FIBRA STAY Investor Presentation September 2018 1 1 Disclaimer - - PowerPoint PPT Presentation

▶
fibra stay investor presentation
SMART_READER_LITE
LIVE PREVIEW

FIBRA STAY Investor Presentation September 2018 1 1 Disclaimer - - PowerPoint PPT Presentation

Sep 30, 2023 168 likes •494 views

FIBRA STAY Investor Presentation September 2018 1 1 Disclaimer This presentation has been prepared with information of different subsidaries of Hoteles City Express, S.A.B. de C.V. (HCITY" or the "Compay") . The presentation

slide-1
SLIDE 1

1

1

FIBRA STAY Investor Presentation

September 2018

slide-2
SLIDE 2

2

This presentation has been prepared with information of different subsidaries of Hoteles City Express, S.A.B. de C.V. (“HCITY" or the "Compay") . The presentation is not intended to be exhaustive and does not necessarily include all the information the receiver should want to be informed of the Company. The forward-looking statements contained in this presentation are based on the current assumptions and outlook of the Company’s management. Actual results, performance and events may differ significantly from those expressed or implied in these forward- looking statements as a result of several factors such as the general and economic conditions in Mexico and abroad, interest and exchange rates, future renegotiations, pre-payments of liabilities or loans denominated in foreign currency, changes in laws and regulations, and general competitive factors (regionally, nationally or internationally). All communications, inquiries and requests for information related to these materials should be directed to the contacts listed below.

Santiago Mayoral Álvarez Corporate Finance and Investors Relations Tel: +5255 5249-8067 smayoral@Hotelescity.com

Disclaimer

slide-3
SLIDE 3

3

Fibra Stay Description Competitive Advantages Hoteles City Express Today

Content

Section 1 Section 3 Section 2

slide-4
SLIDE 4

4

Section 1: Hoteles City Express Today

slide-5
SLIDE 5

5

Fastest Growing Hotel Chain in LatAm

Historical Chain Growth

Installed Rooms Number of Hotels 586 1,061 1,542 2,173 2,850 3,836 4,991 5,562 6,973 8,092 9,326 10,929 11,944 13,702 15,228 17,797 2004 2006 2009 2010 2016 2003 2008 2005 2007 2015 2011 2012 2013 2014 2017 2018 +25.6% Opening first Launch of Launch of First international hotel in San Jose, Costa Rica Initial Public Offering Follow-On Launch of 10 5 15 20 26 35 45 50 62 71 82 96 106 123 135 Launch of 157

slide-6
SLIDE 6

6

139 Hotels Distributed Among the Main Economic Drivers for the Region

Hotels in Operation

San José, Costa Rica Colombia Chile Maquila and logistics Exports Corridor (NAFTA) Mining Corridor Oil and Energy Corridor Manufacturing, Logistics and Industrial Exports Corridor (NAFTA) Agricultural Exports Corridor (NAFTA)

slide-7
SLIDE 7

7

One Brand and Five Successful Products to Serve

  • ur Market Segment

Description

  • Flagship Brand
  • Essential

amenities

  • Economy segment
  • City Express

product located in Premium locations

  • Budget segment

brand

  • Same quality

within smaller rooms

  • Extended stay

brand

  • Apartment-style

layout

  • City Express

product within city downtowns with Premium decor Average Room Size 23 m2 (248 ft2) 23 m2 (248 ft2) 17 m2 (183 ft2) 30 m2 (323 ft2) 23 m2 (248 ft2) Average Daily Rate (ADR) MXN $600 – $1,200 USD $35 - $70 MXN $1,000 – $1,500 USD $ 55 - $80 MXN $500 – $750 USD $30 - $45 MXN $750 – $1,700 USD $45 - $85 MXN $ 1,800 – $3,000 USD $95 - $165 Rooms per Hotel 100 – 150 70 – 150 105 – 134 26 – 120 35 – 80 # of Hotels(1) 87 17 22 11 2 # of Rooms(1) 10,135 2,275 2,476 658 147 > $1,700 $800 - $1,700 $500 - $800 Target ADR (MXN) Market Segments 65% 14% 16% 4%

(1)

As of June 2018

Room Distribution by Brand

slide-8
SLIDE 8

8 72 62 55 33 32 29 29 17 17 15 14 13 101 50 21 17 14 14 12 11 11 7

Leading Position in Limited Service Hotels in Mexico

Source

  • 1. Euromonitor, quarterly reports and websites

Select Service Limited Service As of June 2018

Number of Hotels by Brand in Mexico

157 133 112 62 50 46 44 40 35 34 30 21 Starwo HCE Marriott

As of June 2018

Number of Hotels by Chain in Mexico

slide-9
SLIDE 9

9

Fragmented Industry that Presents Consolidation Opportunities

Source: INEGI, Ministry of Tourism, Ministry of Communications and Transportation, JLL, PwC, Euromonitor.

Hotel Supply – Fragmented and Dominated by Independent, Non-Standardized Hotels Hotel Demand – Driven by our Target Customers Hotel Rooms in Mexico by Number of Stars

2017

Breakdown of Independent and Branded Hotels

2017 (% of Rooms) Brasil United States Mexico Independent Chained

Occupied Room Nights by Guests’ Nationality

2017 (% of Occupied Rooms) Domestic International

Tourism Spending in Mexico (Tourism GDP)

2017 International Tourists Domestic Tourists Target Segment Mainly independent., family operated, non- standardized hotels subject to substitution 48% of Total Rooms in Mexico

199,438 158,613 136,537 75,212 199,335 5 Stars 4 Stars 3 Stars 2 Stars Others 34 82 75 66 19 25 100 100 100 13% 87% 83 38 63 17 62 37 100 100 100 1 - 4 Stars 5 Stars All Hotels

slide-10
SLIDE 10

10

Tourism Sector in Expansion in Mexico

Passenger Arrivals to Airports Index Positive Trends on Tourist Arrivals

Base 2008 (2008 = 100)

Hotel Occupancy Index Adequate Absorption of Installed Capacity that Translates into Increasing Occupancy

Base 2008 (2008 = 100)

Source: Elaboration and seasonality adjustments by Banco de México with respect to data from the Tourism Ministry of the Federal Government and Airports and Auxiliary Services.

60 80 100 120 140 160 2008 2009 2010 2011 2012 2013 2014 2015 2016 North Center North Center South 60 80 100 120 140 160 2008 2009 2010 2011 2012 2013 2014 2015 2016 North Center North Center South +8.1% +8.9%

slide-11
SLIDE 11

11

HCE Key Business Segments

Hoteles City Express Operating Company (OpCo) Company with Asset Ownership (PropCo)

A B

slide-12
SLIDE 12

12

HCE Key Business Segments (Cont’d)

  • Owned Hotels
  • Co-Owned Hotels
  • Leased Hotels
  • Assets registered under net historic value for MXN

$8.9 Billion

  • Landbank of MXN $382 Million
  • Development Pipeline of MXN $8.6 Billion (2018-

2022)

  • Contributes with ~80% of Total Revenues (No

IFRS)

  • Franchise contracts with hotels
  • Management and Operation contracts with hotels
  • Distribution and Digital Market Platform with 80%
  • f reservations by own channels
  • Yield Management systems based on forecast

models, technology, culture and market information in real time

  • Investments in innovation platforms and technology
  • f distribution and operation of rooms
  • Brand recognition and leverage due to geographic

diversification

  • Contributes with ~20% of Total Revenues (No

IFRS)

Hoteles City Express Operating Company (OpCo) Company with Asset Ownership (PropCo)

A B

slide-13
SLIDE 13

13

Section 2: Fibra Stay Description

slide-14
SLIDE 14

14

Fee (in market terms) Investors HCE

FSTAY Structure

FIBRA Servicios Comerciales y Promoción de Hoteles SA de CV Servicios Centrales de Cobranza Hotelera SA de CV Operadora de Hoteles City Express SA de CV Guests Fee (in market terms) Service Provision Fee (in market terms) Management Operation Lodging FIBRA Initial Portfolio Agency FB FIBRA Initial Portfolio Lodging + FB (Other hotels) Lodging + FB Comisión Mercantil HCe (Other hotels) Contract Flow FB Food and Beverages Trust 1 Trust 2 Trust 3 34 Hotels 8 Hotels Administradora FHCE, S.C.

slide-15
SLIDE 15

15

Sustainable Recycling Capital Vehicle

FSTAY

Public Investors

CBFIs Capital Resources Provides capital for hotel construction Has the obligation to

  • ffer stabilized hotels

to FSTAY before anyone else Capital Raise Develops and

  • perates hotels

FSTAY can take advantage of its relationship with HCE to create a sustainable growth cycle Assets from Other Market Participants Receives Buys

slide-16
SLIDE 16

16

Use of Resources

Potential Growth 2019 - 2022

72 Potential Projects in Mexico

Potential Projects 2019-2022

Geographically Diversified Pipeline 2019-2022

Investment Scheme Owned 40 Co-Owned 16 Managed 16 Leased Franchise Total 72 Geographic Area North Border 13 Bajio Region 14 Metropolitan Areas 20 Center 5 Pacific 7 Energy Corridor 7 International South 6 Total 72

slide-17
SLIDE 17

17

Section 3: Competitive Advantages

slide-18
SLIDE 18

18

FSTAY Competitive Advantages

Best in Class Diversified and Established Portfolio Robust Operating and Financial Performance Operation by a Leading Hotel Brand in LatAm Region Significant Growth Potential Based on a Disciplined Acquisition Strategy and Access to Development Pipeline on a Proven Business Model Internally Managed with Incentives Properly Aligned Towards Investors and Total Transparency Conservative Capital Structure and Debt Profile

slide-19
SLIDE 19

19

Best in Class Diversified and Established Portfolio

Portfolio Development

5 8 9 12 14 18 21 23 25 29 31 35 42 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Ce Cs Cj CP

Portfolio Development by Brand

# de Hotels

Key Points

  • Hotels developed and operated by Hoteles City

Express under the highest quality standards.

  • Assets strategically located in regions with high

demand for lodging by business travelers and with growth potential.

  • Established Portfolio of hotels – All the assets have

at least 24 months in operation, and 83% has 36 months or more. No discrimination criteria in addition to compliance with the average stabilization period.

slide-20
SLIDE 20

20

Coverage in the Most Important Economic Regions of the Country

Name Opening Rooms Saltillo Norte 2003 120 San Luis Potosí 2003 120 Monterrey SC 2003 105 Querétaro 2003 121 León 2003 120 Puebla Centro 2004 124 Ciudad Juárez 2004 114 Irapuato 2004 104 Mexicali 2006 117 Toluca 2006 141 EBC Reforma 2007 70 Lázaro Cárdenas 2008 119 Silao Aeropuerto 2008 121 Monterrey Aeropuerto 2008 166 Los Mochis 2009 124 Nogales 2010 109 Aguascalientes Sur 2011 123 Manzanillo 2011 116 Ciudad Obregón 2012 120 Campeche 2012 110 Villahermosa 2012 155 Tijuana Insurgentes 2012 127 La Paz 2013 124 Matamoros 2014 113 Salamanca 2014 113 Piedras Negras 2015 113

City Express

Name Opening Rooms Guadalajara Expo 2006 145 Insurgentes Sur 2007 159 Reforma El Ángel 2009 137 Patio Universidad 2013 124 Monterrey Nuevo Sur 2014 138 Cabo San Lucas 2015 135 Guadalajara Palomar 2015 113 Periférico Sur Tlalpan 2015 137 Monterrey San Jerónimo 2015 149

City Plus City Suites City Jr

Mexicali 2009 104

  • Cd. Juárez Consulado

2010 128 Villahermosa 2014 136 Querétaro 2005 89 Toluca 2008 91 Cabo San Lucas 2015 28 Silao Aeropuerto 2015 58

slide-21
SLIDE 21

21

Diversified Portfolio with Exposure to Different Industrial Regions

Sales Distribution 2017 - % of Total

16% 25% 34% Center 56% Top 21-42

By Hotel By Economic Region By Economic Corridor By Brand

Top 11-20 Top 6-10 CP Reforma El Ángel CP Insurgentes Sur CP Patio Universidad CP Guadalajara Expo CP Monterrey Nuevo Sur 6% 6% 5% 4% 4% Northeast 16% Northwest 18% Metropolitan Areas 43% Bajio 21% North Border 20% South 5% North 5% Pacific 10% Energy Corridor 6% 58% 32% 6% 4%

slide-22
SLIDE 22

22

Asset Value

Based on a Third Party Appraisal

Commercial Value of the Properties Commercial Value of the Properties

  • The third party appraiser is TINSA, a

company specialized in Real Estate valuations in Spain and LatAm.

  • The commercial Value of the Properties

is MXN $5.7 billion as of December 2017

slide-23
SLIDE 23

23

ADR and Occupancy Rates Growing Even with Hotel Development

58.6 58.4 58.7 57.6 61.8 61.5 61.2 63.0 61.8 63.7 679 697 715 741 759 795 879 969 1,011 1,012 600 700 800 900 1,000 50 55 60 65 70 2010 2011 2012 2013 2014 2015 2016 2017 1Q18 2Q18 Occupancy Rate ADR %

Occupancy Rate

MXN $

slide-24
SLIDE 24

24

Robust Operating and Financial Performance

Preliminary Not Audited Financial Information

275 347 421 218 150 300 450 2015 2016 2017 2Q18 MXN $ Million

EBITDA

(3)

Notes

  • 1. Considers Ps$20.9MM, Ps$20.7MM and Ps$19.6MM from other revenues for 2015, 2016 y 2017, respectively
  • 2. Accumulated Results as of June 2018
  • 3. Does not consider Ps$15.5MM, Ps$15.9MM and Ps$16.4MM of SG&A for 2015, 2016 y 2017, respectively
  • 4. Calculated as EBITDA – FF&E
  • 5. Net Income + Income Taxes + D&A – FF&E

170 214 277 145 100 200 300 2015 2016 2017 2Q18 MXN $ Million

AFFO

(5)

MXN $ Million 824 1,012 1,159 588 400 800 1,200 2015 2016 2017 2Q18

Total Sales

MXN $ Million 240 304 371 192 200 400 2015 2016 2017 2Q18

NOI

(1) (4) (2) (2) (2)

slide-25
SLIDE 25

25

Robust Operating and Financial Performance

Preliminary Not Audited Financial Information

21.0 26.9 18.4 8 17 26 35 FSTAY FINN FHotel 20.7 21.1 23.9 24.7 25.9 22.3 20.4 22 21.4 18.7 20.5 23.2 17 20 23 26 2015 2016 2017 2Q18 FSTAY FINN FHotel % 2Q18 (%) 24.9 25.4 28.2 29.1 30.1 24.3 22.5 21.0 22.4 19.4 23.4 27.2 17 22 27 32 2015 2016 2017 2Q18 FSTAY FINN FHotel

FFO Margin LTV

% % 33.3 34.3 36.3 36.7 26.4 30.2 29.7 28 24.8 24.9 26.2 30.4 22 26 30 34 38 2015 2016 2017 2Q18 FSTAY FINN FHotel

EBITDA Margin AFFO Margin

(4)

Notes

  • 1. Does not consider Ps$15.5MM, Ps$15.9MM y Ps$16.4MM of SG&A for 2015, 2016 y 2017, respectively
  • 2. FFO calculated as Net Income + Income Taxes + D&A
  • 3. AFFO calculated as Net Income + Income Taxes + D&A – FF&E
  • 4. Mantains ratio of 55.8% of FF&E vs Capex reserve for 1Q17, real figure during 2Q17
  • 5. Taking Ps$1.2Bn of debt and Ps$5.7Bn of fixed assets, according to last appraisal
  • 6. Includes “Properties in Development”
  • 7. Accumulated Results as of June 2018

(6) (3) (5) (1) (2) (7) (7) (7)

slide-26
SLIDE 26

26

Operated by a Leading Company in the Market

Innovative and Disruptive Room Operation and Distribution Platform

Accelerated Growth

  • Innovative technological

platform receiving more than 80% of reservations through own channels.

  • Optimized Yield

Management System executed in real time focused on maximizing RevPAR.

  • City Premios – Loyalty

program with over 600,000 active members accountable for 20% of total

  • ccupied room nights.
  • More than 8,000 corporate

agreements that account for approximately 40% of total

  • ccupied room nights.
  • Solid commercial

agreements and partnerships that turn into sales. Room Nights Sold by Channel

2017

Room Nights Sold by Guest Type

2017

Room Nights Sold by Travel Purpose

2017

44% 20% 7% 7% 22% OTAs & GDSs Hotel and Walk Ins City @ccess Call Center Website 90% 10% Domestic Guests International Guests 87% 13% Business Leisure

slide-27
SLIDE 27

27

Transparent Operating Contract in Line with Industry

Fees of Operating Contract Other Considerations

  • Fee of Administration

– A percentage is charged on Total Revenues

  • Fee of Operating Incentive

– A percentage is charged over Gross Operating Profit

  • Fee on Reservations

– A percentage is charged on Room Revenues

  • Fee on Royalties

– A percentage is charged on Total Revenues

  • Advances of commissions are contemplated for
  • ther income that is not lodging
  • Contract length

– Renewable every 25 years

  • Operating Contracts in line with industry

standards

  • All our hotels have contracts with similar and

consistent terms

  • Mechanisms of alignment of operational

interests

  • No hidden fees
slide-28
SLIDE 28

28

Conservative Capital Structure and Debt Profile

Maintain levels of debt / Fixed Assets lowers than 50% (21% initially)

Actual cost of debt TIIE + 175 bps contemplating hedges of TIIE at 6.8% already signed.

Migrate to a unsecure debt structure with a balloon payment once the issuance of the vehicle has been made

Leverage Considerations

MXN $ Million 200 400 600 800 1,000 1,200 2018 2019 2020 2021 2022

Debt Amortization Schedule Hedges over Cost of Debt

Total Debt

LTV (1)

DSCR (2)

Net Debt/ LTM EBITDA

% Guaranteed Main Debt Indicators 100% MXN $ 1.2 Bn 21% 2.2x 2.1x

Estimated 2017 with 3Q17 results lineally annualized

100% Covered

Base Interest Rate at 6.8%

Average Weighted Life:4.4 years

Notes

  • 1. Total Debt / Value of the Properties according to last appraisal
  • 2. NTM EBITDA / (Interests+ Amortization + FF&E)
slide-29
SLIDE 29

29

Additional Growth Potential from Subsequent Portfolio Acquisition

Initial Portfolio 42 properties Asset Valuation: MXN $5.7 billion Debt: MXN $1.2 billion Equity: MXN $4.5 billion Free float: 2.25 billion (50%) Co-investment and M&F Hotels 32 properties Asset Valuation: MXN $3.5 billion Debt: MXN $1.0 billion Equity: MXN $2.5 billion Free float: $1.25 billion (50%) 100% owned JV and managed and franchise contract hotels Total Portfolio After Acquisition 74 properties Asset Valuation: MXN $9.2 billion Debt: MXN $2.2 billion Equity: MXN $7.0 billion Free float: $3.5 billion (50%) JV and managed and franchise contract hotels

slide-30
SLIDE 30

30

Tax Implications for Foreign Investors

C-Corp Fibra Foreign Pension Fund Foreign Investor (Corporate or Individual)

Exempt or 30% 0% Corporate Income Tax 0% based no certain treaties Exempt WHT on dividend distributions Either:

  • Exempt
  • 25% on gross sale amount
  • 35% on net gain (certain

requirements must be comply) Exempt Capital gains (via private sale) N.A. Exempt Capital gains (via stock market) 30% N.A. Corporate income tax 10% (can be reduced to 0% depending on certain treaties) 30% WHT on dividend distributions Either:

  • 25% on gross sale amount
  • 35% on net gain (certain

requirements must be comply) 35% on net gain and 10% on gross sale Capital gains (via private sale) N.A. Exempt Capital gains (via stock market)

slide-31
SLIDE 31

31