MARCH 2018 Disclaimer This presentation is strictly confidential - - PowerPoint PPT Presentation
MARCH 2018 Disclaimer This presentation is strictly confidential - - PowerPoint PPT Presentation
MARCH 2018 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 It may not be reproduced or redistributed to any other person, and it may not be published, in whole or in part, for any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 It may not be reproduced or redistributed to any other person, and it may not be published, in whole or in part, for any purpose.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 Investment grade with access to main sources of capital Stable and 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
Key milestones that propelled and supported our growth story
2003
2008
- PGIM completes
Funds’ I & II deployment to generate 19.9MM ft2 industrial portfolio 2013
- ~US$713MM IPO
2013
- AI/Kimco acquisition, 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
- Achieved “Investment Grade”
credit ratings from Moody’s and Fitch
- Debut in international debt
capital markets with a 7-year unsecured bond issue of US $425MM with a fixed interest rate
- f 5.25%
FO GLA: 31.0MM ft2
2014
- ~US$460MM FO offering
2014
2016
2017
2013
IPO GLA: 19.9MM ft2
2016
- Refinancing of US
$150MM at LIBOR + 200bps with a 5 year- loan 2017
- January 2017, completed
portfolio acquisitions of 51 industrial properties / 6.3MM ft2
- Succesfully concluded
refinancing of US$150MM with a 10-year secured credit loan with a fixed interest rate of 4.75%
- New 5-year unsecured term
loan for US$350 million used for liability management; total payment of unsecured credit loan
- f US$150 million and US$196.5
million of revolving credit.
Current GLA: 37.8MM ft2
2003 – 2007
- 2003à PGIM closes Industrial
Fund I for ~US$73MM
- 2005à PGIM raises Industrial
Fund II for ~US$280MM
2008 Initial GLA: 1.2MM ft2
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)
2017
- ~US$317MM FO offering to
support growth strategy
- Acquired in September 2017, 8
industrial properties with a GLA of 1.1MM ft2
- Acquired in December 2017, 17
industrial properties with a GLA of 2.7MM ft2
- .
5
Two key milestones completed in 2017 that strengthen Terrafina’s Balance Sheet
Note 1. Gross proceeds, US$308mm net proceeds 2. Approved Shelf Registration Program with the CNBV for up to MXN$25 billion during a 5-year period 3. Total Debt / Total Assets
Equity Strategy Debt Strategy
ü US$317mm1 Equity Issuance in July 2017 through our Shelf Registration Program2
ü 183.5 million certificates at MXN$30.25 pesos per certificate
ü Broaden investor base
ü 60% international allocation ü 40% local allocation
ü Improved the company’s size and liquidity ü Positioned Terrafina in line for accretive acquisitions and developments ü Reduced the company’s LTV3 from 46.1% to 41.2% ü US$350mm Unsecured Term Loan in October 2017:
ü Proceeds used for debt refinancing
ü US$150mm to repay the BBVA/JPMorgan credit facility ü US$196.5mm to partially repay the existing unsecured revolving credit facility (URCF)
ü Improved liquidity with additional drawdown capacity in the URCF ü Unsecured term-loan with a 5 year duration
ü 3-year interest only ü Weighted average to maturity improves from 4.7 to 5.3 years
ü Attractive cost of LIBOR + 245 bps
Strong Balance Sheet with healthy leverage levels to support future growth activities
Milestones that strengthen our financial posi8on
1
6
1 Milestones that strengthen our growth strategy
Consolidated
70% New Partner / 30% Existing Partner
3.8 4.0 years $5.26 100.0% 8% / 92%
Ramos Arizpe, Monterrey, Chihuahua,
5.5 100% USD Rents ~Blended 8.6% $ 239M $ 62 PSF 25
Partner
Existing Partner New Partner
Transaction Type
Off-market transactions sourced by Terrafina and PGIM relationships
GLA (MM ft2)
2.7 0.9
- Avg. Property Age
4.7 years 4.9 years
- Avg. Annualized Rent (US$
per ft2)
$5.31 $5.12
Occupancy
100.0% 100.0%
Distribution / Manufacturing
0% / 100% 29% / 71%
Portfolio A Portfolio B
Main Markets
Ramos Arizpe Monterrey, Chihuahua
- Avg. Remaining Lease Term
4.7 7.9
Currency
100% USD Rents 100% USD Rents Existing Partner 0.2 < 1 year $4.93 100.0% 0% / 100% Monterrey 9.0 100% USD Rents
Portfolio C
Cap Rates
8.7% 8.5% 10%
Amount USD(3)
$ 53M $ 180M $ 6M
Price PSF
$ 57 PSF $ 66 PSF $ 47 PSF
# of Properties
7 17 1
M&A Activity
Expect to fully contribute to Terrafina’s results in 1Q18 Status
Closed in September 2017 Closed in December 2017 Closed in September 2017
7
Proactive portfolio optimization
- Assets divestiture strictly to improve Terrafina’s operating
metrics, leverage profile and financial position
- Strengthen Terrafina’s balance sheet and overall financial
position
- Leverage Terrafina’s platform and scale
Selectively pursue development opportunities
- Focus on ongoing expansion demand of existing and new
tenants who require additional capacity and Build-to-Suit (BTS) developments
- Selectively access current land reserves to unlock
embedded value of Terrafina’s land at high development yields
Execute accretive acquisitions
- Take advantage of long-term institutional relationships and
JV partnerships to source off-market deals in fragmented market
- Execute accretive acquisitions while maintaining a sound
balance sheet Execute Accretive Acquisitions Selectively Pursue Development Opportunities Proactive Portfolio Optimization Active and Close Tenant Management Foster Merchant Development Generating Synergies:
- First hand opportunities and repeated business
- Increased tenant retention
- Maintain high occupancy levels and rental rates
Local Expertise Business model supported by experienced property managers
Growth Strategy Business Model
Op8mal growth strategy supported by acquisi8ons and selec8ve development
1
8
Operating Statistics Financial Statistics
# of Properties and GLA (MM ft2)
85.9% 91.4% 94.90% 95.5% IPO (1Q13) FO (3Q14) FO (2Q17) 4Q17 $4.60 $4.78 $4.99 $5.04 IPO (1Q13) FO (3Q14) FO (2Q17) 4Q17
Occupancy Rate % US$ Rent per ft2 NOI (millions of US$)
Strong operating and financial performance
132 218 260 284 19.9 31.0 36.5 40.6 IPO (1Q13) FO (3Q14) FO (2Q17) 4Q17 # of Properties GLA 1 1 5 . 2 % / 1 4 . 3 % 16.2 32.6 41.8 44.0 IPO (2Q13) FO (3Q14) FO (2Q17) 4Q17 NOI
Source Terrafina filings Note
- 1. Distribution payout ratio 100% of AFFO
Past performance is not a guarantee or reliable indicator of future results.
11.4 28.9 37.9 39.6 IPO (2Q13) FO (3Q14) FO (2Q17) 4Q17 EBITDA 9.8 18.6 24.3 25.6 IPO (2Q13) FO (3Q14) FO (2Q17) 4Q17 AFFO
EBITDA (millions of US$) AFFO (millions of US$(1))
9 6 b p s 9 . 6 % 1 7 2 . 4 % 2 4 6 . % 1 6 . %
Disciplined and con8nuous growth since IPO
1
9
Source Terrafina filings Past performance is not a guarantee or reliable indicator of future results.
%
…coupled with positive occupancy rates
85.7% 88.6% 89.7% 90.6% 91.1% 91.4% 91.2% 93.7% 93.1% 93.5% 93.2% 93.3% 93.2% 92.8% 94.8% 94.9% 94.9% 95.1% 95.5%
84% 88% 92% 96% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
Stable market US$ rental rates…
US$ Rent per ft2
%
Stronger financial margins both for NOI… …and EBITDA
89.0% 89.9% 92.1% 92.0% 2014 2015 2016 2017 NOI Margin
Strong performance with consistent growth
78.4% 79.8% 82.5% 83.0% 2014 2015 2016 2017 EBITDA Margin
%
~97% of Leases Are US$-Denominated
Strong and consistent rental rates, occupancy and margins
1
4.62 4.77 4.76 4.74 4.78 4.78 4.82 4.87 4.89 4.90 4.88 4.89 4.88 4.89 4.88 4.96 4.99 5.00 5.04
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
10
35 104 177 252 347 75 206 334 466 674
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Distributions Rental Revenues
Source Terrafina filings, Past performance is not a guarantee or reliable indicator of future results.
US$ MM
Accumulated distributions and revenues Attractive margins at the bottom line…
Solid margins and consistent historical distribu8ons
Consistent Performance
53.0% 57.3% 56.6% 56.9% 2014 2015 2016 2017 Distributions as a % Rental Revenues
…and high % distributions / rental revenues
48.5% 53.1% 52.2% 52.4% 2014 2015 2016 2017 AFFO Margin
1
11
Source Public filings, 4Q17 figures
4Q17 NOI Margin
%
4Q17 EBITDA Margin
%
83.6% 78.8% 75.1% 74.0% 93.0% 90.1% 85.2% 79.8%
The most efficiently managed REIT in Mexico
%
4Q17 AFFO Margin
54.1% 51.5% 46.2% 39.0%
% of Total Revenue
4Q17 Total Distributions
51.5% 49.6% 38.9% 31.3%
Industry Leading Margins
1
12
88% 90% 92% 94% 96% 98% 100% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total North Bajio Central
17 23 13 18 13 12 14 14 10 19 20 8 10 4 6 7 13 6 6 69 26 14 8 7 2 7 7 5 3 6 11 14 10
33 40 19 31 27 30 23 26 91 59 45 20 40 60 80 100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 North Bajio Central
+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 %
Posi8ve industry trends
263 410 475 485 506 524 541 544 566 674 736 766 17.8% 37.9% 21.3% 4.0% 5.8% 3.1% 5.5% 3.2% 3.8% 16.1% 8.3% 4.0%
0% 10% 20% 30% 40% 200 400 600 800 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Industrial Stock Market Growth %
CAGR (2006 – 9M17): 10.2%
Industrial Rent (Annualized Avg. US$ Rent per ft2)
$4.00 $4.50 $5.00 $5.50 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total North Bajio Central
$4.70 $4.47 $4.57 $5.08
Industrial Occupancy Rate %
Stable and healthy occupancy rates
95.1% 94.4% 96.7% 94.8%
Increasing average rents
2
13
Diversification across Mexico
Highlights by region as of 3Q17
Key Metrics
North Bajio Central Total # of Buildings
199 55 30 284
# of Tenants
203 56 40 299
GLA (MM ft2)
25.2 9.1 6.3 40.6
Land Reserves (MM ft2)
2.7 0.2 3.3 6.2
Occupancy Rate
97.1% 91.6% 94.4% 95.5%
Average US$ Rent per ft2
4.96 5.12 5.23 5.04
Annualized Rental Base
62.3% 21.9% 15.8% 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
$69.6Bn (5) of AUM globally and one of the longest-standing industrial real estate managers in Mexico
l ~97% US$-denominated leases (4) and
the majority structured as triple-net providing Terrafina with stable US$- denominated cash flows
l Investment Grade balance sheet with
proven access to public and private debt markets
Source Terrafina filings Notes
- 1. Annualized average US$ rent per ft2 as of 4Q17
- 2. 2017 figures
- 3. Converted using an FX of Ps$18.84 per US$ as of February 27, 2018
- 4. As a % of 4Q17 GLA of 40.6MM ft2
- 5. Figures as of December 31, 2017. Net AUM of ~US$49.9Bn
l Best-in-class industrial FIBRA with a
market capitalization of ~US$1.28Bn (3)
Highest-quality portfolio of a pure-play industrial REIT with solid fundamentals
Leading industrial REIT in Mexico
Rent per ft2 US$5.04 (1) GLA 40.6MM ft2 Tenants 299 2017 Rental Revenues ~US$167MM (2) 4Q17 Occupancy Rate 95.5% Properties 284
2
North 62.1% Central 15.4% Bajio 22.5%
14
Mexico Market Characteristics Top 10 Cities Regional Footprint
73.1% Manufacturing 26.9% Distribution
GLA (MM ft2) (1) 4Q17 by GLA
Our geographic footprint best represents the Mexican industrial real estate market North
- Manufacturing focus
- Targeted location for exports to U.S.
- Potential BTS development
- pportunities
Bajio
- Mix of manufacturing and logistics
facilities
- High concentration of automotive
exports
- Strong demand Tier 2 & 3 suppliers
Central
- Predominantly logistics facilities
- High barrier / high occupancy market
- Land scarcity driving highest
industrial rental rates
Facility Use – Portfolio Distribution
Source Public filings, Jones Lang LaSalle Industrial real estate report Notes
- 1. Based on leased GLA reflecting 95.5% occupancy over the total portfolio GLA of 40.6MM ft2 as of 4Q17
- 2. % of total Mexico industrial stock as reported by Jones Lang LaSalle of 766 million square feet
Best-in-class industrial porTolio
7.8 5.8 4.5 4.3 3.3 2.0 1.4 1.4 0.9 0.9
Ciudad Juarez Chihuahua Ramos Arizpe Cuautitlan San Luis Potosi Queretaro Monterrey Guadalajara Toluca Tijuana
4.96 4.65 US$ Rent per ft 5.12 4.23 US$ Rent per ft 5.23 4.91 US$ Rent per ft
2 2 2
Lease term of 3 – 5 years Lease term of 5 – 10 years
1.1% 0.6% 0.5% 0.3% 0.3% 0.2% 0.1% 0.1% 0.1% 0.7%
Market Share % (2)
Market Statistics Terrafina
Strategically diversified portfolio
2
19% 15% 28% 23% 53% 62%
Mexico’s Industrial Stock
15
Diversified tenant base of renowned multinational companies
% of GLA
Top 10 tenants Limited exposure to tenant risk Tenant base & lease expiration schedule (2)
ü Diversified tenant base and lease size mitigates single- tenant vacancy risk ü 284 buildings with 299 tenants ü Top 10 tenants account for ~17.4% of total GLA of ~40.6MM ft2 as of 4Q17 ü Stable rollover with high historical renewal rates above ~85% (1) ü Solid leasing activity on a resilient portfolio ü ~4.8MM ft2 of renewals and new leases in 2017 % GLA 34.3% Automotive 19.8% Industrial Goods 14.4% Consumer Goods 9.9% Aviation 10.0% Logistics & Trade 4.0% Non Durable Consumer Goods 7.7% Electronics
Source Terrafina filings Notes
- 1. Average renewal rate since IPO
- 2. As a % of 4Q17 GLA of 40.6MM ft2
Years in Portfolio 9 8 Logistics Industry 12 Aviation 12 Non-Durable Goods Consumer Goods 8 Non-Durable Goods 17 Aviation 5 Consumer Goods 19 15 Automotive
Stable and resilient porTolio with diversified high-quality tenant base
13.9% 16.5% 22.0% 15.2% 8.7% 23.7% 2018 2019 2020 2021 2022 >2022 10 Industrial Goods
3
Automotive 3.2% 1.7% 1.7% 1.7% 1.6% 1.5% 1.5% 1.4% 1.0% 0.4% Kunne+Nagel Lazyboy Flextronics Cesna Chedraui Omnilife Sumitomo Labinal Continental Cummins
16
ü Large network of relationships, both from Terrafina and PGIM, with solid roster of banks ü ~US$200MM available in undrawn revolver facilities ü Preference for using unsecured credit facilities to support capital structure ü Interest rate hedging policy in place
Leverage Considerations
As of December 31,2018 Currency US$ MM Interest Rate Terms Maturity Derivatives Citibank (Revolver) US$ 98.5 L + 2.65% Interest Aug 2019 US$120M swap(5) / US $100M cap(6) Renegotiation of terms and conditions closed in Feb 18 - Citibank (Revolver) US$ 98.5 used / 201.5 available L + 2.45% Interest Feb 2022 +
- ption to
extend 1 YR US$120M swap(5) / US $100M cap(6) Metlife US$ 150.0 4.75% Interest Jan 2027 Banamex US$ 350.0 L + 2.45% Interest Oct 2022 US$100M swap(7) Senior Notes (2) US$ 444.6 5.25% Interest Nov 2022 New York Life US$ 15.9 5.19% Interest Feb 2020 Total Debt 1,059.1 Cash & Equivalents 162.6 Net Debt 972.2 DSCR (3) 5.7x Loan-to-Value (4) 41.2%
Outstanding Debt Debt Maturity Schedule (1)
US$ MM
Average Cost of Debt 4.41% LTV Long-Term Target 38% – 42% Credit Ratings (International) Baa3 BBB-
Investment grade with access to main sources of capital
Disciplined financial strategy…with diligently structured debt facilities
Source Terrafina filings Notes
- 1. As of December 31, 2017; Citibank revolver facility shows new terms and conditions closed in February 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. Swap fixed rate: 1.286%.
- 6. Cap strike price: 1.75%
- 7. Swap fixed rate: 1.768%.
4
150
- 16
- 150
0% 25% 50% 75% 100% 150 300 450 600 2018 2019 2020 2021 2022 >2022
Citibank Metlife Banamex Senior Notes % Cumulative Matured New York Life
17
PGIM Real Estate is the real estate investment business of PGIM, Inc., the global investment management businesses of Prudential Financial, Inc.(NYSE: PRU) − ~US$69.6Bn (2) of in real estate assets under management − 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
Institutional investment expertise and due diligence Industry relationships Risk management processes Transfer of economies
- f scale
Market intelligence Portfolio management
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
(External Advisor)
- Operating platform – asset & portfolio
management
- Institutional investment management
services
- Oversee capital markets
- Financial reporting, treasury & cash
management, tax, legal and compliance activities
Alfonso Munk
Managing Director & CIO
- f the Americas
Enrique Lavin
Executive Director & Country Head
Fernando Herrera
Executive Director & Head of LatAm Transactions
World-class corporate governance, experienced internal management team and strong sponsorship from PGIM
Notes
- 1. PGIM Real Estate is the global real estate investment business unit of Prudential Financial, Inc.
- 2. Figures as of December 31, 2017. Gross AUM of ~US$49.9Bn
Externally advised by one of the most prestigious real estate advisors in the world
(1)
5
18
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
- 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, experienced internal management team and strong sponsorship from PGIM (cont’d)
5
APPENDIX
SECTION 2:
20
Source Company filings. Past performance is not a guarantee or reliable indicator of future results.
- 1. 2013 results exclude the period from January 1 to March 20, 2013.
- 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)
$42.8 $79.8 $84.0 $83.0 $105.0 $11.1 $12.3 $17.7 $17.7 $19.7 $20.8 $21.6 $21.4 $21.7 $21.4 $19.5 $19.6 $20.7 $21.6 $21.1 $24.9 $26.9 $25.6 $27.5 53.0% 56.2% 61.1% 58.0% 58.4% 55.8% 57.6% 50.4% 50.1% 55.8% 58.3% 60.7% 57.9% 65.2% 64.0% 57.7% 53.8% 59.0% 60.0% 59.2% 55.3% 60.6% 57.8% 58.6%
2013 2014 2015 2016 2017 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1
$32.6 $69.3 $73.5 $74.5 $95.0 $7.7 $9.2 $14.3 $15.1 $16.9 $18.6 $18.6 $19.9 $19.6 $17.5 $16.5 $16.6 $19.0 $18.5 $20.4 $22.1 $24.3 $23.0 $25.6 43.6% 48.5% 53.1% 52.7% 52.4% 37.9% 41.1% 40.3% 42.5% 47.6% 51.8% 51.9% 53.3% 58.6% 52.0% 48.4% 45.1% 53.9% 52.9% 56.8% 48.7% 55.4% 51.4% 54.1%
2013 2014 2015 2016 2017 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
$69.9 $126.3 $123.6 $131.8 $166.8 $17.7 $18.9 $30.9 $30.5 $31.2 $32.6 $32.1 $31.9 $30.3 $30.6 $30.8 $31.8 $31.9 $33.9 $33.1 $39.6 $41.8 $41.4 $44.0 87.6% 89.0% 89.9% 92.1% 92.0% 88.7% 88.2% 87.9% 86.4% 88.4% 91.1% 90.1% 86.1% 91.2% 91.5% 91.1% 87.0% 94.3% 94.3% 92.9% 87.9% 94.1% 93.3% 93.0% 2013 2014 2015 2016 2017 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1 2 $59.2 $111.2 $109.7 $118.2 $150.3 $13.6 $15.5 $28.0 $26.9 $27.6 $28.9 $27.7 $28.5 $27.2 $28.5 $27.0 $28.50 $29.60 $30.50 $29.60 $35.70 $37.90 $37.20 $39.60 77.1% 78.4% 79.8% 82.5% 83.0% 68.1% 72.2% 79.6% 76.2% 78.2% 80.9% 77.8% 76.8% 81.8% 78.2% 79.9% 78.2% 84.3% 84.8% 82.9% 79.2% 85.3% 83.7% 83.6% 2013 2014 2015 2016 2017 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
1
2 2 1 2 3 3
Financial performance since IPO
21
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
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
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
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
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% 46.1% 41.2% 41.2%
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
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
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
Source Company filings. Notes
- 1. Reflects annualized EBITDA figures. Proforma EBITDA (includes full impact of December 2017 acquisition) is reflected in 4Q17 calculations.
- 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
Notes Past performance is not a guarantee or reliable indicator of future results. Source: Terrafina Earnings Reports
PorTolio’s opera8ng and financial highlights
1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16
fx
20.3873 18.5666 17.8251 18.9259 19.8128 (millions of pesos unless otherwise stated) (millions of dollars unless otherwise stated)
Rental Revenues 821.2 773.6 734.3 828.6 660.8 40.3 41.6 41.2 43.8 33.4 Other OperaCng Income 119.7 45.8 67.0 70.8 52.1 5.8 2.5 3.8 3.8 2.8 Net Revenues 941.2 825.1 810.3 915.0 720.3 46.2 44.4 45.5 48.3 36.5 Net OperaCng Income (NOI)* 804.2 776.3 737.7 832.9 654.3 39.6 41.8 41.4 44.0 33.1 NOI Margin 87.9% 94.1% 93.3% 93.0% 92.9% 87.9% 94.1% 93.3% 93.0% 92.9% EBITDA* 727.2 704.5 662.3 749.2 584.4 35.7 37.9 37.2 39.6 29.6 EBITDA Margin 79.2% 85.3% 83.7% 83.6% 82.9% 79.2% 85.3% 83.7% 83.6% 82.9% Funds from OperaCons (FFO)* 508.3 500.8 456.8 520.5 417.3 24.9 26.9 25.6 27.5 21.1 FFO Margin 55.3% 60.6% 57.8% 58.6% 59.2% 55.3% 60.6% 57.8% 58.6% 59.2% Adjusted Funds from OperaCons (AFFO)* 450.5 452.4 410.4 484.9 400.4 22.1 24.3 23.0 25.6 20.4 AFFO Margin 48.7% 55.4% 51.4% 54.1% 56.8% 48.7% 55.4% 51.4% 54.1% 56.8% DistribuCons 450.5 452.4 410.4 484.9 400.4 22.1 24.3 23.0 25.6 20.4 DistribuCons per CBFI 0.7417 0.5720 0.5188 0.6130 0.6593 0.0364 0.0308 0.0291 0.0324 0.0335 Mar17 Jun17 Sep17 Dec17 Dec16 Mar17 Jun17 Sep17 Dec17 Dec16
fx
18.8092 17.8973 18.1979 19.7354 20.6640 (millions of pesos unless otherwise stated) (millions of dollars unless otherwise stated)
Cash & Cash Equivalents 1,038.2 884.0 6,658.7 3,209.0 4,297.1 55.2 49.4 365.9 162.6 259.7 Investment ProperCes 39,348.2 37,393.9 39,048.5 45,959.6 34,719.7 2,092.0 2,089.4 2,145.8 2,328.8 1,666.7 Land Reserves 997.5 934.8 962.9 1,040.3 1,041.5 53.0 52.2 52.9 52.7 48.1 Total Debt 19,273.3 18,526.0 19,267.1 20,900.8 14,561.5 1,024.7 1,035.1 1,058.8 1,059.1 709.9 Net Debt 18,235.1 17,642.0 12,608.4 17,691.8 10,264.4 969.5 985.7 692.8 896.5 450.3
(as of September 30, 2017)
North Bajio Central Total # Buildings
199 55 30 284
# Tenants
203 56 40 299
GLA (msf)
25.2 9.1 6.3 40.6
Land Reserves (msf)
2.7 0.2 3.3 6.2
Occupancy Rate
97.1% 91.6% 94.4% 95.5%
Average Leasing Rent / Square Foot (dollars)
4.96 5.12 5.23 5.04
Annualized Rental Base %
58.8% 24.1% 17.1% 100.0%
23
Source: As reported by JLL Real Estate Industry Reports. Past performance is not a guarantee or reliable indicator of future results.
PorTolio’s occupancy and rental rates
Market information
(As of 3Q17)
Occupancy Rate
- Avg. Leasing
Rent/ Square Foot
(dollars)
North 94.3% 4.65 Baja California 94.3% 4.68 Sonora 94.1% 4.08 Chihuahua 93.5% 4.54 Coahuila 95.5% 4.74 Nuevo Leon 92.9% 4.67 Tamaulipas 93.4% 4.57 Durango
- Bajio
94.7% 4.23 San Luis Potosi 96.6% 4.20 Jalisco 95.1% 4.68 Aguascalientes 99.1% 3.12 Guanajuato 93.0% 4.44 Queretaro 93.1% 4.68 Central 95.9% 4.91 Estado de Mexico 98.2% 4.58 Distrito Federal 94.9% 5.92 Puebla 96.3% 4.20 Tabasco
- Total
94.8% 4.57
Terrafina (As of 4Q17)
Occupancy Rate
- Avg. Leasing Rent/
Square Foot
(dollars)
North 97.1% 4.96 Baja California 100.0% 4.32 Sonora 88.5% 4.53 Chihuahua 97.8% 5.00 Coahuila 95.4% 5.03 Nuevo Leon 96.2% 5.02 Tamaulipas 100.0% 4.55 Durango 100.0% 4.71 Bajio 91.6% 5.12 San Luis Potosi 91.7% 4.84 Jalisco 100.0% 6.41 Aguascalientes 100.0% 4.76 Guanajuato 85.1% 4.89 Queretaro 85.8% 4.69 Central 94.4% 5.23 Estado de Mexico 93.5% 5.45 Distrito Federal 100.0% 8.97 Puebla 100.0% 3.03 Tabasco 100.0% 4.02 Total 95.5% 5.04
24
Implied cap rate US$ MM, unless otherwise noted Certificate Price (1) (Ps$30.65)
1.50
(x) Certificates (MM)
791.0
(=) Market Capitalization
1,187.2
(+) Total Debt
1,059.1
(-) Cash
162.6
(=) Enterprise Value
2,083.6
(-) Landbank
52.7
(=) Implied Operating Real Estate Value
2,030.9
2018E NOI (2)
185.0
Cap Rate
9.1%
NAV US$ MM, unless otherwise noted (+) Investment Properties (Excl. Landbank)
2,328.8
(+) Landbank
52.7
(+) Cash
162.6
(-) Total Debt
1,059.1
(=) NAV
1,485.0
(/) Certificates (MM)
791.0
(=) NAV per Certificate
1.9
Certificate Price (NAV Calculation)
1.9
(x) Certificates (MM)
791.0
(=) Market Capitalization
1,485.0
(+) Total Debt
1,059.1
(-) Cash
162.6
(=) Enterprise Value
2,381.5
(-) Landbank
52.7
(=) Implied Operating Real Estate Value
2,328.8
2018E NOI (2)
185.0
Cap Rate
7.9%
Source Terrafina filings, Wall Street research Notes
- 1. Certificate price as of February 28, 2018. Converted using an FX of Ps$18.84 per US$
- 2. As reported by management guidance
Implied cap rate calcula8on
25