 (437)
78,263 11%
3,499 11%
December, 2019
Ps.
US$
80,614 (23,744)
4,270 (1,258)
56,870 29%
3,012 29%
Ps. 7,422 13,971 21,393
Increase (decrease)
US$
%
(334)
8%
821 (143%)
487 27%
Turnover Costs represent the obligations incurred in connection with the signing of a lease, including leasing commissions and tenant improvements and are presented for leases that commenced during the period. Tenant improvements include costs to prepare a space for a new tenant and for a lease renewal with the current tenant. It excludes costs to prepare a space that is being leased for the first time (i.e. in a new development property and short term leases of less than one year).
Value-Added Acquisitions ("VAA") are properties we acquire for which we believe the discount in pricing attributed to the operating challenges could provide greater returns post-stabilization than the returns of stabilized properties that are not Value-Added Acquisitions. Value Added Acquisitions must have one or more of the following characteristics: (i) existing vacancy in excess of 20%; (ii) short term lease roll-over, typically during the first two years of ownership; (iii) significant capital improvement requirements in excess of 10% of the purchase price and must be invested within the first two years of ownership. These properties are not included in the operating portfolio.
Valuation Methodology the methodologies applied for the valuation of the assets and the factors which are part of the approaches, at the end we will present the ranges of the rates such as the market rents used for the entire portfolio. There are three basic approaches to value:
· The Income Approach · The Direct Comparison Approach · The Cost Approach
In practice, an approach to value is included or omitted based on its applicability to the property type being valued and the quality and quantity of information available.
Income Approach
The Income Approach reflects the subject's income-producing capabilities. This approach assumes that value is created by expected income. Since the investment is expected to be acquired by an investor who would be willing to pay to receive an income stream plus reversion value from a property over a period, the Income Approach is used as the primary approach to value. The two common valuation techniques are the Discounted Cash Flow (DCF) Method and the Direct Capitalization Method.
Discounted Cash Flow Method
Using this valuation method, future cash flows forecasted over an investment horizon, together with the proceeds of a deemed disposition at the end of the holding period. This method allows for modeling any uneven revenues or costs associated with lease up, rental growth, vacancies, leasing commissions, tenant inducements and vacant space costs. These future financial benefits are discounted to a present value at an appropriate discount rate based on market transactions.
Copyright © 2020 FIBRA Prologis
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Notes and Definitions (continued)
3Q 2020 Supplemental
· A discount rate applicable to future cash flows and determined primarily by the risk associated
with income, and
FIBRA Prologis Statistics (201 Assets)
· A capitalization rate used to obtain the future value of the property based on estimated future
market conditions.
Capitalization Rates (%)
For the Three months ended September 30, 2020
From 6.75% to 10.50% Weight Avg. 7.36%
These rates are determined based on:
Discount Rates (%)
From 8.00% to 12.00% Weight Avg. 8.75%
·
The constant interviews we have with the developers, brokers, clients and active players in the market to know their expectation of IRR (before debt or without leverage).
Term Cap Rates (%)
From 7.00% to 10.75% Weight Avg. 7.60%
· Mainly the real transactions in the market are analyzed. Since we are a leading company in the real Market Rents (US $/ Sq ft/ Yr)
From $4.00 to $10.00 Weight Avg. $5.31
estate sector we have extensive experience in most purchase transactions and we have the details of
these before and during the purchase, which allows us to have a solid base when selecting our rates. Weighted Average Stabilized Capitalized ("Cap") Rate is calculated as Stabilized NOI divided by the Acquisition Price.
Direct Capitalization Method
This method involves capitalizing a fully leased net operating income estimate by an appropriate yield. This approach is best utilized with stabilized assets, where there is little volatility in the net income and the growth prospects are also stable. It is most commonly used with single tenant investments or stabilized investments.
Direct Comparison Approach
The Direct Comparison Approach utilizes sales of comparable properties, adjusting for differences to estimate a value for the subject property. This approach is developed in a simplified method to establish a range of unit prices for market comparable sales. This method is typically developed to support the Income Approach rather than to conclude on a value.
Cost Approach
The Cost Approach is based upon the proposition the informed purchaser would pay no more for the subject than the cost to produce a substitute property with equivalent utility. This approach is particularly applicable when the property being appraised involves relatively new improvements, which represent the Highest and Best Use of the land, or when relatively unique or specialized improvements are located on the site and for which there exist few sales or leases of comparable properties. This approach is not considered reliable because investors do not use this methodology to identify securities for purchase purposes; for this reason, this approach is not used for the valuation of the assets which comprise FIBRA Prologis.
Methodology Selection
The target market for any real estate, is composed of those entities capable of benefiting from the Highest and Best Use of a property, of goodwill and paying a fair price. In the case of the properties under study which are part of FIBRA Prologis, the type of buyer will typically be a developer / investor, therefore, our studies replicate the analysis that both the developer and investor make to take their decisions.
Statistics of the Portfolio
The following chart presents the ranges of Capitalization Rates, Discount Rates, Reversion Rates and Market Rents used in the portfolio that are part of FIBRA Prologis:
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