Terrafina® (“TERRA” or “the Company”) (BMV:TERRA13), a leading
Mexican industrial real estate investment trust (“FIBRA”),
externally advised by PGIM Real Estate and dedicated to the
acquisition, development, leasing and management of industrial real
estate properties in Mexico, today announced its second quarter
2018 (2Q18) earnings results.
The figures in this report have been prepared in
accordance with International Financial Reporting Standards
(“IFRS”). Figures presented in this report are presented in
millions of Mexican pesos and millions of U.S. dollars, unless
otherwise stated. Additionally, figures may vary due to rounding.
Terrafina’s financial results included in this report are
unaudited. As a result, the mentioned figures in this financial
report are preliminary figures and could be adjusted in the
future.
This document may include forward-looking
statements that may imply risks and uncertainties. Terms such as
"estimate", "project", "plan", "believe", "expect", "anticipate",
"intend", and other similar expressions could be construed as
previsions or estimates. Terrafina warns readers that declarations
and estimates mentioned in this document, or realized by
Terrafina’s management imply risks and uncertainties that could
change in function of various factors that are out of Terrafina’s
control. Future expectations reflect Terrafina’s judgment at the
date of this document. Terrafina reserves the right or obligation
to update the information contained in this document or derived
from this document. Past or present performance is not an
indicator to anticipate future performance.
Operating and Financial Highlights as of June 30,
2018
Operating
- As of June 30, 2018, the occupancy
rate was 95.5%, a 68 basis point increase compared to the second
quarter of 2017 (2Q17). Additionally, considering signed letters of
intent (LOI), occupancy for 2Q18 was 96.4%.
- Annualized average leasing rate per square foot at 2Q18
was US$5.07, a US$0.08 increase compared to
2Q17.
- Terrafina reported a total of 40.9 million square feet
(msf) of Gross Leasable Area (GLA) comprised of 286 properties and
298 tenants in 2Q18.
- 2Q18 leasing activity totaled 1.4 msf, of
which 18.0% corresponded to new leases, 39.0%
to lease renewals and 43.0% to early renewals.
Leasing activity was mainly concentrated in the Chihuahua, Ciudad
Juarez, Tijuana, Ramos Arizpe, Queretaro, Silao, Cuautitlan
Izcalli, San Luis Potosi, Guadalajara, Irapuato and Hermosillo
markets.
Financial
- Rental revenues reached US$47.6 million, a 14.2% or
US$5.9 million increase compared to 2Q17.
- NOI was US$47.9 million, a 14.6% or US$6.1 million
increase compared to 2Q17.
- The NOI margin reached 94.9%, a 82
basis point increase compared to 2Q17.
- EBITDA reached US$43.6 million, an increase of 15.0% or
US$5.7 million compared to 2Q17.
- EBITDA margin was 86.4%, a 111 basis
point increase compared to 2Q17.
- Adjusted funds for operations (AFFO) reached US$28.8
million, an increase of 18.2% or US$4.4 million
compared to 2Q17.
- AFFO margin was 56.7%, a 241 basis point increase
compared to 2Q17.
- Distributions totaled US$28.8 million. As a
result, Terrafina will distribute Ps.0.7020 per CBFI
(US$0.0364 per CBFI) for distributions corresponding to the April 1
to June 30, 2018 period.
- The annualized distribution was US$0.1456; considering
the average share price for the 2Q18 of US$1.47 (Ps.28.46),
Terrafina’s dividend yield for the quarter was 9.9%.
Operating and Financial Highlights
|
|
|
|
|
|
|
|
Operating |
Jun18 |
Jun17 |
Var. |
|
|
|
|
Number of Developed Properties |
286 |
|
260 |
|
26 |
|
|
|
|
|
Gross Leasable Area
(GLA) (msf)1 |
40.9 |
|
36.5 |
|
4.4 |
|
|
|
|
|
Land Reserves
(msf) |
6.17 |
|
6.26 |
|
-0.09 |
|
|
|
|
|
Occupancy Rate2 |
95.5 |
% |
94.9 |
% |
68 bps |
|
|
|
|
Avg. Leasing Rent /
Square Foot (dollars) |
5.07 |
|
4.99 |
|
0.08 |
|
|
|
|
|
Weighted Average
Remaining Lease Term (years) |
3.46 |
|
3.49 |
|
-0.03 |
|
|
|
|
|
Renewal
Rate3 |
90.4 |
% |
87.9 |
% |
245 bps |
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly
Financial |
2Q18 |
2Q17 |
Var. |
|
2Q18 |
2Q17 |
Var. |
|
|
|
|
fx |
19.3911 |
|
18.5666 |
|
|
|
(millions of pesos unless otherwise stated) |
|
(millions of dollars unless otherwise stated) |
Rental Revenues4 |
921.8 |
|
773.6 |
|
19.2 |
% |
|
47.6 |
|
41.6 |
|
14.2 |
% |
Other Operating
Income |
50.9 |
|
45.8 |
|
11.2 |
% |
|
2.6 |
|
2.5 |
|
7.8 |
% |
Net Revenues |
981.1 |
|
825.1 |
|
18.9 |
% |
|
50.6 |
|
44.4 |
|
14.0 |
% |
Net Operating Income
(NOI)* |
926.9 |
|
776.3 |
|
19.4 |
% |
|
47.9 |
|
41.8 |
|
14.6 |
% |
NOI Margin |
94.9 |
% |
94.1 |
% |
82 bps |
|
94.9 |
% |
94.1 |
% |
82 bps |
EBITDA5* |
842.0 |
|
704.5 |
|
19.5 |
% |
|
43.6 |
|
37.9 |
|
15.0 |
% |
EBITDA Margin |
86.4 |
% |
85.3 |
% |
111 bps |
|
86.4 |
% |
85.3 |
% |
111 bps |
Funds from Operations
(FFO)* |
604.2 |
|
500.8 |
|
20.6 |
% |
|
31.3 |
|
26.9 |
|
16.3 |
% |
FFO Margin |
62.0 |
% |
60.6 |
% |
145 bps |
|
62.0 |
% |
60.6 |
% |
145 bps |
Adjusted Funds from
Operations (AFFO)* |
555.3 |
|
452.5 |
|
22.7 |
% |
|
28.8 |
|
24.3 |
|
18.2 |
% |
AFFO Margin |
56.7 |
% |
54.3 |
% |
241 bps |
|
56.7 |
% |
54.3 |
% |
241 bps |
Distributions |
555.3 |
|
452.4 |
|
22.7 |
% |
|
28.8 |
|
24.3 |
|
18.2 |
% |
Distributions per CBFI6 |
0.7020 |
|
0.5720 |
|
22.7 |
% |
|
0.0364 |
|
0.0308 |
|
18.2 |
% |
|
|
|
|
|
|
|
|
Balance
Sheet |
Jun18 |
Mar18 |
Var. |
fx |
Jun18 |
Mar18 |
Var. |
|
|
|
|
|
19.8633 |
|
18.3445 |
|
|
|
(millions of pesos unless otherwise stated) |
|
(millions of dollars unless otherwise stated) |
Cash & Cash Equivalents |
2,042.4 |
|
2,035.7 |
|
0.3 |
% |
|
102.8 |
|
111.0 |
|
-7.3 |
% |
Investment
Properties |
46,176.3 |
|
42,165.3 |
|
9.5 |
% |
|
2,324.7 |
|
2,298.5 |
|
1.1 |
% |
Land Reserves |
1,032.2 |
|
950.8 |
|
8.6 |
% |
|
52.0 |
|
51.8 |
|
0.3 |
% |
Total Debt |
19,826.6 |
|
18,623.4 |
|
6.5 |
% |
|
998.2 |
|
1,015.2 |
|
-1.7 |
% |
Net
Debt |
17,784.2 |
|
16,587.7 |
|
7.2 |
% |
|
895.3 |
|
904.2 |
|
-1.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Figures in dollars in the Income Statement were converted into
pesos using the average exchange rate for the period. (1) Millions
of square feet. (2) Occupancy at the end of the period. (3)
Indicates the lease renewal rate of the leases, includes early
renewals. (4) Excluding accrued income as it is a non-cash item.
(5) Earnings before interest, taxes, depreciation and amortization.
(6) Certificados Bursátiles Fiduciarios Inmobiliarios - Real Estate
Investment Certificates. (*) Revenues and expenses have been
adjusted for the calculation of the above mentioned metrics.
Figures in dollars in the Balance Sheet were converted using the
closing exchange rate of the period. Please refer to the “2Q18
Financial Performance" and "Appendices" section available in this
document. Source: PGIM Real Estate – Asset Management and Fund
Accounting
Comment by Alberto Chretin, Chief Executive Officer and
Chairman of the Board
During the second quarter of 2018, we continued
generating solid results --- integrating the benefits from the
acquisitions of industrial assets that were concluded at the
beginning of the second quarter. Moreover, the strength of the
industrial real estate sector in Mexico was reflected in high
leasing levels, which represented a total of 1.4 million square
feet for Terrafina. The main leasing activity was concentrated in
the markets of Chihuahua, Ciudad Juarez, Tijuana, Ramos Arizpe,
Queretaro, Silao, Cuautitlan Izcalli, San Luis Potosi, Guadalajara,
Irapuato and Hermosillo markets.
Renewal activity for Terrafina reached 0.6
million square feet and, in terms of early renewals, these were 0.6
million square feet; early renewals are a key indicator of the
importance for our tenants to secure the permanence of their
operation in the long-term. As a result of the strong leasing
activity experienced in the first half of 2018, Terrafina lowered
the remaining portion of the maturity schedule for the year
from 8.1% in the first quarter to 5.2% in the second quarter
of 2018.
Second quarter 2018 occupancy levels reached
95.5% and same-store occupancy was 95.2%. Including signed letters
of intent, occupancy levels for the quarter reached 96.4%.
Occupancy rates by region remained stable, reaching 97.2% in the
Northern region, 92.2% in the Bajio region and 93.7% in the Central
region.
Average annual leasing rent for 2Q18 was US$5.07
per square foot, a US$0.08 increase compared to the second quarter
of 2017 and a US$0.01 increase compared to the first quarter of
2018. Average rents by region remained in line, with US$4.99 per
square foot in the Northern region, US$5.16 per square foot in the
Bajio region and a US$5.27 average rent per square foot in the
Central region.
Terrafina’s main financial indicators for the
second quarter of 2018, rental revenues reached US$47.6 million,
Net Operating Income reached US$47.9 million with an NOI Margin of
94.9%, as well as generating US$28.8 million in Adjusted Funds from
Operations. Finally, Annualized Distributions per CBFI were Ps.
2.81, or US$0.1456, which represented a 9.8% dividend yield,
considering the average CBFI price for the second quarter of
2018.
Thank you for your interest in Terrafina.
Sincerely,
Alberto ChretinChief Executive Officer and
Chairman of the Board
Operating Highlights
|
|
|
|
|
Highlights by Region |
|
|
|
|
(as of June 30,
2018) |
North |
Bajio |
Central |
Total |
#
Buildings |
201 |
|
55 |
|
30 |
|
286 |
|
# Tenants |
203 |
|
56 |
|
39 |
|
298 |
|
GLA (msf) |
25.5 |
|
9.1 |
|
6.3 |
|
40.9 |
|
Land Reserves
(msf) |
2.7 |
|
0.2 |
|
3.3 |
|
6.2 |
|
Occupancy Rate |
97.2 |
% |
92.2 |
% |
93.7 |
% |
95.5 |
% |
Average Leasing Rent /
Square Foot (dollars) |
4.99 |
|
5.16 |
|
5.27 |
|
5.07 |
|
Annualized Rental Base % |
62.4 |
% |
22.0 |
% |
15.7 |
% |
100.0 |
% |
Source: PGIM Real
Estate - Asset Management |
|
|
|
|
|
|
|
|
Leasing Activity |
|
|
|
|
2Q18 |
2Q17 |
Var. |
Operating Portfolio
(msf): |
|
|
|
Renewals |
0.6 |
0.9 |
-0.3 |
Early Renewals |
0.6 |
0.1 |
0.5 |
New Leases |
0.3 |
0.5 |
-0.3 |
Total Square Feet of Leases Signed |
1.4 |
1.6 |
-0.1 |
Source: PGIM Real
Estate - Asset Management |
|
|
|
|
|
|
Occupancy and Rents by
Region |
|
Maturities and Renewals by Region |
|
|
|
|
|
Consolidated |
(As of
June 30, 2018) |
Occupancy Rate |
Avg. Leasing Rent / Square Foot (dollars) |
|
(As of
June 30, 2018) |
Maturities (number of contracts) |
% of Total Maturities |
Renewals (number of contracts) |
% of Total Renewals |
North |
97.2 |
% |
4.99 |
|
North |
7 |
53.8 |
% |
5 |
71.4 |
% |
Baja
California |
100.0 |
% |
4.40 |
|
Baja
California |
1 |
7.7 |
% |
1 |
100.0 |
% |
Tijuana |
100.0 |
% |
4.40 |
|
Tijuana |
1 |
7.7 |
% |
1 |
100.0 |
% |
Sonora |
88.5 |
% |
4.57 |
|
Sonora |
1 |
7.7 |
% |
1 |
100.0 |
% |
Hermosillo |
88.5 |
% |
4.57 |
|
Hermosillo |
1 |
7.7 |
% |
1 |
100.0 |
% |
Chihuahua |
97.8 |
% |
5.03 |
|
Chihuahua |
3 |
23.1 |
% |
3 |
100.0 |
% |
Chihuahua |
98.0 |
% |
5.43 |
|
Chihuahua |
1 |
7.7 |
% |
1 |
100.0 |
% |
Ciudad
Juarez |
97.8 |
% |
4.70 |
|
Ciudad
Juarez |
2 |
15.4 |
% |
2 |
100.0 |
% |
Delicias |
100.0 |
% |
5.98 |
|
Delicias |
0 |
0.0 |
% |
0 |
0.0 |
% |
Gomez
Farias |
100.0 |
% |
3.34 |
|
Gomez
Farias |
0 |
0.0 |
% |
0 |
0.0 |
% |
Casas
Grandes |
100.0 |
% |
4.21 |
|
Casas
Grandes |
0 |
0.0 |
% |
0 |
0.0 |
% |
Coahuila |
96.4 |
% |
5.05 |
|
Coahuila |
2 |
15.4 |
% |
0 |
0.0 |
% |
Ciudad
Acuña |
100.0 |
% |
6.11 |
|
Ciudad
Acuña |
0 |
0.0 |
% |
0 |
0.0 |
% |
Monclova |
100.0 |
% |
5.46 |
|
Monclova |
0 |
0.0 |
% |
0 |
0.0 |
% |
Ramos
Arizpe |
96.2 |
% |
4.88 |
|
Ramos
Arizpe |
1 |
7.7 |
% |
0 |
0.0 |
% |
Saltillo |
91.0 |
% |
5.44 |
|
Saltillo |
1 |
7.7 |
% |
0 |
0.0 |
% |
Derramadero |
100.0 |
% |
6.64 |
|
Derramadero |
0 |
0.0 |
% |
0 |
0.0 |
% |
San Pedro
de las Colinas |
89.3 |
% |
2.10 |
|
San Pedro
de las Colinas |
0 |
0.0 |
% |
0 |
0.0 |
% |
Torreon |
100.0 |
% |
4.26 |
|
Torreon |
0 |
0.0 |
% |
0 |
0.0 |
% |
Nuevo
Leon |
93.3 |
% |
5.03 |
|
Nuevo
Leon |
0 |
0.0 |
% |
0 |
0.0 |
% |
Apodaca |
100.0 |
% |
5.51 |
|
Apodaca |
0 |
0.0 |
% |
0 |
0.0 |
% |
Monterrey |
91.0 |
% |
4.84 |
|
Monterrey |
0 |
0.0 |
% |
0 |
0.0 |
% |
Tamaulipas |
100.0 |
% |
4.65 |
|
Tamaulipas |
0 |
0.0 |
% |
0 |
0.0 |
% |
Reynosa |
100.0 |
% |
4.65 |
|
Reynosa |
0 |
0.0 |
% |
0 |
0.0 |
% |
Durango |
100.0 |
% |
4.79 |
|
Durango |
0 |
0.0 |
% |
0 |
0.0 |
% |
Durango |
100.0 |
% |
4.95 |
|
Durango |
0 |
0.0 |
% |
0 |
0.0 |
% |
Gomez
Palacio |
100.0 |
% |
3.14 |
|
Gomez
Palacio |
0 |
0.0 |
% |
0 |
0.0 |
% |
Bajio |
92.2 |
% |
5.16 |
|
Bajio |
5 |
38.5 |
% |
5 |
100.0 |
% |
San Luis
Potosi |
89.5 |
% |
4.89 |
|
San Luis
Potosi |
0 |
0.0 |
% |
0 |
0.0 |
% |
San Luis
Potosi |
89.5 |
% |
4.89 |
|
San Luis
Potosi |
0 |
0.0 |
% |
0 |
0.0 |
% |
Jalisco |
100.0 |
% |
6.51 |
|
Jalisco |
1 |
7.7 |
% |
1 |
100.0 |
% |
Guadalajara |
100.0 |
% |
6.51 |
|
Guadalajara |
1 |
7.7 |
% |
1 |
100.0 |
% |
Aguascalientes |
100.0 |
% |
4.76 |
|
Aguascalientes |
0 |
0.0 |
% |
0 |
0.0 |
% |
Aguascalientes |
100.0 |
% |
4.76 |
|
Aguascalientes |
0 |
0.0 |
% |
0 |
0.0 |
% |
Guanajuato |
94.4 |
% |
4.80 |
|
Guanajuato |
3 |
23.1 |
% |
3 |
100.0 |
% |
Celaya |
100.0 |
% |
5.29 |
|
Celaya |
0 |
0.0 |
% |
0 |
0.0 |
% |
Irapuato |
81.8 |
% |
5.24 |
|
Irapuato |
1 |
7.7 |
% |
1 |
100.0 |
% |
Silao |
100.0 |
% |
4.55 |
|
Silao |
2 |
15.4 |
% |
2 |
100.0 |
% |
Queretaro |
85.8 |
% |
4.78 |
|
Queretaro |
1 |
7.7 |
% |
1 |
100.0 |
% |
Queretaro |
85.8 |
% |
4.78 |
|
Queretaro |
1 |
7.7 |
% |
1 |
100.0 |
% |
Central |
93.7 |
% |
5.27 |
|
Central |
1 |
7.7 |
% |
1 |
100.0 |
% |
Estado de
Mexico |
92.7 |
% |
5.49 |
|
Estado de
Mexico |
1 |
7.7 |
% |
1 |
100.0 |
% |
Cuautitlan Izcalli |
100.0 |
% |
5.51 |
|
Cuautitlan Izcalli |
1 |
7.7 |
% |
1 |
100.0 |
% |
Toluca |
81.6 |
% |
5.39 |
|
Toluca |
0 |
0.0 |
% |
0 |
0.0 |
% |
Ciudad de
Mexico |
100.0 |
% |
9.22 |
|
Ciudad de
México |
0 |
0.0 |
% |
0 |
0.0 |
% |
Azcapotzalco |
100.0 |
% |
9.22 |
|
Azcapotzalco |
0 |
0.0 |
% |
0 |
0.0 |
% |
Puebla |
100.0 |
% |
3.20 |
|
Puebla |
0 |
0.0 |
% |
0 |
0.0 |
% |
Puebla |
100.0 |
% |
3.20 |
|
Puebla |
0 |
0.0 |
% |
0 |
0.0 |
% |
Tabasco |
100.0 |
% |
3.99 |
|
Tabasco |
0 |
0.0 |
% |
0 |
0.0 |
% |
Villahermosa |
100.0 |
% |
3.99 |
|
Villahermosa |
0 |
0.0 |
% |
0 |
0.0 |
% |
Total |
95.5 |
% |
5.07 |
|
Total |
13 |
100.0 |
% |
11 |
84.6 |
% |
Source: PGIM
Real Estate - Asset Management |
|
Source:
PGIM Real Estate - Asset Management*Over the number of matured
leases in the quarter |
|
|
|
|
|
|
2Q18 Operational
PerformanceComposition by Geographical
DiversificationThe geographic diversification of
Terrafina’s properties at 2Q18 (based on GLA per square foot) was
as follows: the Northern region of Mexico represented 62.4% of GLA,
while the Bajio and Central regions represented 22.3% and 15.3% of
GLA, respectively.
|
|
|
Geographic Distribution by Region and State |
|
|
|
2Q18 |
as a % of Total GLA 2Q18 |
2Q17 |
as a % of Total GLA 2Q17 |
North |
25.55 |
62.4 |
% |
21.01 |
57.5 |
% |
Baja
California |
0.90 |
2.2 |
% |
0.90 |
2.5 |
% |
Tijuana |
0.90 |
2.2 |
% |
0.90 |
2.5 |
% |
Sonora |
0.33 |
0.8 |
% |
0.33 |
0.9 |
% |
Hermosillo |
0.33 |
0.8 |
% |
0.33 |
0.9 |
% |
Chihuahua |
14.29 |
34.9 |
% |
13.66 |
37.4 |
% |
Chihuahua |
5.83 |
14.2 |
% |
5.44 |
14.9 |
% |
Ciudad
Juarez |
7.76 |
19.0 |
% |
7.74 |
21.2 |
% |
Delicias |
0.52 |
1.3 |
% |
0.29 |
0.8 |
% |
Gomez
Farias |
0.08 |
0.2 |
% |
0.08 |
0.2 |
% |
Camargo |
0.02 |
0.1 |
% |
0.02 |
0.1 |
% |
Casas
Grandes |
0.09 |
0.2 |
% |
0.09 |
0.2 |
% |
Coahuila |
6.84 |
16.7 |
% |
3.49 |
9.5 |
% |
Ciudad
Acuña |
0.24 |
0.6 |
% |
0.24 |
0.7 |
% |
Monclova |
0.35 |
0.8 |
% |
0.34 |
0.9 |
% |
Ramos
Arizpe |
4.54 |
11.1 |
% |
2.00 |
5.5 |
% |
Saltillo |
0.62 |
1.5 |
% |
0.62 |
1.7 |
% |
Derramadero |
0.54 |
1.3 |
% |
0.00 |
0.0 |
% |
San Pedro
de las Colinas |
0.15 |
0.4 |
% |
0.15 |
0.4 |
% |
Torreon |
0.39 |
1.0 |
% |
0.13 |
0.4 |
% |
Nuevo
Leon |
1.94 |
4.7 |
% |
1.38 |
3.8 |
% |
Apodaca |
0.50 |
1.2 |
% |
0.50 |
1.4 |
% |
Monterrey |
1.44 |
3.5 |
% |
0.89 |
2.4 |
% |
Tamaulipas |
0.47 |
1.1 |
% |
0.47 |
1.3 |
% |
Reynosa |
0.47 |
1.1 |
% |
0.47 |
1.3 |
% |
Durango |
0.78 |
1.9 |
% |
0.78 |
2.1 |
% |
Durango |
0.71 |
1.7 |
% |
0.71 |
1.9 |
% |
Gomez
Palacio |
0.07 |
0.2 |
% |
0.07 |
0.2 |
% |
Bajio |
9.12 |
22.3 |
% |
9.26 |
25.4 |
% |
San Luis
Potosi |
3.31 |
8.1 |
% |
3.30 |
9.0 |
% |
San Luis
Potosi |
3.31 |
8.1 |
% |
3.30 |
9.0 |
% |
Jalisco |
1.66 |
4.0 |
% |
1.81 |
5.0 |
% |
Guadalajara |
1.66 |
4.0 |
% |
1.81 |
5.0 |
% |
Aguascalientes |
0.75 |
1.8 |
% |
0.75 |
2.1 |
% |
Aguascalientes |
0.75 |
1.8 |
% |
0.75 |
2.1 |
% |
Guanajuato |
1.42 |
3.5 |
% |
1.42 |
3.9 |
% |
Celaya |
0.12 |
0.3 |
% |
0.12 |
0.3 |
% |
Irapuato |
0.44 |
1.1 |
% |
0.44 |
1.2 |
% |
Silao |
0.87 |
2.1 |
% |
0.86 |
2.4 |
% |
Queretaro |
1.98 |
4.8 |
% |
1.98 |
5.4 |
% |
Queretaro |
1.98 |
4.8 |
% |
1.98 |
5.4 |
% |
Central |
6.25 |
15.3 |
% |
6.25 |
17.1 |
% |
Estado de
Mexico |
5.40 |
13.2 |
% |
5.40 |
14.8 |
% |
Cuautitlan Izcalli |
4.26 |
10.4 |
% |
4.26 |
11.7 |
% |
Toluca |
0.91 |
2.2 |
% |
0.91 |
2.5 |
% |
Huehuetoca |
0.23 |
0.6 |
% |
0.23 |
0.6 |
% |
Ciudad de
Mexico |
0.02 |
0.1 |
% |
0.02 |
0.1 |
% |
Azcapotzalco |
0.02 |
0.1 |
% |
0.02 |
0.1 |
% |
Puebla |
0.18 |
0.5 |
% |
0.18 |
0.5 |
% |
Puebla |
0.18 |
0.5 |
% |
0.18 |
0.5 |
% |
Tabasco |
0.65 |
1.6 |
% |
0.65 |
1.8 |
% |
Villahermosa |
0.65 |
1.6 |
% |
0.65 |
1.8 |
% |
Total |
40.92 |
100.0 |
% |
36.52 |
100.0 |
% |
Total Gross
Leasable Area / million square feet. Potential leasable area of
land reserves are not included. |
Source:
PGIM Real Estate - Asset Management |
|
|
Composition by Asset TypeAt the
end of 2Q18, 73.5% of Terrafina’s portfolio consisted of properties
dedicated to manufacturing activities while 26.5% were dedicated to
distribution and logistics activities.
|
|
|
Composition by Asset Type |
|
|
|
2Q18 |
2Q17 |
Var. |
Distribution |
26.5 |
% |
26.4 |
% |
9
bps |
Manufacturing |
73.5 |
% |
73.6 |
% |
-9 bps |
Source:
PGIM Real Estate - Asset Management |
|
|
|
Composition by SectorAs of June 30, 2018,
tenant diversification by industrial sector was as follows:
|
|
|
Industrial Sector Diversification |
|
|
|
2Q18 |
2Q17 |
Var. |
Automotive |
34.5 |
% |
31.9 |
% |
257
bps |
Industrial
properties |
19.8 |
% |
20.0 |
% |
-26
bps |
Consumer goods |
14.5 |
% |
15.2 |
% |
-69
bps |
Logistics and
Trade |
9.6 |
% |
9.8 |
% |
-21
bps |
Aviation |
9.8 |
% |
10.4 |
% |
-59
bps |
Non-durable consumer
goods |
3.9 |
% |
4.4 |
% |
-47
bps |
Electronics |
8.0 |
% |
8.3 |
% |
-35
bps |
Total |
100.0 |
% |
100.0 |
% |
|
Source:
PGIM Real Estate - Asset Management |
|
|
|
|
Composition of Top
ClientsTerrafina has a widely diversified tenant base that
lease industrial properties throughout several of Mexico’s main
cities. For 2Q18, Terrafina’s top client, top 10 clients and top 20
clients, represented 3.3%, 17.1% and 26.8% of total revenues,
respectively.
|
Top Clients |
(As of
June 30, 2018) |
Leased Square Feet
(millions) |
% Total GLA |
% Total Revenues |
Top Client |
1.24 |
3.2 |
% |
3.3 |
% |
Top 10 Clients |
6.75 |
17.3 |
% |
17.1 |
% |
Top 20 Clients |
10.54 |
27.0 |
% |
26.8 |
% |
Source:
PGIM Real Estate - Asset Management |
|
|
|
Occupancy2Q18 occupancy rate
was 95.5%, a 68 basis point increase compared to 2Q17. Including
signed LOIs for the quarter, the occupancy rate was 96.4% for the
quarter. It is important to note that occupancy rate indicators
presented in this report reflect the quarterly closing rate.
For 2Q18, Terrafina’s leasing activity reached
1.4 msf, of which 18.0% corresponded to new leasing contracts
(including expansions), 39.0% for contract renewals and 43.0% for
early renewals.
Leasing activity mainly took place in the
Chihuahua, Ciudad Juarez, Tijuana, Ramos Arizpe, Queretaro, Silao,
Cuautitlan Izcalli, San Luis Potosi, Guadalajara, Irapuato and
Hermosillo markets. In addition to this leasing activity, Terrafina
signed an additional 348,500 square feet in LOIs.
|
|
|
|
|
2Q18 |
2Q17 |
Var. |
Leased GLA |
95.5 |
% |
94.9 |
% |
26
bps |
Vacant GLA |
3.6 |
% |
4.9 |
% |
-129
bps |
Signed Letters of
Intent |
0.9 |
% |
0.2 |
% |
68
bps |
Total |
100.0 |
% |
100.0 |
% |
|
Source:
PGIM Real Estate - Asset Management |
|
|
Lease MaturitiesTerrafina had
298 tenants under leasing contracts at the end of 2Q18. The leasing
characteristics of these contracts have an average maturity of
three to five years for logistics and distribution properties and
of five to seven years for manufacturing properties. Annual average
maturities (as a percentage of annual base rents) remain at levels
of between 5% to 22% for the next five years.
The following table breaks down Terrafina’s
leasing maturity schedule for the upcoming years:
|
|
|
|
|
|
Annual Base Rent (millions of
dollars) |
% of Total |
Occupied Sq. Ft (millions) |
% of Total |
2018 |
9.5 |
4.8 |
% |
2.03 |
5.2 |
% |
2019 |
34.8 |
17.6 |
% |
7.12 |
18.2 |
% |
2020 |
44.5 |
22.5 |
% |
8.74 |
22.4 |
% |
2021 |
37.0 |
18.7 |
% |
7.23 |
18.5 |
% |
2022 |
16.9 |
8.5 |
% |
3.62 |
9.3 |
% |
Thereafter |
55.4 |
28.0 |
% |
10.35 |
26.5 |
% |
Source:
PGIM Real Estate – Asset Management |
|
Capital Deployment
Capital Expenditures
(CAPEX)Terrafina’s CAPEX is classified as recurring
expenses that took place based on upcoming leasing maturities and
property improvements. The main goal of these expenses is the
renewal of leasing contracts as well as the improvement of property
conditions taking into account tenant requirements. Terrafina
expects to apply CAPEX towards vacant properties as well as towards
the development of new GLA by means of expansions and/or new
developments.
Additionally, it is important to consider that
CAPEX intended for expansions and new developments are not financed
with Terrafina’s operating cash flow and therefore do not pass
through the income statement.
Capital expenditures accounts are comprised as
follows:
- Tenant property improvement resources as well as recurring
maintenance CAPEX.
- Broker and administrator fees.
- CAPEX for new developments, which due to their nature, are
generally capitalized.
In 2Q18, Terrafina’s investments in tenant
improvements and recurring CAPEX was US$1.3 million. Total CAPEX
for 2Q18 is broken down in the following table:
|
|
|
Capital
Expenditures |
|
|
|
2Q18 |
2Q18 |
|
(millions of pesos) |
(millions of dollars) |
Tenant Improvements & Recurring Capex |
25.3 |
1.3 |
Leasing
Commissions |
20.0 |
1.0 |
Development Capex1 |
8.2 |
0.4 |
Total Capital Expenditures |
53.4 |
2.7 |
Maintenance
expenses for vacant properties are included in the Tenant
Improvements & Recurring Capex figures. (1) Capex for
expansions/new developments. |
Source: PGIM Real
Estate - Asset Management |
|
|
|
Land ReservesTerrafina’s land
reserve as of June 30, 2018 was comprised of 12 land reserve
properties, equivalent to 6.2 msf of potential GLA for the
development of future industrial properties.
As of June 30, 2018, Terrafina’s land reserves
were distributed as follows:
|
|
|
As of June 30, 2018 |
|
Square Feet (millions) |
Land at Cost (millions of
pesos) |
Land at Cost (millions of
dollars) |
Appraisal Value
(millions of pesos) |
Market Value (millions of
dollars) |
North |
3.0 |
514.3 |
25.9 |
592.8 |
29.8 |
Bajio |
0.1 |
14.2 |
0.7 |
14.7 |
0.7 |
Central |
3.1 |
737.8 |
37.1 |
424.7 |
21.4 |
Total
Land Portfolio |
6.2 |
1,266.3 |
63.7 |
1,032.2 |
51.9 |
Source:
PGIM Real Estate - Asset Management and Fund Accounting |
|
|
2Q18 Financial Performance
Financial Results and
CalculationsTerrafina’s financial results are presented in
Mexican pesos and U.S. dollars. Figures on the income statement for
each period were converted to dollars using the average exchange
rate for 2Q18, while for the balance sheet, the exchange rate at
the close of June 30, 2018 was applied.
Terrafina has in place best accounting practices
for measuring the FIBRA’s (REIT) performance results by providing
relevant metrics to the financial community. Throughout the
following financial performance section, additional calculations
are available. It is important to note that these metrics must not
be considered individually to evaluate Terrafina’s results. It is
recommended to use them in combination with other International
Financial Reporting Standards metrics to measure the Company’s
performance.
Terrafina presents in this earnings report
additional metrics such as Net Operating Income (NOI), Earnings
Before Interests, Taxes, Depreciation and Amortization (EBITDA),
Funds from Operations (FFO), and Adjusted Funds from Operations
(AFFO). Each breakdown calculation is available in this
document.
|
In addition, Terrafina recommends reviewing the Appendices
as a reference of the integration of different items of
Terrafina’s financial statement. This information is
available in the last section of this document. |
|
Past performance is not a guarantee or reliable indicator
of future results. |
|
Same-StoreThe following table
shows Terrafina’s 2Q18 same-store highlights and consolidated
information:
|
|
|
|
|
|
(as of June 30, 2018) |
Same-Store1 2Q18 |
Consolidated2 2Q18 |
|
|
|
Number of
Properties |
259.0 |
|
286.0 |
|
|
|
|
Occupancy Rate |
95.2 |
% |
95.5 |
% |
|
|
|
Gross Leasable Area
(GLA) (msf) |
36.7 |
|
40.9 |
|
|
|
|
Avg. Leasing Rent /
Square Foot (dollars) |
5.02 |
|
5.07 |
|
|
|
|
|
|
|
|
|
|
|
Same-Store 2Q18 |
Consolidated 2Q18 |
Same-Store 2Q18 |
Consolidated 2Q18 |
|
|
(millions of pesos) |
(millions of dollars) |
|
Rental Revenues |
816.4 |
|
921.8 |
|
42.1 |
|
47.6 |
|
|
Net Operating
Income |
824.2 |
|
926.9 |
|
42.6 |
|
47.9 |
|
|
NOI Margin |
93.8 |
% |
94.9 |
% |
93.8 |
% |
94.9 |
% |
|
EBITDA |
764.4 |
|
842.0 |
|
39.5 |
|
43.6 |
|
|
EBITDA Margin |
85.2 |
% |
86.4 |
% |
85.2 |
% |
86.4 |
% |
|
FFO |
530.7 |
|
604.2 |
|
27.4 |
|
31.3 |
|
|
FFO Margin |
60.7 |
% |
62.0 |
% |
60.7 |
% |
62.0 |
% |
|
Adjusted Funds from
Operations |
479.8 |
|
555.3 |
|
24.8 |
|
28.8 |
|
|
AFFO
Margin |
54.6 |
% |
56.7 |
% |
54.6 |
% |
56.7 |
% |
|
(1) Same
properties information evaluates the performance of the industrial
properties without including recent acquisitions closed in
January, September and December 2017. (2) Includes
acquisitions closed in January, September and December 2017. |
Source:
PGIM Real Estate - Asset Management and Fund Accounting |
|
|
|
|
|
|
|
Rental RevenuesIn 2Q18,
Terrafina reported rental revenues of US$47.6 million, a 14.2% or
US$5.9 million increase compared to 2Q17.
Rental revenues do not include accrued revenues
as these are a non-cash item.
Other Operating IncomeIn 2Q18,
other operating income totaled US$2.6 million, a 7.8% or US$0.2
million decrease compared to 2Q17.
Other operating income mainly stem from tenant
refunds from triple-net leases. Expenses reimbursable to Terrafina
mainly included electricity, property taxes, insurance costs and
maintenance.
Net revenues reached US$50.6 million in 2Q18, an
increase of US$6.2 million, or 14.0% compared to 2Q17.
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
2Q18 |
2Q17 |
Var. % |
2Q18 |
2Q17 |
Var. % |
|
(millions of pesos) |
(millions of dollars) |
Rental Revenue |
921.8 |
773.6 |
19.2 |
% |
47.6 |
41.6 |
14.2 |
% |
Accrued Income1 |
8.4 |
5.8 |
46.5 |
% |
0.4 |
0.3 |
36.8 |
% |
Other Operating Revenues |
50.9 |
45.8 |
11.2 |
% |
2.6 |
2.5 |
7.8 |
% |
Reimbursable Expenses as Revenues2 |
40.7 |
36.0 |
13.1 |
% |
2.1 |
1.9 |
10.3 |
% |
Reimbursable Tenant Improvements |
5.5 |
7.5 |
-26.1 |
% |
0.3 |
0.4 |
-28.9 |
% |
Other
non-cash income |
4.7 |
2.3 |
102.5 |
% |
0.2 |
0.1 |
86.7 |
% |
Net Revenue |
981.1 |
825.1 |
18.9 |
% |
50.6 |
44.4 |
14.0 |
% |
(1)
Straight line rent adjustment; non-cash item. (2) Triple net leases
expenses reimbursed to Terrafina from its tenants. |
Source: PGIM Real
Estate - Fund Accounting |
|
|
|
|
|
|
For additional information regarding the revenue breakdown
used to calculate additional metrics presented in this
earnings report, please refer to Appendix 1 in the last
section of this document. |
Real Estate ExpensesIn 2Q18,
real estate expenses totaled US$7.1 million, an increase of 9.1% or
US$0.6 million compared to 2Q17.
It is important to differentiate between
expenses that are directly related to the operation and those that
are for the maintenance of the industrial portfolio; the latter are
used in the NOI calculation.
The remainder of the accounts included in real
estate expenses are considered non-recurring expenses and are used
to calculate EBITDA and AFFO.
For additional information regarding the real estate
expenses breakdown, please refer to Appendix 2 in the last
section of this document. |
|
Net Operating Income (NOI)In
2Q18, NOI totaled US$47.9 million, a 14.6% or US$6.1 million
increase compared with 2Q17. NOI margin increased by 82 basis
points reaching 94.9% compared to 94.1% in 2Q17.
The following table displays the NOI calculation
for 2Q18:
|
|
|
|
|
|
|
Net Operating
Income |
|
|
|
|
|
|
|
2Q18 |
2Q17 |
Var. % |
2Q18 |
2Q17 |
Var. % |
|
(millions of pesos unless otherwise stated) |
(millions of dollars unless otherwise stated) |
Rental Revenues1 |
921.8 |
|
773.6 |
|
19.2 |
% |
47.6 |
|
41.6 |
|
14.2 |
% |
Other Operating income2 |
55.8 |
|
51.7 |
|
8.0 |
% |
2.9 |
|
2.8 |
|
3.6 |
% |
Net Revenues for NOI Calculation |
977.6 |
|
825.2 |
|
18.5 |
% |
50.5 |
|
44.4 |
|
13.6 |
% |
Repair
and Maintenance |
-6.0 |
|
-8.2 |
|
-26.5 |
% |
-0.3 |
|
-0.4 |
|
-30.4 |
% |
Property
Taxes |
0.6 |
|
-0.4 |
|
-280.0 |
% |
0.0 |
|
0.0 |
|
-266.5 |
% |
Property
Management Fees |
-20.4 |
|
-16.6 |
|
23.0 |
% |
-1.1 |
|
-0.9 |
|
17.8 |
% |
Electricity |
-13.1 |
|
-12.7 |
|
2.9 |
% |
-0.7 |
|
-0.7 |
|
-5.0 |
% |
Property
Insurance |
-2.9 |
|
-2.8 |
|
3.7 |
% |
-0.2 |
|
-0.2 |
|
-0.4 |
% |
Security |
-5.0 |
|
-3.8 |
|
33.8 |
% |
-0.3 |
|
-0.2 |
|
27.3 |
% |
Other
Operational Expenses |
-3.9 |
|
-4.6 |
|
-14.0 |
% |
-0.2 |
|
-0.2 |
|
-19.9 |
% |
Real Estate Operating Expenses for NOI
Calculation |
-50.7 |
|
-48.9 |
|
3.6 |
% |
-2.6 |
|
-2.6 |
|
-2.1 |
% |
Net Operating Income3 |
926.9 |
|
776.3 |
|
19.4 |
% |
47.9 |
|
41.8 |
|
14.6 |
% |
NOI
Margin |
94.9 |
% |
94.1 |
% |
82 bps |
94.9 |
% |
94.1 |
% |
82 bps |
(1)Excludes accrued income from straight line rent adjustments as
it is a non-cash item. (2) Excludes tenant improvements
reimbursements which are included in ' AFFO ' (3) The income
calculation generated by the operation of the property, independent
of external factors such as financing and income taxes. |
NOI is the
result of Net Revenues (includes rental income and
triple net leases expenses reimbursements) minus Real Estate
Operating Expenses (costs incurred during the operation
and maintenance of the industrial portfolio). |
Source: PGIM Real
Estate - Fund Accounting |
|
|
|
Fees and Administrative Expenses (G&A)
G&A in 2Q18 totaled US$5.6 million, a 13.1%
or US$0.6 million increase compared to 2Q17.
The following table breaks down total G&A:
|
|
|
|
|
|
|
G&A |
|
|
|
|
|
|
|
2Q18 |
2Q17 |
Var. % |
2Q18 |
2Q17 |
Var. % |
|
(millions of pesos unless otherwise stated) |
(millions of dollars unless otherwise stated) |
External Advisor Fees1 |
-59.2 |
-47.7 |
24.1 |
% |
-2.9 |
-2.6 |
11.3 |
% |
Professional and Consulting Services |
-6.1 |
-8.9 |
-31.1 |
% |
-0.4 |
-0.5 |
-22.0 |
% |
Payroll,
Admin. Fees and Other Expenses |
-45.6 |
-34.4 |
32.5 |
% |
-2.3 |
-1.9 |
24.6 |
% |
Total G&A2 |
-110.9 |
-91.0 |
21.9 |
% |
-5.6 |
-4.9 |
13.1 |
% |
(1) General
and Administrative Expenses (2) PLA Administradora Industrial, S.
de R.L. de C.V., is a Mexican affiliate of PGIM Real Estate and
Advisor as per the Advisory Contract. |
Source: PGIM Real
Estate - Fund Accounting |
|
|
|
Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA)In 2Q18, EBITDA totaled US$43.6
million, an increase of US$5.7 million, or 15.0%, compared to 2Q17.
EBITDA margin for 2Q18 was 86.4%, a 111 basis point increase
compared to 2Q17.
The following shows the EBITDA calculation for 2Q18:
EBITDA |
|
|
|
|
|
|
|
2Q18 |
2Q17 |
Var. % |
2Q18 |
2Q17 |
Var. % |
|
(millions of pesos unless otherwise stated) |
(millions of dollars unless otherwise stated) |
Rental Revenues1 |
921.8 |
|
773.6 |
|
19.2 |
% |
47.6 |
|
41.6 |
|
14.2 |
% |
Other Operating
income2 |
55.8 |
|
51.7 |
|
8.0 |
% |
2.9 |
|
2.8 |
|
3.6 |
% |
Real Estate Expenses for EBITDA Calculation |
-51.3 |
|
-51.1 |
|
0.4 |
% |
-2.6 |
|
-2.8 |
|
-4.9 |
% |
Real
Estate Operating Expenses for NOI Calculation |
-50.7 |
|
-48.9 |
|
3.6 |
% |
-2.6 |
|
-2.6 |
|
-2.1 |
% |
Advertising |
-0.5 |
|
-0.2 |
|
109.5 |
% |
0.0 |
|
0.0 |
|
- |
|
Admin.
Property Insurance Expenses |
-0.7 |
|
-0.8 |
|
-14.3 |
% |
0.0 |
|
0.0 |
|
-17.7 |
% |
Other
Admin. Real Estate Expenses |
0.6 |
|
-1.1 |
|
-156.0 |
% |
0.0 |
|
-0.1 |
|
-144.9 |
% |
Fees and Admin. Expenses |
-84.4 |
|
-69.6 |
|
21.2 |
% |
-4.3 |
|
-3.8 |
|
12.3 |
% |
External
Advisor Fees |
-59.2 |
|
-47.7 |
|
24.1 |
% |
-2.9 |
|
-2.6 |
|
11.3 |
% |
Legal,
Admin. and Other Professional Fees |
-15.0 |
|
-12.3 |
|
22.1 |
% |
-0.8 |
|
-0.6 |
|
26.7 |
% |
Trustee
Fees |
-0.3 |
|
-2.2 |
|
-84.9 |
% |
0.0 |
|
-0.1 |
|
-86.7 |
% |
Payroll |
-6.8 |
|
-5.8 |
|
18.6 |
% |
-0.4 |
|
-0.3 |
|
12.9 |
% |
Other
Expenses |
-3.0 |
|
-1.7 |
|
75.2 |
% |
-0.2 |
|
-0.1 |
|
63.6 |
% |
EBITDA3 |
842.0 |
|
704.5 |
|
5.6 |
% |
43.6 |
|
37.9 |
|
15.0 |
% |
EBITDA
Margin |
86.4 |
% |
85.3 |
% |
111 bps |
86.4 |
% |
85.3 |
% |
111 bps |
(1)
Excludes accrued income from straight line rent adjustments as it
is a non-cash item. (2) Excludes tenant improvements reimbursements
which is included in AFFO calculation. (3) Earnings
before interest, taxes, depreciation and amortization. |
Source: PGIM Real
Estate - Fund Accounting |
|
For additional information regarding the commissions and
administrative expenses breakdown used for the calculation of
EBITDA and AFFO, please refer to Appendix 3 located in the last
section of this document. |
|
Financing ExpensesIn 2Q18, financing expenses
totaled US$12.7 million, an increase of 13.9% or US$1.6 million
compared to 2Q17.
|
|
|
|
|
|
Financial Expenses |
|
|
|
|
|
|
2Q18 |
2Q17 |
Var. % |
2Q18 |
2Q17 |
Var. % |
|
(millions of pesos unless otherwise stated) |
(millions of dollars unless otherwise stated) |
Interest Paid |
-240.2 |
-205.4 |
17.0 |
% |
-12.4 |
-11.1 |
12.2 |
% |
Borrowing Expenses |
-8.6 |
-3.8 |
127.2 |
% |
-0.4 |
-0.2 |
105.9 |
% |
Recurring |
0.0 |
-0.3 |
- |
|
0.0 |
0.0 |
- |
|
Non
Recurring |
-8.6 |
-3.4 |
- |
|
-0.4 |
-0.2 |
- |
|
Interest Income |
2.4 |
2.0 |
19.7 |
% |
0.1 |
0.1 |
13.8 |
% |
Total |
-246.4 |
-207.1 |
18.9 |
% |
-12.7 |
-11.2 |
13.9 |
% |
Source:
PGIM Real Estate - Fund Accounting |
|
|
|
Funds from Operations (FFO) / Adjusted Funds from
Operations (AFFO) In 2Q18, FFO increased by US$4.4
million, or 16.3% compared to 2Q17, reaching US$31.3 million. FFO
Margin was 62.0%, a 145 basis point increase compared to 2Q17.
Additionally, Terrafina reported an AFFO of US$28.8 million, an
increase of US$4.4 million, or 18.2% compared to 2Q17. AFFO margin
was 56.7%, an increase of 241 basis points versus 2Q17.
|
|
|
|
|
|
|
Funds from
Operations (FFO) |
|
|
|
|
|
|
|
2Q18 |
2Q17 |
Var. % |
2Q18 |
2Q17 |
Var. % |
|
(millions of pesos unless otherwise stated) |
(millions of dollars unless otherwise stated) |
EBITDA |
842.0 |
|
704.5 |
|
19.5 |
% |
43.6 |
|
37.9 |
|
15.0 |
% |
Finance Cost1 |
-237.8 |
|
-203.7 |
|
16.7 |
% |
-12.3 |
|
-11.0 |
|
12.0 |
% |
Funds from Operations (FFO) |
604.2 |
|
500.8 |
|
20.6 |
% |
31.3 |
|
26.9 |
|
16.3 |
% |
FFO
Margin |
62.0 |
% |
60.6 |
% |
145 bps |
62.0 |
% |
60.6 |
% |
145 bps |
Tenant
Improvements |
-25.3 |
|
-31.1 |
|
-18.8 |
% |
-1.3 |
|
-1.7 |
|
-22.8 |
% |
Leasing
Commissions |
-20.0 |
|
-13.2 |
|
51.6 |
% |
-1.0 |
|
-0.7 |
|
45.7 |
% |
Other Non Recurring
Expenses3 |
-3.7 |
|
-4.1 |
|
-11.3 |
% |
-0.2 |
|
-0.2 |
|
3.8 |
% |
Adjusted Funds from Operations (AFFO) |
555.3 |
|
452.5 |
|
22.7 |
% |
28.8 |
|
24.3 |
|
18.2 |
% |
AFFO
Margin |
56.7 |
% |
54.3 |
% |
241 bps |
56.7 |
% |
54.3 |
% |
241 bps |
(1) Net
Operational Interest Expenses comprised by interest paid, recurring
borrowing expenses and other interest income. (2) Capex
reserve for expenses to acquisitions, dispositions, legal and
other expenses. |
Source: PGIM Real
Estate - Fund Accounting |
|
|
|
Comprehensive
IncomeComprehensive Income For 2Q18 reached a profit of
US$149.4 million, compared to a loss of US$45.3 million in
2Q17.
The following table presents the calculation of
Comprehensive Income for 2Q18:
|
|
|
|
|
|
|
Comprehensive
Income |
|
|
|
|
|
|
|
2Q18 |
2Q17 |
Var. % |
2Q18 |
2Q17 |
Var. % |
|
(millions of pesos unless otherwise stated) |
(millions of dollars unless otherwise stated) |
Net Revenues |
988.9 |
825.1 |
19.8 |
% |
51.0 |
44.4 |
14.9 |
% |
Real Estate
Expenses |
-137.4 |
-120.3 |
14.2 |
% |
-7.1 |
-6.5 |
9.4 |
% |
Fees and Other
Expenses |
-110.9 |
-91.0 |
21.9 |
% |
-5.7 |
-4.9 |
15.8 |
% |
Gain (Loss) from Sales
of Real Estate Properties |
0.0 |
1.9 |
- |
|
0.0 |
0.1 |
- |
|
Net Income (Loss) from
Fair Value Adjustment on Investment Properties |
4.1 |
-62.7 |
- |
|
0.2 |
-3.4 |
- |
|
Net Income (Loss) from
Fair Value Adjustment on Derivative Financial Instruments |
9.4 |
4.4 |
112.4 |
% |
0.5 |
0.2 |
103.4 |
% |
Net Income (Loss) from
Fair Value Adjustment on Borrowings |
246.3 |
-190.2 |
- |
|
12.7 |
-10.2 |
- |
|
Realized gain (loss) on
derivative financial instruments |
-0.2 |
- |
- |
|
0.0 |
-10.2 |
- |
|
Foreign Exchange Gain
(loss) |
-69.0 |
50.8 |
- |
|
-3.6 |
2.7 |
- |
|
Operating Profit |
931.1 |
418.1 |
122.7 |
% |
48.0 |
22.4 |
113.9 |
% |
Financial Income |
2.4 |
2.0 |
19.7 |
% |
0.1 |
0.1 |
- |
|
Financial Expenses |
-248.8 |
-209.1 |
19.0 |
% |
-12.8 |
-11.3 |
14.0 |
% |
Net Financial Cost |
-246.4 |
-207.1 |
18.9 |
% |
-12.7 |
-11.2 |
13.9 |
% |
Share of Profit from
Equity Accounted Investments |
7.4 |
15.7 |
- |
|
0.4 |
0.8 |
- |
|
Net Profit (Loss) |
692.1 |
226.6 |
205.5 |
% |
35.7 |
12.1 |
194.1 |
% |
Items Reclassified
after Net Profit (Loss) - Currency Translation
Adjustments |
2,205.5 |
-1,066.9 |
- |
|
113.7 |
-57.5 |
- |
|
Comprehensive Income |
2,897.6 |
-840.3 |
- |
|
149.4 |
-45.3 |
- |
|
Source: PGIM Real
Estate - Fund Accounting |
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions per CBFIsIn 2Q18, Terrafina
generated US$28.8 million of AFFO and therefore will distribute
US$0.0364 per CBFI.
|
|
|
|
|
|
|
Distributions |
|
|
|
|
|
|
(millions of pesos unless otherwise stated) |
2Q17 |
3Q17 |
4Q17 |
1Q18 |
2Q18 |
Var.% (2Q18 vs
2Q17) |
Total Outstanding
CBFIs (millions of CBFIs) |
791.0 |
|
791.0 |
|
791.0 |
|
791.0 |
|
791.0 |
|
0.0 |
% |
CBFI Price1 |
32.35 |
|
31.29 |
|
30.20 |
|
28.68 |
|
28.46 |
|
-12.0 |
% |
Distributions |
452.4 |
|
410.4 |
|
484.9 |
|
505.2 |
|
555.3 |
|
22.7 |
% |
Distributions Per CBFI |
0.5720 |
|
0.5188 |
|
0.6130 |
|
0.6386 |
|
0.7020 |
|
22.7 |
% |
FX Rate USD/MXN
(average closing period) |
18.57 |
|
17.83 |
|
18.93 |
|
18.78 |
|
19.39 |
|
4.4 |
% |
Distributions (million
dollars) |
24.3 |
|
23.0 |
|
25.6 |
|
26.9 |
|
28.8 |
|
18.2 |
% |
Distributions Per CBFI
(dollars) |
0.0308 |
|
0.0291 |
|
0.0324 |
|
0.0340 |
|
0.0364 |
|
18.2 |
% |
Annualized Distribution Yield2 |
7.1 |
% |
6.6 |
% |
8.1 |
% |
8.9 |
% |
9.9 |
% |
279 bps |
(1)
Average closing price for the period. (2) Annualized
distribution per share divided by the average CBFI price of the
quarter. Quarterly distribution yield calculation has been
annualized. |
|
Source: PGIM Real
Estate - Fund Accounting |
|
|
|
DebtAs of June 30, 2018,
Terrafina’s total debt reached US$998.2 million. The average cost
of Terrafina’s long-term debt was 4.99%. All of Terrafina’s debt is
denominated in U.S. dollars.
|
|
|
|
|
|
|
|
|
Outstanding Debt |
|
|
|
|
|
|
|
|
(as of
June 30, 2018) |
Currency |
Millions of pesos |
Millions of dollars |
Interest Rate |
Terms |
Maturity |
Extension Option |
Derivatives |
Long Term
Debt |
|
|
|
|
|
|
|
|
Citibank1 |
Dollars |
1,032.0 |
52.0 |
Libor + 2.45% |
Interest Only |
Jan
2023 |
- |
US$120M swap4 / US$100M cap5 |
Metlife |
Dollars |
2,979.5 |
150.0 |
4.75 |
% |
Interest Only |
Jan
2027 |
- |
- |
Banamex2 |
Dollars |
7,013.5 |
353.1 |
Libor + 2.45% |
Interest Only |
Oct
2022 |
- |
US$105M swap6 |
Senior
Notes3 |
Dollars |
8,489.8 |
427.4 |
5.25 |
% |
Interest Only |
Nov
2022 |
- |
- |
New York
Life |
Dollars |
311.9 |
15.7 |
5.19 |
% |
Interest + Principal |
Feb
2020 |
- |
- |
Total Debt |
|
19,826.6 |
998.2 |
|
|
|
|
|
Net Cash |
|
2,042.4 |
102.8 |
|
|
|
|
|
Net Debt |
|
17,784.2 |
895.3 |
|
|
|
|
|
(1)
Unsecured syndicated revolving credit facility. (2) Unsecured
syndicated term loan facility; interest only for the first three
years. (3) Value at Cost: US$425 million / Ps.7,977 million. |
(4) Swap
fixed rate: 1.286%. (5) Cap strike price: 1.75% (6) Swap fixed
rate: 1.768%. |
|
|
|
|
|
Source:
PGIM Real Estate - Fund Accounting and Transactions |
|
|
|
The following tables show leverage and debt
service coverage as of June 30, 2018 as well as Terrafina’s
projections for the following six quarters:
|
|
Loan-to-Value (LTV) |
|
(as of June 30,
2018) |
(millions of pesos) |
(millions of dollars) |
Total Assets |
49,498.2 |
2,491.9 |
|
Total
Debt |
19,826.6 |
998.2 |
|
|
|
|
Loan-to-Value (LTV)1 |
|
40.1 |
% |
(1) Total
Debt divided by Total Assets as defined by the National Securities
and Banking Commission (CNBV) |
Source:
PGIM Real Estate - Fund Accounting and Capital Markets |
|
|
|
|
|
Debt Service Coverage Ratio
(DSCR) |
|
|
|
|
period |
(millions of pesos) |
(millions of dollars) |
|
Cash & Cash Equivalents |
June 30, 2018 |
2,042.4 |
102.8 |
|
Recoverable Taxes |
Σ next
6 quarters |
296.8 |
14.9 |
|
EBIT1 after
distributions |
Σ next
6 quarters |
1,719.7 |
86.6 |
|
Available
Credit Line |
June 30, 2018 |
4,818.7 |
242.6 |
|
|
|
|
period |
(millions of pesos) |
(millions of dollars) |
|
Interest Payments |
Σ next 6 quarters |
1,500.5 |
75.5 |
|
Principal Payments |
Σ next
6 quarters |
17.7 |
0.9 |
|
Recurring CAPEX |
Σ next
6 quarters |
193.9 |
9.8 |
|
Development Expenses |
Σ next 6 quarters |
290.9 |
14.6 |
|
|
|
|
|
|
Debt Service Coverage Ratio (DSCR)2 |
|
|
4.4x |
|
(1)
Earnings Before Interest and Taxes |
|
(2) (Cash
& Cash Equivalents + Recoverable Taxes + EBIT After
Distributions + Available Credit Line) / (Interest Payments +
Principal Payments + Recurring CAPEX + Development Expenses) |
Source:
PGIM Real Estate - Fund Accounting and Capital Markets |
|
|
|
Moreover, as of June 30, 2018, Terrafina was in full compliance
with its debt covenants related to the US$425 million bond issuance
(November 2015), as follows:
|
|
|
Unsecured Bond Covenants |
|
|
(as of June 30,
2018) |
Terrafina |
Bond
Covenants |
Loan-to-Value (LTV)1 |
40.1 |
% |
≤ 60% |
Debt Service Coverage
Ratio (DSCR)2 |
3.2x |
≥
1.5x |
Secured Debt to Gross
Assets Limitation |
6.6 |
% |
≤
40% |
Unencumbered Assets to Unsecured Debt Limitation |
238 |
% |
≥ 150% |
(1) Total
Debt divided by Total Assets. (2) (Net Income/Loss + Interest on
Debt + Unrealized Gain /Loss of fair value changes)/ (all interest
and principal payments on Debt) |
Source: PGIM Real
Estate - Transactions |
|
|
|
Analyst CoverageThe following
is a list of banks and institutions that regularly publish research
reports on Terrafina:
|
|
- Barclays |
- Invex |
- BBVA Bancomer |
- Itaú BBA |
- Bradesco
|
- JPMorgan |
- BofA ML |
- Monex |
- BTG Pactual
|
- Morgan Stanley |
- BX+
|
- NAU Securities |
- Citi Banamex
|
- Scotiabank |
- Credit Suisse
|
- Vector |
- GBM |
- Santander |
- HSBC
|
- UBS |
- Interacciones
|
|
|
|
About TerrafinaTerrafina (BMV:TERRA13) is a
Mexican real estate investment trust formed primarily to acquire,
develop, lease and manage industrial real estate properties in
Mexico. Terrafina’s portfolio consists of attractive, strategically
located warehouses and other light manufacturing properties
throughout the Central, Bajio and Northern regions of Mexico. It is
internally managed by highly-qualified industry specialists and
externally advised by PGIM Real Estate.
Terrafina owns 298 real estate properties,
including 286 developed industrial facilities with a collective GLA
of approximately 40.9 million square feet and 12 land reserve
parcels, designed to preserve the organic growth capability of the
portfolio.
Terrafina’s objective is to provide attractive
risk-adjusted returns for the holders of its certificates through
stable distributions and capital appreciations. Terrafina aims to
achieve this objective through a successful performance of its
industrial real estate and complementary properties, strategic
acquisitions, access to a high level of institutional support, and
to its management and corporate governance structure. For more
information, please visit www.terrafina.mx
PGIM Real Estate PGIM Real
Estate is the real estate investment business of PGIM Inc., the
global investment management business of Prudential Financial, Inc.
(NYSE:PRU). Redefining the real estate investing landscape
since 1970, PGIM Real Estate has professionals in 18 cities in the
Americas, Europe and Asia Pacific with deep local knowledge and
expertise, and gross assets under management of US$69.6 billion
(US$50.3 billion net) as of March 31, 2018. PGIM Real Estate’s
tenured team offers to its global client base a broad range of real
estate equity, debt and securities investment strategies that span
the risk/return spectrum. For more information, visit
www.pgimrealestate.com
About Prudential Financial, Inc.Prudential
Financial, Inc. (NYSE:PRU), a financial services leader with more
than US$1 trillion of assets under management as of March 31, 2018,
has operations in the United States, Asia, Europe, and Latin
America. Prudential’s diverse and talented employees are committed
to helping individual and institutional customers grow and protect
their wealth through a variety of products and services, including
life insurance, annuities, retirement-related services, mutual
funds and investment management. In the U.S., Prudential’s iconic
Rock symbol has stood for strength, stability, expertise and
innovation for more than a century. For more information, please
visit www.news.prudential.com
Forward Looking StatementsThis document may
include forward-looking statements that may imply risks and
uncertainties. Terms such as "estimate", "project", "plan",
"believe", "expect", "anticipate", "intend", and other similar
expressions could be construed as previsions or estimates.
Terrafina warns readers that declarations and estimates mentioned
in this document, or realized by Terrafina’s management imply risks
and uncertainties that could change in function of various factors
that are out of Terrafina’s control. Future expectations reflect
Terrafina’s judgment at the date of this document. Terrafina
reserves the right or obligation to update the information
contained in this document or derived from this document. Past or
present performance is not an indicator to anticipate future
performance.
Conference Call
Terrafina(BMV: TERRA13)Cordially invites you to
participate in its Second Quarter 2018 Results
Friday, July 27, 201811:00 a.m. Eastern Time10:00
a.m. Central Time
To access the call, please
dial:from within the U.S. 1-877-830-2576from outside the
U.S. 1-785-424-1726Conference ID Number: Terrafina
Audio Webcast Link:
https://www.webcaster4.com/Webcast/Page/1111/26311
Conference Replay U.S.
1-844-488-7474International (outside the US)
1-862-902-0129Passcode: 24061815
Appendix
Appendix 1 – Revenues
Terrafina’s revenues are mainly classified as
rental revenues and other operating reimbursable revenues.
Additionally, there are accounting revenues that
must be registered according with IFRS; however, these are
considered as non-cash items and therefore are excluded in some
calculations.
Reimbursable tenant improvements are included in
the tenant improvement expenses for the AFFO calculation.
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
2Q18 |
2Q17 |
2Q18 |
2Q17 |
|
|
|
|
(millions of pesos) |
(millions of dollars) |
|
NOI
calculation |
|
Rental Revenue |
921.8 |
773.6 |
47.6 |
41.6 |
|
Non
Cash |
|
Accrued Income1 |
8.4 |
5.8 |
0.4 |
0.3 |
|
|
|
Other Operating Revenues |
50.9 |
45.8 |
2.6 |
2.5 |
|
NOI
calculation |
|
Reimbursable Expenses as Revenues2 |
40.7 |
36.0 |
2.1 |
1.9 |
|
AFFO
calculation |
|
Reimbursable Tenant Improvements |
5.5 |
7.5 |
0.3 |
0.4 |
|
Non
Cash |
|
Other
non-cash income |
4.7 |
2.3 |
0.2 |
0.1 |
|
|
|
Net Revenue |
981.1 |
825.1 |
50.6 |
44.4 |
|
NOI
calculation |
|
Share of Profit from Equity Accounted Investments2 |
15.1 |
15.7 |
0.8 |
0.9 |
|
|
|
(1)
Straight line rent adjustment. (2) Triple net leases expenses
reimbursed to Terrafina from its tenants. (2) Profit from
joint-venture developments. |
|
|
|
Source: PGIM Real
Estate - Fund Accounting |
|
|
|
|
|
Appendix 2 – Real Estate
Expenses
Real estate expenses are comprised of recurring
figures related with the operation (used for the Net Operating
Profit calculation) as well as non-recurring figures used for
metric calculations such as Earnings Before Interests, Taxes,
Depreciation and Amortization (EBITDA), Funds from Operations
(FFO), Adjusted Funds from Operations (AFFO).
The following table presents the real estate
expenses breakdown, which are used for the calculation of several
metrics.
|
|
|
|
|
|
|
|
|
Real Estate
Expenses |
|
|
|
|
|
|
|
2Q18 |
2Q17 |
2Q18 |
2Q17 |
|
|
|
(million of pesos) |
(million of dollars) |
|
|
Repair and Maintenance |
-36.8 |
-46.8 |
-1.9 |
-2.5 |
NOI
calculation |
|
Recurring |
-6.0 |
-8.2 |
-0.3 |
-0.4 |
AFFO
calculation |
|
Non
Recurring |
-30.8 |
-38.6 |
-1.6 |
-2.1 |
|
|
Property Taxes |
-4.8 |
-12.7 |
-0.3 |
-0.7 |
NOI
calculation |
|
Operating |
0.6 |
-0.4 |
0.0 |
0.0 |
Non
Cash |
|
Non
Operating |
-5.4 |
-12.4 |
-0.3 |
-0.7 |
NOI
calculation |
|
Property Management
Fees |
-20.4 |
-16.6 |
-1.1 |
-0.9 |
NOI
calculation |
|
Electricity |
-13.1 |
-12.7 |
-0.7 |
-0.7 |
AFFO
calculation |
|
Brokers Fees |
-20.0 |
-13.2 |
-1.0 |
-0.7 |
|
|
Property Insurance |
-3.6 |
-3.7 |
-0.2 |
-0.2 |
NOI
calculation |
|
Operating |
-2.9 |
-2.8 |
-0.2 |
-0.2 |
EBITDA
calculation |
|
Administrative |
-0.7 |
-0.8 |
0.0 |
0.0 |
NOI
calculation |
|
Security |
-5.0 |
-3.8 |
-0.3 |
-0.2 |
EBITDA
calculation |
|
Advertising |
-0.5 |
-0.2 |
0.0 |
0.0 |
|
|
Other Expenses |
-18.6 |
-6.1 |
-0.9 |
-0.3 |
NOI
calculation |
|
Operational Related |
-3.9 |
-4.6 |
-0.2 |
-0.2 |
Non
Cash |
|
Non
Operational Related |
-15.3 |
-0.5 |
-0.8 |
0.0 |
EBITDA
calculation |
|
Administrative |
0.6 |
-1.1 |
0.0 |
-0.1 |
Non
Cash |
|
Bad Debt Expense |
-14.6 |
-4.7 |
-0.8 |
-0.2 |
|
|
Total Real Estate Expenses |
-137.4 |
-120.3 |
-7.1 |
-6.5 |
|
|
Source: PGIM Real
Estate - Fund Accounting |
|
|
|
|
|
|
|
|
|
|
|
Appendix 3 – Fees and Administrative
Expenses
Fees and administrative expenses include figures
used for metric calculations such as Earnings before Interests,
Taxes, Depreciation and Amortization (EBITDA), Funds from
Operations (FFO), Adjusted Funds from Operations (AFFO).
Terrafina’s fees and administrative expenses
breakdown is available in the following table and indicates the
figures used for the calculation of these metrics:
|
|
|
|
|
|
|
Fees and
Administrative Expenses |
|
|
|
|
|
|
|
2Q18 |
2Q17 |
2Q18 |
2Q17 |
|
|
|
(million of pesos) |
(million of dollars) |
EBITDA
calculation |
|
External Advisor Fees |
-59.2 |
-47.7 |
-2.9 |
-2.6 |
|
|
Legal Fees |
-1.4 |
-3.8 |
-0.1 |
-0.2 |
EBITDA
calculation |
|
Recurring |
0.0 |
-0.3 |
0.0 |
0.0 |
AFFO
calculation |
|
Non
Recurring |
-1.3 |
-3.5 |
-0.1 |
-0.2 |
|
|
Other Professional
Fees |
-4.8 |
-5.1 |
-0.3 |
-0.3 |
EBITDA
calculation |
|
Recurring |
-2.4 |
-3.3 |
-0.2 |
-0.2 |
AFFO
calculation |
|
Non
Recurring |
-2.3 |
-1.7 |
-0.1 |
-0.1 |
|
|
Administrative
Fees |
-35.4 |
-24.8 |
-1.8 |
-1.3 |
EBITDA
calculation |
|
Recurring |
-12.5 |
-8.6 |
-0.6 |
-0.5 |
Non
Operational related |
|
Non
Recurring1 |
-22.9 |
-16.2 |
-1.1 |
-0.9 |
EBITDA
calculation |
|
Payroll |
-6.8 |
-5.8 |
-0.4 |
-0.3 |
EBITDA
calculation |
|
Trustee Fees |
-0.3 |
-2.2 |
0.0 |
-0.1 |
EBITDA
calculation |
|
Other Expenses |
-3.0 |
-1.7 |
-0.2 |
-0.1 |
|
|
Total Fees and Admin. Expenses |
-110.9 |
-91.0 |
-5.6 |
-4.9 |
|
|
(1) Non
operational related administrative fees. |
|
|
Source:
PGIM Real Estate - Fund Accounting |
|
|
|
|
Appendix 4 – Reconciliation
|
|
|
|
Reconciliation of Net Profit (Loss) to FFO, EBITDA and
NOI |
|
|
|
|
2T18 |
2T17 |
2T18 |
2T17 |
|
(millions of pesos) |
(millions of dollars) |
Comprehensive Income (Loss) |
2,897.6 |
-840.3 |
149.4 |
-45.3 |
Add (deduct) Currency
Translation Adjustment: |
|
|
|
|
Currency
Translation Adjustment |
-2,205.5 |
1,066.9 |
-113.7 |
57.5 |
Add (deduct) Cost of
Financing Adjustment: |
|
|
|
|
Non
Recurring Borrowing Expenses |
8.6 |
3.4 |
0.4 |
0.2 |
Add (deduct) Non-Cash
Adjustment: |
|
|
|
|
Foreign
Exchange Adjustments |
69.0 |
-50.8 |
3.6 |
-2.7 |
Gain
(Loss) on Derivative Financial Instruments |
0.2 |
- |
0.0 |
- |
Fair Value Adjustment on Borrowings |
-246.3 |
190.2 |
-12.7 |
10.2 |
Fair
Value Adjustment on Derivative Financial Instruments |
-9.4 |
-4.4 |
-0.5 |
-0.2 |
Fair
Value Adjustment on Investment Properties |
-4.1 |
62.7 |
-0.2 |
3.4 |
Gain
(Loss) from Sales of Real Estate Properties |
0.0 |
-1.9 |
0.0 |
-0.1 |
Add (deduct) Expenses
Adjustment: |
|
|
|
|
Non
Recurring Repair and Maintenance |
30.8 |
38.6 |
1.6 |
2.1 |
Non
Operating Property Taxes |
5.4 |
12.4 |
0.3 |
0.7 |
Brokers
Fees |
20.0 |
13.2 |
1.0 |
0.7 |
Bad Debt
Expense |
14.6 |
4.7 |
0.8 |
0.3 |
Other Non
Operational Related Expenses |
15.3 |
0.5 |
0.8 |
0.0 |
Non
Recurring Legal Fees |
1.3 |
3.5 |
0.1 |
0.2 |
Non
Recurring Other Professional Fees |
2.3 |
1.7 |
0.1 |
0.1 |
Add (deduct) Revenues
Adjustment: |
|
|
|
|
Accrued
Income |
-8.4 |
-5.8 |
-0.4 |
-0.3 |
Other
Non-Cash Income |
-4.7 |
-2.3 |
-0.2 |
-0.1 |
Reimbursable Tenant Improvements |
-5.5 |
-7.5 |
-0.3 |
-0.4 |
Add (deduct) Non
Operational Administrative Fees |
|
|
|
|
Non
Operational Administrative Fees |
22.9 |
16.2 |
1.2 |
0.9 |
FFO |
604.2 |
500.8 |
31.3 |
26.9 |
Add (deduct) Cost of
Financing Adjustment: |
|
|
|
|
Interest
Paid |
240.2 |
205.4 |
12.4 |
11.1 |
Recurring
Borrowing Expenses |
0.0 |
0.3 |
0.0 |
0.0 |
Interest
Income |
-2.4 |
-2.0 |
-0.1 |
-0.1 |
EBITDA |
842.0 |
704.5 |
43.6 |
37.9 |
Add (deduct) Expenses
Adjustment: |
|
|
|
|
External
Advisor Fees |
59.2 |
47.7 |
3.1 |
2.6 |
Recurring
Legal Fees |
0.0 |
0.3 |
0.0 |
0.0 |
Recurring
Other Professional Fees |
2.4 |
3.3 |
0.1 |
0.2 |
Administrative Fees |
12.5 |
8.6 |
0.6 |
0.5 |
Payroll |
6.8 |
5.8 |
0.4 |
0.3 |
Trustee
Fees |
0.3 |
2.2 |
0.0 |
0.1 |
Other
Expenses |
3.0 |
1.7 |
0.2 |
0.1 |
Advertising |
0.5 |
0.2 |
0.0 |
0.0 |
Administrative Property insurance |
0.7 |
0.8 |
0.0 |
0.0 |
Other
Administrative Expenses |
-0.6 |
1.1 |
0.0 |
0.1 |
NOI |
926.9 |
776.3 |
47.9 |
41.8 |
Add (deduct) Expenses
Adjustment: |
|
|
|
|
Recurring
Repair and Maintenance |
6.0 |
8.2 |
0.3 |
0.4 |
Operating
Property Taxes |
-0.6 |
0.4 |
0.0 |
0.0 |
Property
Management Fees |
20.4 |
16.6 |
1.1 |
0.9 |
Electricity |
13.1 |
12.7 |
0.7 |
0.7 |
Operating
Property Insurance |
2.9 |
2.8 |
0.2 |
0.2 |
Security |
5.0 |
3.8 |
0.3 |
0.2 |
Other
Operational Expenses |
3.9 |
4.6 |
0.2 |
0.2 |
Add (deduct) Revenues
Adjustment: |
|
|
|
|
Other
Non-Cash Income |
4.7 |
2.3 |
0.2 |
0.1 |
Accrued
Income |
8.4 |
5.8 |
0.4 |
0.3 |
Reimbursable Tenant Improvements |
5.5 |
7.5 |
0.3 |
0.4 |
Share of
Profit from Equity Accounted Investments |
-15.1 |
-15.7 |
-0.8 |
-0.8 |
Net Revenue |
981.1 |
825.1 |
50.6 |
44.4 |
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Profit (Loss) to AFFO |
|
|
|
|
|
2T18 |
2T17 |
2T18 |
2T17 |
|
(millions of pesos) |
(millions of dollars) |
Comprehensive Income (Loss) |
2,897.6 |
-840.3 |
149.4 |
-45.3 |
Add (deduct) Cost of
Financing Adjustment: |
|
|
|
|
Non
Recurring Borrowing Expenses |
-2,205.5 |
1,066.9 |
-113.7 |
57.5 |
Add (deduct) Cost of
Financing Adjustment: |
|
|
|
|
Non
Recurring Borrowing Expenses |
8.6 |
3.4 |
0.4 |
0.2 |
Add (deduct) Non-Cash
Adjustment: |
|
|
|
|
Foreign
Exchange Adjustments |
69.0 |
-50.8 |
3.6 |
-2.7 |
Gain
(Loss) on Derivative Financial Instruments |
0.2 |
- |
0.0 |
- |
Fair
Value Adjustment on Borrowings |
-246.3 |
190.2 |
-12.7 |
10.2 |
Fair
Value Adjustment on Derivative Financial Instruments |
-9.4 |
-4.4 |
-0.5 |
-0.2 |
Fair
Value Adjustment on Investment Properties |
-4.1 |
62.7 |
-0.2 |
3.4 |
Gain
(Loss) from Sales of Real Estate Properties |
0.0 |
-0.8 |
0.0 |
0.0 |
Add (deduct) Expenses
Adjustment: |
|
|
|
|
Non
Operating Property Taxes |
5.4 |
12.4 |
0.3 |
0.7 |
Bad Debt
Expense |
14.6 |
4.7 |
0.8 |
0.3 |
Other
Expenses Non Operational Related |
15.3 |
0.5 |
0.8 |
0.0 |
Add (deduct) Revenues
Adjustment: |
|
|
|
|
Accrued
Income |
-8.4 |
-5.8 |
-0.4 |
-0.3 |
Other
Non-Cash Income |
-4.7 |
-2.3 |
-0.2 |
-0.1 |
Add (deduct) Non
Operational Administrative Fees |
|
|
|
|
Non
Administrative Fees |
22.9 |
16.2 |
1.2 |
0.9 |
Add (deduct) Capex
Adjustment: |
|
|
|
|
AFFO |
555.3 |
452.4 |
28.8 |
24.3 |
|
|
|
|
|
Appendix 5 - Cap Rate
Calculation
Terrafina subtracts cash and land reserves for the cap rate
calculation.
Implied cap rate and under NAV (Net Asset Value) calculation are
shown in the following tables:
|
|
|
Implied
Cap Rate |
|
|
Quarterly Average Price
(dollars)¹ |
1.47 |
|
|
(x) CBFIs (million
shares) |
791.0 |
|
|
(=) Market
Capitalization |
1,161.0 |
|
|
(+) Total
Liabilities |
1,030.5 |
|
|
(-) Cash |
102.8 |
|
|
(=) Enterprise Value |
2,088.6 |
|
|
(-) Landbank |
51.9 |
|
|
(=) Implied Operating Real Estate Value |
2,036.7 |
|
|
Net Operating Income
(NOI) 2018e |
185.0 |
|
|
Implied Cap Rate |
9.1 |
% |
|
Figures expressed in
millions of dollars unless otherwise stated. |
|
(1) 2Q18
average share price of Ps.28.46; and average exchange rate of Ps.
19.3911 |
|
|
|
Cap Rate Calculation
with NAV |
|
|
(+) Investment Properties (excluding landbank) |
2,261.0 |
|
|
(+) Land |
51.9 |
|
|
(+) Cash |
102.8 |
|
|
(-) Total
Liabilities |
1,030.5 |
|
|
(=) NAV1 |
1,385.2 |
|
|
(/) CBFIs (million
shares) |
791.0 |
|
|
(=) NAV per CBFI (dollars) |
1.8 |
|
|
|
|
|
CBFI Price (NAV calculation) |
1.8 |
|
|
(x) CBFIs (million
shares) |
791.0 |
|
|
(=) Market Cap |
1,385.2 |
|
|
(+) Total Debt and
Liabilities |
1,030.5 |
|
|
(-) Cash |
102.8 |
|
|
(=) Enterprise Value |
2,312.9 |
|
|
(-) Landbank |
51.9 |
|
|
(=) Implied Operating Real Estate Value |
2,261.0 |
|
|
Net Operating Income
(NOI) 2018e |
185.0 |
|
|
Implied Cap Rate |
8.2 |
% |
|
|
|
|
|
Financial Statements
|
|
|
|
Income
Statement |
|
2Q18 |
2Q18 |
|
|
(thousands of pesos) |
(thousands of dollars) |
|
|
|
|
Rental revenues |
|
$ |
930,232 |
|
$ |
47,972 |
|
Other operating
income |
|
|
58,635 |
|
|
3,024 |
|
Real estate operating
expenses |
|
|
(137,408 |
) |
|
(7,086 |
) |
Fees and other
expenses |
|
|
(110,920 |
) |
|
(5,720 |
) |
Realized gain (loss)
from disposal of investment properties |
|
|
- |
|
|
- |
|
Net gain (loss) from
fair value adjustment on investment properties |
|
|
4,109 |
|
|
212 |
|
Net gain (loss) from
fair value adjustment on borrowings |
|
|
246,282 |
|
|
12,701 |
|
Net gain (loss)
unrealized from fair value on derivative financial instruments |
|
|
9,358 |
|
|
483 |
|
Realized gain (loss) on
derivative financial instruments |
|
|
(207 |
) |
|
(11 |
) |
Foreign exchange (loss)
gain |
|
|
(69,004 |
) |
|
(3,559 |
) |
Operating profit |
|
|
931,077 |
|
|
48,016 |
|
|
|
|
|
Finance income |
|
|
2,422 |
|
|
125 |
|
Finance cost |
|
|
(248,788 |
) |
|
(12,830 |
) |
Finance cost - net |
|
|
(246,366 |
) |
|
(12,705 |
) |
|
|
|
|
Share of profit from
equity accounted investments |
|
|
7,378 |
|
|
380 |
|
Net Profit for the period |
|
|
692,089 |
|
|
35,691 |
|
|
|
|
|
Items
that may be subsequently reclassified to profit or loss- currency
translation differences |
|
|
2,205,470 |
|
|
113,736 |
|
|
|
|
|
Total Comprehensive income for the period |
|
|
2,897,559 |
|
|
149,427 |
|
|
|
|
|
|
|
|
|
Financial Statements
|
|
|
|
Balance Sheet |
Jun-31-18 |
|
Jun-31-18 |
(thousands of pesos) |
(thousands of pesos) |
(thousands of pesos) |
Assets |
|
|
|
Non-current
assets |
|
|
|
Investment
properties |
$ |
46,176,289 |
|
$ |
2,324,704 |
(Cost:30/06/2018 -
Ps.45,597,200, US$2,351,450; 31/03/2018 - Ps.41,634,186,
US$2,269,5735) |
|
|
|
Investments accounted
using equity method |
|
449,436 |
|
|
22,626 |
Derivative financial
instruments |
|
70,828 |
|
|
3,566 |
Deferred charges and
accrued income |
|
208,263 |
- |
|
10,485 |
Loan receivable |
|
38,613 |
|
|
1,944 |
(Cost: 30/06/2018 -
Ps.38,613, US$1,991;31/03/2018 - Ps.35,660, US$1,944) |
|
|
|
Restricted cash |
|
36,934 |
|
|
1,859 |
Current
assets |
|
|
|
Other assets |
|
34,191 |
|
|
1,721 |
Loan receivable |
|
632 |
|
|
32 |
(Cost: 30/06/2018 -
632, US$33; 31/12/2017 - Ps.1,244, US$63) |
|
|
|
Recoverable taxes |
|
296,763 |
|
|
14,940 |
Prepaid expenses |
|
4,461 |
|
|
225 |
Deferred charges and
accrued income |
|
5,463 |
|
|
275 |
Accounts
receivable |
|
133,905 |
|
|
6,741 |
(Net of allowance for
doubtful accounts: 30/06/2018 - 54,084, US$2,789; 31/03/2018 -
Ps.36,454, US$1,987) |
|
|
|
Cash and cash
equivalents |
|
2,042,416 |
|
|
102,824 |
Total assets |
|
49,498,194 |
|
|
2,491,942 |
Net assets
attributable to Investors |
|
|
|
Contributions, net |
|
19,513,306 |
|
|
982,380 |
Retained earnings |
|
186,666 |
|
|
- |
Currency translation
adjustment |
|
9,328,922 |
|
|
469,656 |
Total net assets (Net Equity) |
|
29,028,894 |
|
|
1,452,036 |
Liabilities |
|
|
|
Non-current
liabilities |
|
|
|
Borrowings |
|
19,686,895 |
|
|
991,119 |
(Cost: 30/06/2018 -
Ps.19,700,401, US$1,015,951; 31/03/2018 - Ps.18,194,058,
US$991,799) |
|
|
|
Tenant deposits |
|
297,217 |
|
|
14,963 |
Accounts payable |
|
4,866 |
|
|
245 |
Current
liabilities |
|
|
|
Trade and other
payables |
|
229,704 |
|
|
11,564 |
Borrowings |
|
139,748 |
|
|
7,035 |
(Cost: 30/06/2018 -
Ps.139,748, US$7,207;31/03/2018 - Ps.219,194, US$11,949) |
|
|
|
Tenant deposits |
|
110,870 |
|
|
5,582 |
Total liabilities (excluding net assets attributable to the
Investors) |
|
20,469,300 |
|
|
1,030,509 |
Total net assets and liabilities |
|
49,498,194 |
|
|
2,482,545 |
|
|
|
|
|
|
Financial Statements
|
|
|
Cash Flow Statement |
Jun-18 |
Jun-18 |
|
(thousands of pesos) |
(thousands of dollars) |
Cash flows from
operating activities |
|
|
(Loss) profit for the
period |
$ |
798,114 |
|
$ |
40,180 |
|
Adjustments: |
|
|
Net loss (gain)
unrealized from fair value adjustment on investment properties |
|
558,798 |
|
|
28,132 |
|
Net loss (gain)
unrealized from fair value adjustment on borrowings |
|
(398,921 |
) |
|
(20,083 |
) |
Net loss (gain)
unrealized from fair value adjustment on derivative financial
instruments |
|
(38,921 |
) |
|
(1,959 |
) |
Realized gain from
disposal of investment properties |
|
17,836 |
|
|
898 |
|
Bad debt expense |
|
22,953 |
|
|
1,156 |
|
Interest expense |
|
458,960 |
|
|
23,106 |
|
Interest income on bank
accounts |
|
(3,180 |
) |
|
(160 |
) |
Share of profit from
equity accounted investments |
|
(12,943 |
) |
|
(652 |
) |
Decrease (increase)
deferred rents receivable |
|
(15,548 |
) |
|
(783 |
) |
Decrease (increase) in
accounts receivable |
|
(98,220 |
) |
|
(4,945 |
) |
Decrease (increase) in
recoverable taxes |
|
853,009 |
|
|
42,944 |
|
Decrease (increase) in
reimbursed value added tax |
|
(466,237 |
) |
|
(23,472 |
) |
Decrease (increase) in
prepaid expenses |
|
7,311 |
|
|
368 |
|
Decrease (increase) in
other assets |
|
(8,359 |
) |
|
(421 |
) |
Decrease (increase) in
tenant deposits |
|
19,318 |
|
|
973 |
|
(Decrease) in accounts
payable |
|
22,733 |
|
|
1,144 |
|
Net cash (used in) generated from operating
activities |
|
1,716,703 |
|
|
86,426 |
|
Cash flows from
investing activities |
|
|
Acquisitions s of
investment properties |
|
(481,977 |
) |
|
(24,265 |
) |
Improvements of
investment properties |
|
(24,183 |
) |
|
(1,217 |
) |
Proceeds from
dispositions of investment properties |
|
- |
|
|
- |
|
Acquisition
prepayment |
|
- |
|
|
- |
|
Interest income on bank
accounts |
|
3,180 |
|
|
160 |
|
Investments in joint
venture |
|
390 |
|
|
20 |
|
Loans receivable
payment |
|
594 |
|
|
30 |
|
Net cash (used in) generated from investing
activities |
|
(501,996 |
) |
|
(25,273 |
) |
Cash flows from
financing activities |
|
|
Proceeds from
borrowings |
|
- |
|
|
- |
|
Principal payments on
borrowings |
|
(879,578 |
) |
|
(44,282 |
) |
Interest expense |
|
(449,479 |
) |
|
(22,629 |
) |
Distributions to
investors |
|
(990,293 |
) |
|
(49,855 |
) |
Restricted cash |
|
(274 |
) |
|
(14 |
) |
Net cash (used in) generated from financing
activities |
|
(2,319,624 |
) |
|
(116,779 |
) |
Net (decrease) in cash
and cash equivalents |
|
(1,104,917 |
) |
|
(55,626 |
) |
Cash and cash
equivalents at the beginning of the period |
|
3,209,041 |
|
|
161,556 |
|
Exchange effects on
cash and cash equivalents |
|
(61,708 |
) |
|
(3,107 |
) |
Cash and cash equivalents at the end of the
period |
$ |
2,042,416 |
|
$ |
102,824 |
|
|
|
|
|
|
|
|
Financial Statements
|
|
|
|
|
Statement of
Changes in Equity |
Net contributions |
Currency translation adjustment |
Retained earnings |
Net assets |
(thousands of pesos) |
|
|
|
|
Balance at January 1,
2018 |
$ |
19,844,088 |
|
$ |
9,169,409 |
$ |
48,063 |
|
$ |
29,061,560 |
|
Capital Contribution,
Net of Issuing Costs |
|
0 |
|
|
- |
|
- |
|
|
- |
|
Distributions to
Investors |
|
(330,782 |
) |
|
- |
|
(659,511 |
) |
|
(990,293 |
) |
Comprehensive
Income |
|
|
|
|
Net loss of the
period |
|
- |
|
|
- |
|
798,114 |
|
|
798,114 |
|
Other
Comprehensive Income |
|
|
|
|
Currency
Translation |
|
- |
|
|
159,513 |
|
- |
|
|
159,513 |
|
Total
Comprehensive (loss) income |
|
- |
|
|
159,513 |
|
798,114 |
|
|
957,627 |
|
Net Assets as of June 30, 2018 |
$ |
19,513,306 |
|
$ |
9,328,922 |
$ |
186,666 |
|
$ |
29,028,894 |
|
(thousands of dollars) |
|
|
|
|
Balance at January 1,
2018 |
$ |
999,033 |
|
$ |
461,626 |
$ |
2,420 |
|
$ |
1,463,078 |
|
Capital Contribution,
Net of Issuing Costs |
|
0 |
|
|
- |
|
- |
|
|
- |
|
Distributions to
Investors |
|
(16,653 |
) |
|
- |
|
(33,202 |
) |
|
(49,855 |
) |
Comprehensive
Income |
|
|
|
|
Net loss of the
period |
|
- |
|
|
- |
|
40,180 |
|
|
40,180 |
|
Other
Comprehensive Income |
|
|
|
|
Currency
Translation |
|
- |
|
|
8,031 |
|
- |
|
|
8,431 |
|
Total
Comprehensive (loss) income |
|
- |
|
|
8,031 |
|
40,180 |
|
|
48,211 |
|
Net Assets as of June 30, 2018 |
$ |
982,380 |
|
$ |
469,656 |
|
- |
|
$ |
1,461,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Contacts in Mexico City:Francisco
MartinezInvestor Relations OfficerTel: +52 (55) 5279-8107E-mail:
francisco.martinez@terrafina.mx
Contacts in New York:Maria Baronai-advize
Corporate Communications, Inc.Tel: +(212) 406-3691 E-mail:
mbarona@i-advize.com