07/24/2014 | By Sarah Borchersen-Keto
Lorenzo Berho, chairman and CEO of Mexican real estate company Vesta (BMV: Vesta), joined REIT.com for a CEO Spotlight video interview during REITWeek 2014: NAREIT’s Investor Forum, held in New York.
Vesta is an owner, developer and manager of industrial buildings and distribution centers in Mexico.
Berho explained that the decision to hold an initial public offering (IPO) in July 2012 reflected the view that the company’s business model in the private sector “was at its limit.” Vesta raised $250 million from its IPO, and the following year secured an additional $200 million in public capital.
Berho said the company has been well received in the public markets, in part because non-domestic investors “already knew the story of the company, most of them knew Mexico, and realized the benefits of investing in an emerging market,” he said.
Berho said there have been a number of structural and political reforms enacted by the Mexican government in the past year which have had a positive impact on Vesta and the overall Mexican commercial real estate market.
For Vesta, the most important reform has been in the energy sector, Berho said. Energy reforms have lowered the cost of electricity, thereby increasing the competitiveness of manufacturing companies that want to move to Mexico, he noted.
Lower utility prices have also increased the purchasing power of the Mexican public, especially the middle class, Berho said. The combination of increased investment and consumer consumption will boost gross domestic product growth for the next few years, Berho added.
Looking at the company’s portfolio, Berho said that logistics services account for about 40 percent of its tenant base, with food and beverage logistics accounting for a growing portion of that share.
Two other sectors that are becoming more prevalent are the automotive and aerospace industries, Berho noted. The automotive industry is taking advantage of Mexico’s strategic location , trained labor force, established supplier base, and cost competitiveness, he said.
Aerospace, meanwhile, “was not even on the radar screen in 2007,” according to Berho. Today, Mexico has almost 300 companies in the aerospace business. “This is a very dynamic sector and Vesta is well-positioned to capitalize,” Berho said.