April 2019 Disclaimer This presentation is strictly confidential - - PowerPoint PPT Presentation
April 2019 Disclaimer This presentation is strictly confidential - - PowerPoint PPT Presentation
April 2019 Disclaimer This presentation is strictly confidential and is being furnished to you solely for your information. It may not be reproduced or redistributed to any other person, and it may not be published, in whole or in part, for any
2
This presentation is strictly confidential and is being furnished to you solely for your information. It may not be reproduced or redistributed to any other person, and it may not be published, in whole or in part, for any purpose. By receiving this presentation, you become bound by the above referred confidentiality obligation. Failure to comply with such confidentiality obligation may result in civil, administrative or criminal liabilities. The distribution of this presentation in other jurisdictions may also be restricted by law and persons into whose possession this presentation comes should inform themselves about and observe any such restrictions. The material that follows presents general background information about Terrafina (“Terrafina” or the “Company”) as of the date of the presentation. This information consists of publicly available information concerning the Company and the industries in which it participates. It is information in summary form and does not purport to be complete. It is not intended to be relied upon as advice to potential investors and does not form the basis for an informed investment decision. If the Company should at any time commence an
- ffering of securities, any decision to invest in such offer to subscribe for or acquire securities of the Company must be based wholly on the information contained in the offering
circular to be issued by the Company in connection with any such offer and not on the contents hereof. None of the Company or any authorized underwriter or any of their respective affiliates expects to update or otherwise review the information contained herein except by means of a prospectus, offering memorandum or other customary disclosure document with respect to the offer of any securities of the Company. This presentation does not constitute or form part of any offer for sale or solicitation of any offer to buy any securities in the United States or elsewhere nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment to purchase certificates. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the “Act”). This presentation is being made only to investors that, by means of their attendance at this presentation, represent that they are “Qualified Institutional Buyers” as that term is defined in the Act. Terrafina has not and does not intend to register any securities under the Act or offer any securities to the public in the United States. Any decision to purchase certificates in any offering should be made solely on the basis of the information to be contained in the Mexican prospectus to be registered with the Comisión Nacional Bancaria y de Valores (“CNBV”) or any offering memorandum delivered to you in due course in relation to any such offering, and not on the basis of this presentation. No reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness. All information in this presentation is subject to verification, correction, completion and change without notice. No representation or warranty, express or implied, is given or will be given as to the accuracy, completeness or fairness of the information or opinions contained in this document and any reliance you place on them will be at your sole risk. In addition, no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) is or will be accepted by the Company, any global coordinator, bookrunner, manager or any other person in relation to such information or opinions or any other matter in connection with this document or its contents or otherwise arising in connection therewith. This presentation includes forward-looking statements. All statements other than statements of historical fact included in this presentation, including, without limitation, those regarding our prospective resources, contingent resources, financial position, business strategy, management plans and objectives, future operations and synergies are forward- looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual resources, reserves, results, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. These forward-looking statements are based on numerous assumptions regarding our present and future business operations and strategies and the environment in which we expect to operate in the future. Forward- looking statements speak only as of the date of this presentation and we expressly disclaim any obligation or undertaking to release any update of or revisions to any forward- looking statements in this presentation, any change in our expectations or any change in events, conditions or circumstances on which these forward-looking statements are based. Neither the CNBV nor any other authority have approved or disapproved the information contained in this presentation, or the accuracy or the veracity of the information contained herein. By attending this presentation or by accepting to view any of the materials presented, you agree to be bound by the foregoing limitations.
Disclaimer
3
Proven track record delivering consistent and stable operating and financial results Sound capital structure Resilient portfolio with diversified high-quality tenant base World-class corporate governance, experienced internal management team and strong sponsorship from PGIM Real Estate Best-in-class industrial portfolio in strong growing markets and sectors
1 2 3 4 5
Key investment highlights
4
Diversification across Mexico
Highlights by region as of 4Q18
Key Metrics
North Bajio Central Total # of Buildings
201 56 30 287
# of Tenants
200 57 38 295
GLA (MM ft2)
25.6 9.3 6.3 41.1
Land Reserves (MM ft2)
2.6 0.2 3.3 6.1
Occupancy Rate
97.5% 91.5% 91.8% 95.3%
Average Annualized US$ Rent per ft2
5.08 5.21 5.34 5.15
Annualized Rental Base
62.8% 21.9% 15.2% 100.0%
Terrafina Overview
l Diversified high-growth portfolio with
exposure to the most relevant industrial real estate markets in Mexico
l Strong sponsorship by PGIM RE:
~US$168.4Bn (3) of AUM globally and
- ne of the longest-standing industrial
real estate managers in Mexico
l ~97% US$-denominated leases (2) and
the majority structured as triple-net providing Terrafina with stable US$- denominated cash flows
l Investment Grade balance sheet with
proven access to public and private debt markets
Source Terrafina filings Notes
- 1. As of 4Q18
- 2. As a % of 4Q18 GLA of 41.1MM ft2
- 3. Figures as of December 31, 2018. Combined gross assets under management and administration across its PGIM Real Estate and PGIM Real Estate Finance businesses.
Highest-quality portfolio of a pure-play industrial REIT with solid fundamentals
Leading industrial REIT in Mexico
Rent per ft2 US$5.15 (1) GLA 41.1MM ft2 Average Portfolio Age 12 years 2018 Rental Revenues ~US$191MM 2018 Occupancy Rate 95.3% Industrial Properties 287
1
North 62.3% Central 15.2% Bajio 22.5%
5
Key milestones that propelled and support our growth story
2003
2011
- PGIM completes
19.9MM ft2 of ndustrial assets 2013
- ~US$713MM IPO
2013
- Acquisition in
September 2013, 84 properties with a GLA of 11MM ft2
2015
2015
- ~US$101MM asset recycling
strategy
- Acquired 10 industrial properties
with a GLA of ~1.1MM ft2
- Debut in international debt
capital markets with a 7-year unsecured bond issue of US$425MM
- Investment grade from FITCH &
Moody’s 2014
- ~US$460MM
FO offering
2014
2016 2017
2013 2016
- Refinancing of US$150MM
2017
- Acquisition in January 2017, 51 industrial
properties with a GLA of 6.3MM ft2
- Refinancing of US$500MM
- US$317MM FO offering
- Acquisition in September/December
2017, 25 industrial properties with a GLA of 3.8MM ft2
Current GLA: 41.1 MM ft2
2003 – 2011
- PGIM raised two industrial funds
2011
1
Delivering results enhancing our growth strategy
Source
- 1. PGIM Real Estate (“PGIM”) is the global real estate investment business unit of Prudential Financial, Inc.
(1)
2018
- Acquisition in April 2018, two
industrial properties with a GLA of 0.3MM ft2
2018
6
Execute Accretive Acquisitions
1
Aquisitions New Development Dispositions Terrafina growth focus Five-year results
Aquisitions US$1,348 MM New Development US$102 MM Dispositions US$101 MM
t
New development (expansions / BTS) New development (expansions / BTS) CBFI Price to NAV Acquisitions / Raise capital Asset Recycling / CBFI Buyback program
- +
Value creation strategy aligned to the industrial real estate cycle
YE 2013 2018 △% Industrial Properties 132
287 117.4%
Gross Leasable Area
(million square foot)
19.9
41.1 106.8%
Occupancy 89.7%
95.3% 560 bps
Annualized avg. rental rate/ square foot (dollars) 4.60
5.15 12.0%
2013 2018 △% Rental Revenue 75.0
191.0 104.5%
NOI 69.9
190.0 120.7%
EBITDA 59.2
170.9 131.6%
AFFO 32.6
111.1 159.6%
Distributions per CBFI
(dollars)
0.0920
0.1407 20.4%
Optimal growth strategy
Source Terrafina filings. Past performance is not a guarantee or reliable indicator of future results.
- 1. 2013 numbers include 1Q13 estimate results for the full quarter.
(1)
7
4.77 4.76 4.74 4.78 4.78 4.82 4.87 4.89 4.90 4.88 4.89 4.88 4.89 4.88 4.96 4.99 5.00 5.04 5.06 5.07 5.13 5.15 88.6% 89.7% 90.6% 91.1% 91.4% 91.2% 93.7% 93.1% 93.5% 93.2% 93.3% 93.2% 92.8% 94.8% 94.9% 94.9% 95.1% 95.5% 95.2% 95.5% 95.2% 95.3% 80.0% 82.0% 84.0% 86.0% 88.0% 90.0% 92.0% 94.0% 96.0% 98.0% 4.50 4.60 4.70 4.80 4.90 5.00 5.10 5.20 5.30
3T13 4T13 1T14 2T14 3T14 4T14 1T15 2T15 3T15 4T15 1T16 2T16 3T16 4T16 1T17 2T17 3T17 4T17 1T18 2T18 3T18 4T18
- Avg. annualized rental rate (US$ per ft2)
Occupancy rate
Source Terrafina filings Past performance is not a guarantee or reliable indicator of future results.
Solid market US$ rental rates coupled with positive occupancy rates Attractive margins both for NOI… EBITDA…
89.0% 89.9% 92.1% 92.0% 92.3% 2014 2015 2016 2017 2018 NOI Margin
Strong performance operational and financial indicators
78.4% 79.8% 82.5% 83.0% 83.1%
2014 2015 2016 2017 2018
EBITDA Margin
1
Record-high results under challenging macro conditions
…and AFFO
48.5% 53.1% 52.2% 52.4% 53.5%
2014 2015 2016 2017 2018
AFFO Margin
8
Operating Statistics Financial Statistics
# of Properties and GLA (MM ft2)
89.7% 91.4% 94.90% 95.3% YE2013 FO (3Q14) FO (2Q17) 4Q18 $4.76 $4.78 $4.99 $5.15 YE2013 FO (3Q14) FO (2Q17) 4Q18
Occupancy Rate % US$ Rent per ft2 NOI (millions of US$)
Strong operating and financial performance
216 218 260 287 30.8 31.0 36.5 41.1 YE2013 FO (3Q14) FO (2Q17) 4Q18 # of Properties GLA 3 2 . 9 % / 3 3 . 6 % 31.0 32.6 41.8 48.0 4Q13 FO (3Q14) FO (2Q17) 4Q18 NOI
Source Terrafina filings Note
- 1. Distribution payout ratio 100% of AFFO
Past performance is not a guarantee or reliable indicator of future results.
28.1 28.9 37.9 4Q13 FO (3Q14) FO (2Q17) 4Q18 EBITDA 42.8 14.3 18.6 24.3 25.4 4Q13 FO (3Q14) FO (2Q17) 4Q18 AFFO
EBITDA (millions of US$) AFFO (millions of US$(1))
5 6 b p s 8 . 2 % C A G R 9 . 1 % C A G R 8 . 8 % C A G R 1 2 . 2 %
Disciplined and continuous growth
1
9
Source Terrafina filings. Past performance is not a guarantee or reliable indicator of future results Past performance is not a guarantee or reliable indicator of future results
- 1. IPO in March 2013, September 2014 follow-on and July 2017 follow-on.
US$ MM
Accumulated distributions and revenues High profit margins at FFO…
Solid bottom line and historical distributions
56.2% 61.1% 58.0% 58.0% 60.0% 2014 2015 2016 2017 2018 FFO Margin
…and AFFO level
48.5% 53.1% 52.2% 52.4% 53.5% 2014 2015 2016 2017 2018 AFFO Margin
1
Pesos MM
Equity raising1
- Ps. 22,311.2 mm
- Accum. Rental
Revenue
- Ps. 13,990.3
Accum.Distributions
- Ps. 7,312.3 mm
Equity raising US$1,640.0 mm
- Accum. Rental
Revenue US$864.8 Accum.Distributions US$456.8 mm
13,990.3 7,814.9
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
- Acum. Rental Revenue
- Acum. Distributions
864.8 456.8
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
- Acum. Rental Revenue
- Acum. Distributions
10
Mexico Market Characteristics Top 10 Cities Regional Footprint
73.6% Manufacturing 26.4% Distribution
GLA (MM ft2) (1) 2018 by GLA
Our geographic footprint best represents the Mexican industrial real estate market North
- Manufacturing focus
- Targeted location for exports to U.S.
- Potential BTS development
- pportunities
Bajio
- Mix of manufacturing and logistics
facilities
- High concentration of automotive
exports
- Strong demand Tier 2 & 3 suppliers
Central
- Predominantly logistics facilities
- High barrier / high occupancy market
- Land scarcity driving highest
industrial rental rates
Facility Use – Portfolio Distribution
Source Public filings, Jones Lang LaSalle Industrial real estate report
- 1. Based on leased GLA reflecting 95.2% occupancy over the total portfolio GLA of 41.0MM ft2 as of 3Q18
- 2. % of total Mexico industrial stock as reported by Jones Lang LaSalle of 770 million square feet
- 3. Mexico industrial breakdown,
Best-in-class industrial portfolio
7.8 5.8 4.5 4.3 3.3 2.0 1.7 1.4 1.0 0.9
Ciudad Juarez Chihuahua Ramos Arizpe Cuautitlan Izcali San Luis Potosi Queretaro Guadalajara Monterrey Toluca Tijuana
5.08 4.49
US$ Rent per ft
5.21 4.59
US$ Rent per ft
5.34 5.20
US$ Rent per ft
2 2 2
Lease term of 3 – 5 years Lease term of 5 – 10 years
Market Statistics Terrafina
Strategically diversified portfolio
2
97% lease contracts denominated in US dollars
(3)
19.4% 15.2% 27.9% 22.5% 52.7% 62.3%
11
Diversified tenant base of renowned multinational companies Top 10 tenants Limited exposure to tenant risk Tenant base & lease expiration schedule (2)
ü 287 buildings with 295 tenants ü Stable rollover with high historical renewal rates above ~85% (1) ü Our automotive tenants supply for the production of fuel, electric and hybrid models (mainly wiring harnesses,
stamping and control panel components)
ü Top 10 tenants account for ~18.1% of total GLA of ~41.0MM ft2 as of 3Q18 % GLA
35.0%
Auto parts
20.0%
Industrial Goods
13.7%
Consumer Goods
9.8%
Aerospace
9.7%
Logistics & Trade
3.7%
Non Durable Consumer Goods
8.1%
Electronics
Source Terrafina filings Notes
- 1. Average renewal rate since IPO
- 2. As a % of 4Q18 GLA of 41.1 MM ft2
Stable and resilient portfolio with diversified high-quality tenant base
3
13.9% 22.5% 19.1% 9.8% 12.1% 22.6% 2019 2020 2021 2022 2023 >2024 3.2% 1.8% 1.8% 1.7% 1.7% 1.7% 1.5% 1.5% 1.4% 1.3%
% of GLA Years in Portfolio
12 10 Logistics
Industry
13 Non-Durable Goods Electronics 9 Non-Durable Goods 13 Aerospace 6 Consumer Goods 16 18 Auto parts Auto parts Aerospace 4 11 Auto parts Kunne+Nagel Labinal Lazyboy Flextronics Cesna Chedraui Yangfeng Omnilife Continental Mann + Hummel
12
ü Large network of relationships, both from Terrafina and PGIM, with solid roster of banks ü ~US$250MM available in undrawn revolver facilities ü Preference for using unsecured credit facilities to support capital structure ü Interest rate hedging policy in place
Leverage Considerations
As of December 31, 2018 Currency US$ MM Interest Rate Terms Maturity Citibank (Revolver) US$ 52.6 L + 2.45% Interest Jan 2023 Metlife US$ 150.0 4.75% Interest Jan 2027 Banamex (Term-loan) US$ 352.6 L + 2.45% Interest Oct 2022 Senior Notes (2) US$ 422.4 5.25% Interest Nov 2022 New York Life US$ 15.4 5.19%
- Int. & Principal
Feb 2020 Total Debt 993.0 Cash & Equivalents 79.1 Net Debt 913.8 DSCR (3) 3.2x Loan-to-Value (4) 40.1%
Outstanding Debt
Average Cost of Debt 5.02% LTV Long-Term Target 38% – 42% Credit Ratings (International) Investment grade Baa3 BBB-
Sound capital structure
Disciplined financial strategy…with diligently structured debt facilities
Source Terrafina filings Notes
- 1. As of December 31, 2018.
- 2. Senior Notes are fairly valued, bullet payment is US$425MM
- 3. (Cash + cash & equivalents + recoverable taxes + EBIT after distributions + available credit line) / (interest payments + principal payments + recurring Capex + development expenses)
- 4. LTV = total debt / total assets. As defined by CNBV
5. Interest rate Swap fixed rate: 1.768%.
- 6. Interest rate Cap strike price: 2.75%
4
Derivatives
Swap5 US$105.0 MM Cap6 US$150.0 MM
85% 15%
Debt Breakdown
(including derivatives)
Fixed Rate Variable Rate
13
Alfonso Munk
Managing Director & CIO of the Americas
Enrique Lavin
Managing Director & Country Head
Fernando Herrera
Executive Director & Head of LatAm Transactions
PGIM Real Estate is the real estate investment business of PGIM, Inc., the global investment management businesses of Prudential Financial, Inc.(NYSE: PRU) − $168.4 billion in combined real estate equity and debt AUM and AUA2 − Experienced manager of institutional industrial real estate in Mexico since 2003 − Advisory agreement that can be terminated at any time without penalty with a simple majority vote from holders
Organizational Structure
Terrafina
(Internal Management subsidiary)
- Drive growth and establish objectives
- Ensure appropriate capital structure
- Oversee financial performance
- Communications with investors
Alberto Chretin
Chief Executive Officer
Carlos Gomez
Chief Financial Officer
Francisco Martinez
Investor Relations Officer
Third party property managers
- Property Operations
- Leasing & Development
- Maintenance
- Identify Properties
- Invoicing & Collections
PGIM
(Management Platform)
- Operating platform – asset & portfolio
management
- Institutional investment management
services, M&A, dispositions
- Oversee capital markets
- Financial reporting, treasury & cash
management, tax, legal and compliance activities
- Investment Committee with more than 150
years of combined real estate experience.
World-class corporate governance, experienced internal management team and strong advisory from PGIM
Notes
- 1. PGIM Real Estate is the global real estate investment business unit of Prudential Financial, Inc.
- 2. Inclusive of PGIM Real Estate and PGIM Real Estate Finance AUM and AUA. As of December 31, 2018
Terrafina’s operational platform is ran by one of the top real estate investment managers in the world
(1)
5
Institutional investment expertise and due diligence Industry relationships Risk management processes Transfer of economies
- f scale
= Higher operating margins Market intelligence Portfolio management
14
Eduardo Solis Alfonso Munk
- Former Minister of Economic Affairs for the state of Chihuahua
- 18 years of experience at recognized industrial real estate
companies
- Managing Director of PGIM and CIO of the Americas
- Former Morgan Stanley head of real estate for Southern Europe
and South America; 23 years of experience in real estate.
- President of the Mexican Association of the Automotive Industry
- Former Head of Promotion of Investment at the Ministry of
Economy and Chief Trade Negotiator in Mexico
Victor D. Almeida
- Chairman and CEO of Interceramic, a leading tile manufacturer in
Mexico
- Over 30 years of corporate experience in Latin America
Arturo D’Acosta Ruiz
- Executive Director of Actinver and former ED of Alvarez & Marsal
- Broad experience in financial consulting, M&A, restructurings and
financing
Jose Luis Barraza
- Former Chairman of Grupo Aeromexico
- Over 30 years of experience in international trading and industrial
promotion and development
Carmina Abad
- CEO at Swiss Re Corporate Solutions in Mexico
- Former CEO & Chairman of the Board of Metlife Mexico
Alberto Chretin
Technical Committee members
Advisor
Investment Committee
- Comprised of PGIM executives
and Terrafina’s CEO
- Terrafina’s CEO must approve
any acquisition or disposition of real estate assets Audit Committee (100% Independent)
- Carries out internal audits of
the FIBRA and related activities
- Reviews documents prepared
by external auditor
- Oversees the performance of
the Finance, Accounting and Tax functions Indebtedness Committee (100% Independent)
- Reviews credit agreements
- Ensures compliance with
indebtedness regulation and financial covenant Practices Committee (100% Independent)
- Assists the Board in making
decisions regarding conflict of interests, governance and best practices Nominating Committee (100% Independent)
- Responsible for membership
and compensation of Board members and Management team Julio Cardenas
- Independent Board Member Advisor for MEXDER and Afore
CitiBanamex
- Former Head of GCM and CEO of Casa de Bolsa HSBC
- Has worked in several renowned financial institutions such as
Bank of America, J.P. Morgan, Citi and Banpais
Committees Independent majority technical committee and corporate governance standards
Independent Members (75%)
World-class corporate governance
5
APPENDIX
SECTION 2:
16
42.8 69.3 73.5 74.5 95 110.1 26.9 28.8 29.1 25.4 43.6% 48.5% 53.1% 52.7% 52.4% 53.5% 50.7% 56.7% 56.6% 49.3%
2013 2014 2015 2016 2017 2018 1Q18 2Q18 3Q18 4Q18 AFFO AFFO Margin
53.8 79.8 84 83 105 122.5 29.7 31.3 31.2 30.3 53.0% 56.2% 61.1% 58.0% 58.4% 60.0% 56.4% 62.0% 61.0% 59.3%
2013 2014 2015 2016 2017 2018 1Q18 2Q18 3Q18 4Q18 FFO FFO Margin
73.8 111.2 109.7 118.2 150.3 170.9 41.3 43.6 43.3 42.8 77.1% 78.4% 79.8% 82.5% 83.0% 83.1% 78.4% 86.4% 84.6% 83.1%
2013 2014 2015 2016 2017 2018 1Q18 2Q18 3Q18 4Q18 EBITDA EBITDA Margin
86.1 126.3 123.6 131.8 166.8 190.0 46.0 47.9 48.1 48.0 87.6% 89.0% 89.9% 92.1% 92.0% 92.3% 87.3% 94.9% 94.0% 93.3%
2013 2014 2015 2016 2017 2018 1Q18 2Q18 3Q18 4Q18 NOI NOI Margin
Source Company filings. Past performance is not a guarantee or reliable indicator of future results.
- 1. 2013 results includes an estimate for the complete 1Q13 and the rest of the quarters.
- 2. 2015 results exclude portfolio sold in 1Q15
- 3. FFO decreases as a result of higher interest expenses from bond issuance concluded in November 2015.
AFFO and AFFO Margin — (US$ MM) EBITDA and EBITDA Margin – (US$ MM) FFO and FFO Margin – (US$ MM) NOI and NOI Margin – (US$ MM)
1
1 2
1 2 2 1 2 3
Financial performance
17
4.3x 15.0x 8.2x 8.5x 8.1x 7.5x 6.7x 6.0x 6.0x 6.1x 6.5x 6.2x 6.1x 6.0x 6.0x 4.6x 5.0x 5.2x 6.2x 6.1x 5.7x 5.8x 5.8x
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
4.0x 13.4x 7.7x 8.1x 7.8x 3.4x 3.7x 2.7x 3.2x 3.3x 4.1x 3.9x 4.0x 3.9x 4.0x 2.9x 3.3x 3.4x 5.2x 5.5x 5.1x 5.3x 5.3x
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
Source Company filings. Notes
- 1. Reflects annualized EBITDA figures.
- 2. The AI / Kimco acquisition closed on September 27, 2013. This indicator reflects the full impact of leverage on Balance Sheet but only three days of EBITDA contribution.
- 3. Defined as Total Debt / Total Assets. Total Debt at Fair Value. (4) Leverage increases as a result of acquisitions completed in January 2017.
Past performance is not a guarantee or reliable indicator of future results.
EBITDA / Interest Expense Debt / EBITDA(1) LTV(3) Net Debt / EBITDA(1)
(2) (2)
2
Credit metrics
22.2% 51.7% 51.7%52.1% 50.6% 40.0% 37.0% 34.9% 34.8% 34.6% 36.1% 35.9% 36.9% 37.3% 36.5% 45.6% 45.1% 41.2%41.2% 40.6% 40.1% 40.9% 40.1%
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
8.9x 6.5x 2.9x 2.9x 3.5x 3.4x 3.5x 4.1x 4.9x 4.7x 4.0x 3.2x 3.1x 3.4x 3.3x 3.3x 3.4x 3.2x 3.4x 3.1x 3.4x 3.3x 3.3x
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
18
Notes Past performance is not a guarantee or reliable indicator of future results. Source: Terrafina Earnings Reports
Portfolio’s operating and financial highlights
4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18
fx
18.9259 18.7759 19.3911 18.9859 19.7877 (millions of pesos unless otherwise stated) (millions of dollars unless otherwise stated)
Rental Revenues 828.6 889.8 921.8 912.0 951.3 43.8 47.4 47.6 48.0 48.0 Other Operating Income 70.8 101.7 50.9 55.8 76.1 3.8 5.4 2.6 2.9 3.9 Net Revenues 915.0 997.0 981.1 973.5 1,034.1 48.3 53.1 50.6 51.3 52.2 Net Operating Income (NOI)* 832.9 862.7 926.9 913.3 950.7 44.0 46.0 47.9 48.1 48.0 NOI Margin 93.0% 87.3% 94.9% 94.0% 93.3% 93.0% 87.3% 94.9% 94.0% 93.3% EBITDA* 749.2 774.4 842.0 822.1 846.4 39.6 41.3 43.6 43.3 42.8 EBITDA Margin 83.6% 78.4% 86.4% 84.6% 83.1% 83.6% 78.4% 86.4% 84.6% 83.1% Funds from Operations (FFO)* 520.5 557.2 604.2 592.4 598.9 27.5 29.7 31.3 31.2 30.3 FFO Margin 58.6% 56.4% 62.0% 61.0% 59.3% 58.6% 56.4% 62.0% 61.0% 59.3% Adjusted Funds from Operations (AFFO)* 484.9 505.2 555.3 553.1 502.5 25.6 26.9 28.8 29.1 25.4 AFFO Margin 54.1% 50.7% 56.7% 56.6% 49.3% 54.1% 50.7% 56.7% 56.6% 49.3% Distributions 484.9 505.2 555.3 553.1 502.5 25.6 26.9 28.8 29.1 25.4 Distributions per CBFI 0.6130 0.6386 0.7020 0.6993 0.6356 0.0324 0.0340 0.0364 0.0368 0.0321 Dec17 Mar18 Jun18 Sep18 Dec18 Dec17 Mar18 Jun18 Sep18 Dec18
fx
19.7354 18.3445 19.8633 18.8120 19.6829 (millions of pesos unless otherwise stated) (millions of dollars unless otherwise stated)
Cash & Cash Equivalents 6,658.7 3,209.0 2,035.7 2,042.4 1,557.7 162.6 111.0 102.8 101.6 79.1 Investment Properties 39,048.5 45,959.6 42,165.3 46,176.3 45,880.2 2,328.8 2,298.5 2,324.7 2,310.6 2,331.0 Land Reserves 962.9 1,040.3 950.8 1,032.2 1,100.2 52.7 51.8 52.0 52.0 56.0 Total Debt 19,267.1 20,900.8 18,623.4 19,826.6 19,544.5 1,059.1 1,015.2 998.2 1,016.2 993.0 Net Debt 12,608.4 17,691.8 16,587.7 17,784.2 17,986.9 896.5 904.2 895.3 914.6 913.8
(as of December 31, 2018)
North Bajio Central Total # Buildings
201 56 30 287
# Tenants
200 57 38 295
GLA (msf)
25.6 9.3 6.3 41.1
Land Reserves (msf)
2.6 0.2 3.3 6.1
Occupancy Rate
97.5% 91.5% 91.8% 95.3%
Average Leasing Rent / Square Foot (dollars)
5.08 5.21 5.34 5.15
Annualized Rental Base %
62.8% 21.9% 15.2% 100.0%
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84% 86% 88% 90% 92% 94% 96% 98% 100% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Bajio Central North
+10 Years of growth history…a positive outlook
Source Jones Lang LaSalle Industrial real estate report Note
- 1. Absorption level includes total industrial real estate stock including automotive OEMs
Industrial Stock (MM ft2)
Consistent and stable growth trend
Industrial Net Absorption (1) (MM ft2)
Sound absorption across markets
Growth %
Positive industrial real estate trends
CAGR (2006 – 2018): 10.0%
Industrial Rent (Annualized Avg. US$ Rent per ft2)
$4.79 $4.63 $4.67 $5.08
Industrial Occupancy Rate %
Stable and healthy occupancy rates
94.8% 95.0% 96.9% 93.9%
Increasing average rents
263 410 475 485 506 524 541 544 566 674 736 766 819 17.8% 37.9% 21.3% 4.0% 5.8% 3.1% 5.5% 3.2% 3.8% 16.1% 8.3% 4.0% 7.0%
0% 10% 20% 30% 40% 200 400 600 800 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Industrial Stock Market Growth %
17 23 13 18 13 12 14 14 10 19 20 16 8 10 4 6 7 13 6 6 69 26 14 9 8 7 2 7 7 5 3 6 11 14 10 9
33 40 19 31 27 30 23 26 91 59 45 34 20 40 60 80 100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 North Bajio Central $4.00 $4.50 $5.00 $5.50 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Bajio Central North
20
Source: As reported by JLL Real Estate Industry Reports. Past performance is not a guarantee or reliable indicator of future results.
Portfolio’s occupancy and rental rates
Market information
(As of 4Q18)
Occupancy Rate
- Avg. Leasing
Rent/ Square Foot
(dollars)
North 93.9% 4.67 Baja California 94.7% 4.87 Sonora 96.9% 5.56 Chihuahua 94.3% 4.58 Coahuila 94.2% 4.74 Nuevo Leon 92.5% 4.67 Tamaulipas 93.9% 4.45 Durango
- Bajio
95.0% 4.63 San Luis Potosi 94.5% 4.64 Jalisco 96.8% 4.85 Aguascalientes 96.9% 4.40 Guanajuato 93.4% 4.63 Queretaro 94.7% 4.60 Central 96.9% 5.08 State of Mexico 98.9% 5.20 Mexico City 96.4% 5.60 Puebla 96.2% 4.46 Tabasco
- Total
94.8% 4.79
Terrafina (As of 4Q18)
Occupancy Rate
- Avg. Leasing
Rent/ Square Foot
(dollars)
North 97.5% 5.08 Baja California 89.8% 4.42 Sonora 88.5% 4.57 Chihuahua 98.8% 5.05 Coahuila 96.1% 5.28 Nuevo Leon 96.2% 5.10 Tamaulipas 100.0% 4.67 Durango 100.0% 4.79 Bajio 91.5% 5.21 San Luis Potosi 89.6% 4.92 Jalisco 100.0% 6.58 Aguascalientes 100.0% 4.77 Guanajuato 89.9% 4.87 Queretaro 85.8% 4.86 Central 91.8% 5.34 State of Mexico 90.5% 5.56 Mexico City 100.0% 9.22 Puebla 100.0% 3.23 Tabasco 100.0% 4.23 Total 95.3% 5.15
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Implied cap rate US$ MM, unless otherwise noted Certificate Avg. Price 2018 (1) (Ps$27.71)
1.61
(x) Certificates (MM)
790.6
(=) Market Capitalization
1,271.2
(+) Total Debt
993.0
(-) Cash
79.1
(=) Enterprise Value
2,185.0
(-) Landbank
56.0
(=) Implied Operating Real Estate Value
2,129.0
2019E NOI (2)
192.0
Cap Rate
9.0%
NAV US$ MM, unless otherwise noted (+) Investment Properties (Excl. Landbank)
2,331.0
(+) Landbank
56.0
(+) Cash
79.1
(-) Total Liabilities
993.0
(=) NAV
1,473.1
(/) Certificates (MM)
790.6
(=) NAV per Certificate
1.86
Certificate Price (NAV Calculation)
1.86
(x) Certificates (MM)
790.6
(=) Market Capitalization
1,473.1
(+) Total Liabilities
993.0
(-) Cash
79.1
(=) Enterprise Value
2,387.0
(-) Landbank
56.0
(=) Implied Operating Real Estate Value
2,331.0
2019E NOI (2)
192.0
Cap Rate
8.2%
Source Terrafina filings, Wall Street research Notes 1. Certificate price Ps. 30.44. Converted using an FX of Ps$18.9317. 2. As reported by management guidance
Implied cap rate calculation
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