Ahead of FIBRA Day 2023 on Sept. 7 in New York City, hosted by AMEFIBRA, the Mexican Association of Real Estate FIBRAs (REITs), REIT.com spoke to a range of FIBRAs about the major developments they see shaping their markets.
Fibra Uno (BMV: FUNO11), the first and largest FIBRA, operates and develops a wide range of real estate assets for leasing, mainly in the industrial, retail, and office segments. Fibra Uno CEO Gonzalo Robina shared his thoughts with REIT.com.
How would you describe fundamentals in your sector of the commercial real estate market today, and for Mexico more broadly?
Gonzalo Robina: The fundamentals are robust and the trends we are seeing are indicative of long term sustained growth in our sector. In Mexico, the commercial real estate market continues to show steady growth and resilience, offering attractive opportunities for investors and tenants alike. The demand for commercial properties remains strong, primarily in the industrial segment, followed by the retail and lodging segments, and lastly the office segment.
The positive trends underlying our sector are supported by a growing economy, favorable demographic trends, and increasing foreign investment in the country, driven by the global reconfiguration of supply chains that are benefiting Mexico through the nearshoring mega-trend. Additionally, the continued government commitment to further invest in infrastructure development and urbanization solidifies the potential of our sector.
At Fibra Uno, we are strategically focused on maximizing value and capitalizing on the current state of the market through several key strategies:
a. Portfolio location and diversification: We believe in maintaining a strategically located diverse portfolio across different asset classes and geographies, enabling us to capture growth opportunities in various markets and minimize risks.
b. Active asset management: Our dedicated team is continuously optimizing our assets, ensuring they meet the evolving demands of tenants and remain competitive in their respective markets.
c. Sustainable development: Sustainability is a core pillar of our business strategy. We are committed to environmentally and socially responsible practices in our developments, which not only benefit the communities we serve but also appeal to environmental and socially conscious tenants and investors.
d. Strategic acquisitions: We remain vigilant in identifying strategic acquisition opportunities that align with our long-term objectives, allowing us to expand our portfolio and strengthen our market position.
e. Tenant-centric approach: We prioritize understanding and meeting the needs of our tenants to foster strong, long-term relationships and maintain high occupancy rates throughout the business cycle.
Where do you see the biggest growth opportunities for your company in the year ahead?
Nearshoring is the strategic growth driver for our country and therefore our company as well in the years ahead. By proactively identifying and addressing the real estate needs of companies engaged in nearshoring activities, we aim to seize these opportunities and deliver value to our investors while contributing to the economic growth of Mexico.
For Fibra UNO, nearshoring presents several key growth opportunities, including increased demand for industrial properties, expansion of logistics and distribution centers, a surge in E-commerce and last-mile delivery, increased foreign investment, and demand for properties located in areas with access to labor, energy, water, and other key services, as well as transportation infrastructure.
In what ways has the nearshoring trend impacted your operations and are there particular adjustments you have made in response?
As more companies look to nearshore their manufacturing and distribution activities to Mexico, we have made specific adjustments to capitalize on the opportunities and meet the changing demands in the market.
By proactively adjusting our operations to align with the nearshoring trend, Fibra Uno has been able to capture growth opportunities, strengthen our market position, and deliver value to our investors and stakeholders. We remain committed to staying agile and responsive to evolving market dynamics while positioning Fibra Uno as a preferred real estate partner for companies engaging in nearshoring activities in Mexico.
How active is the transaction market and to what extent are you involved?
The transaction market has been relatively active in Mexico, with various opportunities arising for both acquisitions and dispositions. The extent of our involvement in the transaction market can be influenced by various factors, such as market conditions, the availability of attractive investment opportunities, and our financial position. During periods of favorable market conditions and ample liquidity, we may be more active in pursuing acquisitions and selectively divesting certain assets to maximize returns for our investors.
Can you describe the role sustainability is playing in your overall strategy?
Sustainability plays a fundamental and strategic role in Fibra Uno’s business strategy. Energy and water costs represent two out of our top 10 operational costs, additionally we´ve aligned social and governance KPIs through our sustainable finance mechanisms. Our commitment is to have 100% of our debt be labeled either green, social, or sustainable.
Our energy intensity consumption has been reduced since 2019 by 59.8%, water intensity consumption was reduced by 49%, and we avoided 67% of our GHG emissions versus our 2019 baseline; annually we recycle around 2,200 tons of solid waste across our operations.
We recognize that incorporating sustainable practices into our operations and developments is not only essential for responsible business management but also critical for ensuring long-term success and value creation. Incorporating sustainability into our overall strategy not only allows us to contribute positively to the environment and society but also enhances our competitiveness and long-term financial performance. To date we have tenants who have chosen Fibra Uno’s properties over our competitors for the ESG practices we have implemented.
We are committed to ensuring that sustainability remains a core pillar of our business approach, guiding our decisions and actions to create value for all our stakeholders while contributing to a more sustainable future.
What trends have you seen regarding international investment in FIBRAs and how active are you in terms of engaging with international investors?
There has been a noticeable increase in interest from international investors over the past years. FIBRAs offer attractive opportunities for foreign investors seeking exposure to Mexico's real estate market without direct ownership of physical properties. Some of the trends supporting international investment in FIBRAs include diversification, stable yields, access to expertise, nearshoring, and a favorable regulatory environment.
Fibra Uno is actively engaged in fostering relationships with international investors. We recognize the importance of attracting foreign capital to fuel our growth and expansion plans.
Is there an aspect to investing in FIBRAs that you wish was better understood?
Yes, the tax treatment and withholding requirements for international investors. FIBRAs are subject to specific tax regulations in Mexico, and the tax treatment can vary depending on the type of income and the investor's country of residence. International investors often encounter complexities related to tax implications, including withholding taxes on dividends and capital gains.
For students and professionals seeking out career opportunities in FIBRAs or commercial real estate, what advice would you give them?
Gain relevant education and knowledge: Consider pursuing a degree or certification in fields such as real estate, finance, economics, business administration, or urban planning. Building a strong foundation of knowledge in these areas will provide you with valuable insights and skills to excel in the industry.
Seek internship and networking opportunities: Look for internships or entry-level positions in real estate firms, property management companies, or financial institutions with a focus on real estate. These experiences will give you practical exposure to the industry and help you build a network of contacts.
Stay Informed about the Industry: Keep yourself updated with the latest trends, market dynamics, and regulatory developments. Attend industry conferences, seminars, and webinars to expand your knowledge and connect with professionals in the field.
Develop analytical and financial skills: Commercial real estate involves complex financial analysis and decision-making. Enhance your analytical skills and financial acumen to be able to evaluate investment opportunities and understand the financial implications of real estate transactions.
Embrace technology: The real estate industry is adopting technology rapidly. Familiarize yourself with real estate software, data analytics tools, and digital marketing platforms to stay competitive in the market.
Cultivate soft skills: Communication, negotiation, and relationship-building skills are crucial in the commercial real estate industry. Work on developing interpersonal abilities to interact effectively with clients, colleagues, and stakeholders.
Pursue specialization: Consider specializing in a specific area of commercial real estate, such as retail, industrial, office, or hospitality. Specialization can make you a sought-after expert in a particular segment of the market.
Build a strong professional network: Networking is key to finding career opportunities in the industry. Attend industry events, join real estate associations, and connect with professionals on social media platforms like LinkedIn to expand your network.
Demonstrate a strong work ethic: The real estate industry can be demanding and competitive. Show a strong work ethic, enthusiasm, and a willingness to go the extra mile to stand out among your peers.