General CBFI- Holders Assembly Alternate Fee Structure Proposal - - PowerPoint PPT Presentation

General CBFI-Holders’ Assembly

Alternate Fee Structure Proposal Employee Compensation Plan Proposal Issuance of New CBFIs Proposal

April 4th, 2014

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Alternate Fee Proposal

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Employee Compensation Plan Proposal

Agenda 3

New CBFI Issuance Proposal

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Designation of shareholders representatives

Alternate Fee Proposal

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Understanding Fibra Uno’s current fee structure

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Fibra Uno’s Fee Structure at IPO was designed considering feedback from prospective IPO investors:

 3.0% of rents Advisory fee  1.0% of Gross Asset Value

(“GAV”) Property Management fee Pre - IPO Fee Structure Proposal

 Incentivise growth via 3rd

party acquisitions and not

• nly through E-Group

contributions

 Incentivise growth with

moderate leverage Investor Feedback

 1.0% of rents Property

Management Fee

 2.0% of rents Services Fee  0.5% of undepreciated asset

value net of debt (Net Asset Value or “NAV”)

 3.0% Acquisition Fee over

GAV of 3rd party acquisitions IPO Fee Structure

IPO investors requested a change from 100 bps or 1.0% of GAV and 3.0% of Rents for: a) 2.0% of Rents to Advisor (Plus 1.0% of Rents for Management Subsidiary) b) 3.0% on GAV Acquisition Fee on 3rd party acquisitions and c) 50 bps on NAV Property Management Fee

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 Following the success of our IPO and the strong market performance of our CBFIs, some competitors followed

• ur footsteps and got listed in the Mexico Stock Exchange and included different fee structures that enabled

them to better reward and retain talent.

FIBRA Fee Benchmark April 2013

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Asset Management Fee 0.5% of Net Asset Value 0.5% of gross asset cost indexed for inflation 1.0% of equity market capitalization Property Management Fee 1.0% 1.5% to 3.0% 4.0% Leasing Fees (% of rents) 2.0% 3.0% to 6.0% 4.0% Incentive / Performance Fees(1) None 10.0% above 9.0% cumulative return 10.0% above a 5.0% inflation- adjusted cumulative total return Other Fees Acquisition Fee:

 3.0% of property value (3rd

party acquisitions only) Termination Fee:

 5x Asset Management Fee

None Founder’s Fee:

 1.5% of the purchase price of the

initial portfolio Termination Fee:

 Receive base and incentive fees

for up to 10 years

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Asset Management Fee 0.5% of Net Asset Value 0.5% of gross asset cost indexed for inflation 1.0% of equity market capitalization 1.0% of Net Asset Value Property Management Fee 1.0% 1.5% to 3.0% 4.0% 2.0% Leasing Fees (% of rents) 2.0% 3.0% to 6.0% 4.0% None Incentive / Performance Fees(1) High water-mark $45.67

 10% of return in excess of 12%  15% of return in excess of 18%  20% of return in excess of 24% −

The above to be paid in CBFIs with a 3-year lock-up period 10.0% above 9.0% cumulative return 10.0% above a 5.0% inflation- adjusted cumulative total return None

Current Fibra Uno Fee Status and Benchmark

Other Fees Acquisition Fee:

 3.0% of property value (3rd

party acquisitions only) Termination Fee:

 5x Asset Management Fee

None Founder’s Fee:

 1.5% of the purchase price of

the initial portfolio Termination Fee:

 Receive base and incentive

fees for up to 10 years Termination Fee:

 Years 1 – 7: three years of

advisory fee

 Years 7 – 10: accrued fees

for the total term of the contract (10 years)

Danhos

Source: Company Public Filings. (1) Fibra Uno’s Performance Fee is approved but suspended by Advisor’s decision.

 In light of the new competitive environment, as well as the performance of Fibra Uno’s CBFIs (up

134.2% since the IPO), Fibra Uno introduced a “Performance Fee”, which was unanimously approved at the CBFIs holders’ general assembly held in April 23, 2013; but placed on hold by Advisor .

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Leasing

Fee Structure proposal

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Management

• 1.0% of rents Management

Fee (Fibra Uno G&A) 1.0% of rents Management Fee (Fibra Uno G&A) 3.0% of rents 2.0% of rents Service / Leasing Fee 2.0% of rents Service / Leasing Fee Property Management 1.0% of GAV 0.5% of NAV 1.0% of NAV Acquisition

• 3.0% on 3rd party acquisitions

NONE

 Fibra Uno has hired an external consultants to advise our Management, Technical Committee and

Practices Committee on development of an Employee Compensation plan that will be in line with global industry standards and best practices

 Since our IPO, our shareholder base has grown and evolved to include a broader range of investors

and partners

 Considering the feedback of our partners and in order to address our investors’ concerns and to

better align all of Fibra Uno’s stakeholders’ interests, Fibra Uno’s Practices Committee recommends the adoption of the following changes

Fee Structure at IPO Current Proposal Performance

• Include Performance Fee

Employee Compensation Plan

Employee Compensation Plan (“ECP”)

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Employee Compensation Plan (“ECP”)

 In order to align CBFI Holders’ interests with that of our management, Fibra Uno has been working, both internally and

with external advisors, to develop an Employee Compensation Plan (“ECP”) that would replace the Performance Fee approved during our CBFI holders’ general assembly of April 23, 2013

 The specific parameters of the ECP are still under development and would include certain conditions and variables

that we consider sensitive information from a competitive standpoint and therefore will remain confidential

 Based on Employee Compensation plans established by leading REITs, Fibra Uno’s stock compensation plan would

be structured considering the following: − In line with international standards − Simple to measure and evaluate − Parameters and thresholds should be clearly established upfront − Duration of the program should be for 10 years − Fixed number of shares to be granted over the life of the program − Performance compensation thresholds based on specific operating metrics linked to fundamental Company performance, dividend and indexed based relative return for CBFI holders

 The proposal outlined herein considers input from our CBFI holders, Employee Compensation consultants, investment

banks, as well as from our own research and expertise

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ECP general parameters

I. CBFI based variable compensation structure designed to: a) Reward performance b) Retain key talent c) Align CBFI holders’ and management’s objectives and interests II. CBFI or equity-based compensation parameters: a) A significant portion of CBFIs granted will “vest” over periods that range from 3 to 5 years b) Equity based compensation to be granted as a reward for performance achievements, with well-defined measurable goals appropriate for each individuals, position, responsibilities and

• rganizational objectives

c) Organizational objectives and measurable goals shall consider certain key operating metrics, but shall not be limited to: 1. FFO/CBFI and Distributions/CBFI 2. Minimum or target occupation level 3. Minimum or target NOI margin 4. Relative index-based return measurement

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ECP dimensions and duration

In order to account for the aforementioned objectives as well as to consider certain specific factors of Fibra Uno, the ECP should: a) Have a duration or lifespan of 10 years in order to allow for: i. Long-term goal setting ii. Key talent retention iii. New talent additions as Fibra Uno grows and evolves b) Have a defined size equal to 5% of pro-forma 2014 Follow On CBFIs outstanding in order to: i. Create an ECP that will allow Fibra Uno to reward employees at all levels within the

• rganization

ii. Enable CBFI holders to asses overall dilution impact of the ECP iii. Define an ECP that will enable Fibra Uno to continue its industry leading performance while addressing our CBFI holders’ feedback c) 5% of Proforma CBFIs outstanding would be approximately 162.95 million CBFIs (1)

(1) Assumes currently outstanding CBFIs of 1,809 million, + 200 million CBFIs for G30 and Garza Ponce Acquisitons + 1,250 million for 2014 New Equity

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ECP Governance

I. Employee Compensation shall be governed by a Compensations Committee a) Compensation Committee shall be 100% independent b) Compensation shall be proposed by the CEO and evaluated by the Compensations Committee c) Compensation Committee member changes to be approved by Nominations Committee II. Compensation Committee’s Mandate will be to: a) Maintain a strategic oversight of compensation program b) Evaluate and recommend pay for the CEO c) Conduct pay recommendation for key executives in conjunction with the CEO

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ECP vs. Performance fee

ECP Performance fee N/A

 5.0% of shares outstanding pro forma 2014 equity

follow-on

 Valid for 10 years  Pay for performance  Objective measurement  Retention objective 3-5 year vesting period  High water-mark $45.67  10% of return in excess of 12%  15% of return in excess of 18%  20% of return in excess of 24%

− The above to be paid in CBFIs with a 3-year lock-up period N/A

 Fibra Uno’s Practices Committee recommends our CBFI holders to adopt the proposed Employee

Compensation Plan, a vote will be requested during our upcoming General CBFI Meeting to indicate preference between the recommended ECP or re-instating the current (but suspended) Performance fee

Current Proposal

New CBFI Issuance

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New CBFI Issuance

Fibra Uno’s Technical Committee recommends CBFI Holders’ approve the issuance of new CBFIs in order to meet the following objectives:

a) Allow Fibra Uno to maintain its growth plan without increasing it current debt

levels

b) Enable Fibra Uno to negotiate and close potential acquisition opportunities that

are available in the Mexican Real Estate Sector Fibra Uno’s Technical Committee recommends approval to issue

a) up to 1,250 million new CBFI’s of Fibra Uno b) CBFIs to be offered, over the coming twelve months period in México though one

• r more public offering(s) registered with the CNBV

c) CBFIs to be offered, over the coming twelve months period in the international

markets through one or more private placement(s) under Rule 144a and Regulation S The expected maximum dilution impact would be of 40.86%

a) Dilution = (1,250,000,000 / (1,250,000,000 + 1,809,013,266))

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New CBFI Issuance

Fibra Uno expects to deploy capital raised in a 12 to 18 month time frame from the time of issuance. Although particular use of proceeds would be outlined in the official documentation of a potential offering, Fibra Uno expects that the capital raised will be deployed according to the following general guidelines:

a)

Up to 1/3 of all proceeds to be used for development properties with the remaining capital used for acquisition of stabilized properties

b)

Up to 1/3 of capital raised for related party acquisitions, including capital committed for properties under development from related parties

c)

Although particular acquisition opportunities may deviate from our diversification targets by sector, our goal is to maintain a diversification of 40% retail, 40% industrial and 20% office on an income basis

d)

Fibra Uno commits to close accretive acquisitions only