FIBRA Macquarie México Reports Third Quarter 2022 Results

• FY22 AFFO per certificate guidance increased to Ps. 2.70, a 2.9% increase from the midpoint of the prior range
• AFFO per certificate growth of 5.8% QoQ and 18.8% YoY
• Closing occupancy levels of 97.0% for industrial portfolio and 96.2% for consolidated portfolio; retail closing occupancy reached 91.0%, a second sequential quarterly increase
• Growth of leased GLA with the addition of two buildings, raising consolidated leased GLA by 1.5% QoQ and 3.0% YoY

FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ) announced its financial and operating results for the third quarter ended September 30, 2022.

2022 GUIDANCE UPDATES

• FY22 AFFO per certificate guidance increased to Ps. 2.70, up Ps. 0.075 from the midpoint of the prior range of Ps. 2.60 – 2.65
• FY22 distribution per certificate guidance of Ps. 2.00 reaffirmed

THIRD QUARTER 2022 HIGHLIGHTS

• AFFO per certificate Ps. 0.7097, up 18.8% YoY
• Consolidated occupancy at 96.2%, flat QoQ and up 146 bps YoY
• Industrial occupancy at 97.0%, flat QoQ and up 152 bps YoY
• 3Q22 cash distribution of Ps. 0.5000 per certificate authorized, resulting in a 70.5% AFFO payout
• Delivered and fully leased the first phase of the industrial development project in Apodaca, Nuevo Leon, and began construction on the second building

“During the third quarter, we delivered solid growth from the prior year and sequentially, reflecting the ongoing successful execution on our strategy,” said Simon Hanna, FIBRA Macquarie’s chief executive officer. “The favorable composition of our industrial portfolio with primary exposure to the attractive northern markets in Mexico is allowing us to realize sustained high occupancy and rental rate growth. In the retail portfolio, as trading conditions continued to improve, we saw sequential occupancy improvement, strong cash collections and the expiry of Covid-related rent discounts. This positive momentum is resulting in sustained cash flow and a well-covered distribution, and we are pleased to increase our earnings guidance for the year, even after incorporating a strengthening of the Peso in our final quarter forecast.”

Mr. Hanna continued, “With a prudent approach to capital allocation, we have maintained our focus on value creation by delivering organic growth along with a disciplined development strategy, as evidenced by a record NAV per certificate. During the third quarter, we delivered and fully-leased a new building in Apodaca realizing a 10.4% NOI yield with a high-quality ten-year USD-denominated lease. With strong tailwinds supporting ongoing demand and an in-progress pipeline of approximately 1.3 million square feet of GLA, we remain encouraged by our strategy to create value for our certificate holders in the quarters to come.”

FINANCIAL AND OPERATING RESULTS

Consolidated Portfolio

FIBRAMQ’s consolidated results were as follows:

Industrial Portfolio

The following table summarizes the results for FIBRAMQ’s industrial portfolio:

FIBRAMQ’s industrial portfolio performance remains robust, with solid increases in occupancy and rental rates YoY. For the quarter ended September 30, 2022, FIBRAMQ’s industrial portfolio delivered NOI of Ps. 842.7 million, an 8.6% increase when compared to the prior year. This result was driven by record quarterly lease revenues of US$43.6 million, up 7.9% in USD terms.

At quarter-end, occupancy remained steady at 97.0%, up 152 basis points on an annual basis. New leasing activity comprised 312 thousand sqft of GLA, exceeding moveouts of 131 thousand sqft of GLA. New leases featured a US-based manufacturer of electric vehicle parts in our newly completed Apodaca development, two logistics providers and a US-domiciled metal plating company. Renewal leases comprised eight leases and 1.2 million sqft, driving a healthy retention rate of 86.6% over the last 12 months.

Cash collections continue to be strong, and through September 30, 98.4% of scheduled 3Q22 rental income has been collected. Total cash collections for the quarter totaled Ps. 1,038.8 million, up 9.8% YoY.

As of September 30, 2022, trade receivables net of provisions were Ps. 6.8 million (excl. VAT), lower by 52.2% over the prior corresponding period, reflecting solid cash collections along with prudent provisioning.

Retail Portfolio

The following table summarizes the proportionally combined results for FIBRAMQ’s retail portfolio:

FIBRAMQ’s retail portfolio benefited from improving trading conditions. Of note, average occupancy increased sequentially for the second time since the onset of the pandemic, up 59bps from the end of the second quarter, and up 73bps from the prior comparable period to 91.0%.

• NOI was higher by 16.2% year over year. Excluding the impact of IFRS non-cash straight line rent amortization, with NOI higher by 34.9% year over year.
• For the first quarter since the onset of the pandemic, there were no COVID-related rent discounts impacting the Retail portfolio, This follows the expiration of all COVID-related rent discounts and represents a Ps. 12.9 million decline versus the prior corresponding quarter.
• Retail portfolio cash collections during the quarter totaled Ps. 164.1 million, an increase of 18.0% versus the prior corresponding period.
• During the third quarter, foot traffic at FIBRAMQ’s shopping centers was approximately 34% above the prior comparable period, and approximately 25% below pre-pandemic levels.
• Reflecting overall improving activity levels, total car parking and variable income of Ps. 19.5 million was 43.9% higher than the prior comparable period.

Lease renewal activity was strong for the quarter. FIBRAMQ signed 20 leases encompassing 5.6 thousand sqm of retail space during the third quarter of 2022. Leasing highlights included the renewal of an office supplies store in Tecamac Power Center and a new lease for a sports bar in Coacalco Power Center. The Retail portfolio also benefited from a strong retention of 87.0% over the last 12 months.

As of September 30, 2022, trade receivables net of provisions were Ps. 20.3 million (excl. VAT), higher 101.7% over the prior corresponding period.

Lease Rental Rate Summary

Based on the consolidated lease profile, the third quarter had just 15.6% of consolidated leases (as measured by annualized base rents) subject to scheduled annual rent escalations, representing the lowest quarter of indexation increases for the year. The fourth quarter of 2022 is scheduled to have 28.1% of consolidated leases benefiting from annual rent escalations, as measured by annualized base rents.

For leases that were renewed during the quarter, positive releasing spreads of 10.0% and 2.4% were achieved for the industrial and retail portfolios, respectively.

Based on FIBRAMQ’s consolidated lease portfolio, 58.2% of leases (as measured by annualized base rent) are directly linked to either Mexican or US CPI.

For more detail on FIBRAMQ’s lease rental rate disclosures, including contractual rental rate increases and scheduled lease escalation, please refer to Third Quarter 2022 Supplementary Information materials located at BMV Filings (fibramacquarie.com).

Same Store Portfolio Results

For detail on FIBRAMQ’s industrial and retail same store portfolio results, please refer to Third Quarter 2022 Supplementary Information materials located at BMV Filings (fibramacquarie.com).

CAPITAL ALLOCATION

FIBRAMQ continues to pursue a strategy of investing in and developing class “A” industrial assets in core markets that demonstrate strong performance and a positive economic outlook. Across expansions and development, growth GLA of approximately 1.3 million square feet of GLA is expected to be added in the near term.

UPDATE ON INDUSTRIAL PORTFOLIO GROWTH CAPEX PROGRAM

As at the date of this release, FIBRA Macquarie’s industrial portfolio growth capex program comprises 1.8 million sqft of GLA, which includes projects completed in FY22 along with projects under construction. This takes into account development and expansion projects of 1.5 million sqft of GLA and opportunistic acquisitions of 293 thousand sqft.

Through the recently completed Apodaca building, as well its active development pipeline, FIBRAMQ estimates to deploy approximately US$118.0 million across projects completed in 2022 and currently under construction (MCMA US$43.0 million, Apodaca US$35.0 million, Ciudad Juárez US$32.0 million, Hermosillo/ Querétaro US$8.0 million).

For further details please refer to Third Quarter 2022 Supplementary Information materials located at BMV Filings (fibramacquarie.com).

CERTIFICATE REPURCHASE PROGRAM

FIBRA Macquarie has a Ps. 1,000.0 million CBFI repurchase-for-cancellation program available through to June 25, 2023. No certificates were repurchased during the quarter.

BALANCE SHEET

As of September 30, 2022, FIBRAMQ had approximately Ps. 17.1 billion of debt outstanding, Ps. 5.0 billion available on its undrawn committed revolving credit facility and Ps. 0.7 billion of unrestricted cash on hand.

As of September 30, 2022, FIBRAMQ’s indebtedness was 88.4% fixed rate, with 4.0 years weighted-average duration.

FIBRAMQ’s CNBV regulatory debt to total asset ratio was 32.2% and the debt service coverage ratio was 1.2x.

On a consolidated basis, NAV per certificate increased 22.0% year over year to a record Ps. 43.0.

GREEN BUILDING CERTIFICATION PROGRAM

During the third quarter, FIBRA Macquarie achieved the EDGE certification on five industrial buildings. Cumulative green building certification coverage on FIBRAMQ’s consolidated portfolio now represents 32.3% of GLA.

DISTRIBUTION

On October 24, 2022, FIBRAMQ declared a cash distribution for the quarter ended September 30, 2022, of Ps. 0.5000 per certificate. The distribution is expected to be paid on January 30, 2023, to holders of record on January 27, 2023. FIBRAMQ’s certificates will commence trading ex-distribution on January 26, 2023.

FY22 GUIDANCE

AFFO per certificate

Reflecting positive momentum in underlying financial and operating results, FIBRA Macquarie is increasing its FY22 AFFO per certificate guidance to approximately Ps. 2.70, from its prior range of Ps. 2.60 to Ps. 2.65.

This guidance assumes:

• an average exchange rate of Ps. 20.0 per US dollar for the remainder of FY22, compared to the prior assumption of an average exchange rate of Ps. 20.5;
• no new government restrictions regarding retail trading activities;
• no new acquisitions or divestments of stabilized properties;
• no issuances or repurchases of certificates; and
• no further deterioration in broader economic and market conditions.

Distribution per certificate

FIBRAMQ is reaffirming it guidance for cash distributions in FY22 of Ps. 2.00 per certificate, implying that the fourth quarter 2022 cash distribution is expected to be Ps. 0.50 per certificate, payable in March 2023.

The payment of cash distributions is subject to the approval of the Manager, stable market conditions and prudent management of FIBRAMQ’s capital position.

WEBCAST AND CONFERENCE CALL

FIBRAMQ will host an earnings conference call and webcast presentation on Tuesday, October 25, 2022, at 7:30 a.m. CT / 8:30 a.m. ET. The conference call, which will also be webcast, can be accessed online at www.fibramacquarie.com or by dialing toll free +1-877-407-2988. Callers from Mexico may dial 01-800-522-0034 and other callers from outside the United States may dial +1-201-389-0923. Please ask for the FIBRA Macquarie Third Quarter 2022 Earnings Call. An audio replay will be available by dialing +1-877-660-6853 or +1-201-612-7415 for callers from outside the United States. A webcast archive of the conference call and a copy of FIBRA Macquarie’s financial information for the third quarter 2022 will also be available on FIBRA Macquarie’s website, www.fibramacquarie.com.

About FIBRA Macquarie

FIBRA Macquarie México (FIBRA Macquarie) (BMV:FIBRAMQ) is a real estate investment trust (fideicomiso de inversión en bienes raíces), or FIBRA, listed on the Mexican Stock Exchange (Bolsa Mexicana de Valores) targeting industrial, retail and office real estate opportunities in Mexico, with a primary focus on stabilized income-producing properties. FIBRA Macquarie’s portfolio consists of 238 industrial properties and 17 retail properties, located in 20 cities across 16 Mexican states as of September 30, 2022. Nine of the retail properties are held through a 50/50 joint venture. For additional information about FIBRA Macquarie, please visit www.fibramacquarie.com.

Cautionary Note Regarding Forward-looking Statements

This release may contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ significantly from these forward-looking statements and we undertake no obligation to update any forward-looking statements.

Other than Macquarie Bank Limited ABN 46 008 583 542 (“Macquarie Bank”), any Macquarie Group entity noted in this document is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these other Macquarie Group entities do not represent deposits or other liabilities of Macquarie Bank. Macquarie Bank does not guarantee or otherwise provide assurance in respect of the obligations of these other Macquarie Group entities. In addition, if this document relates to an investment, (a) the investor is subject to investment risk including possible delays in repayment and loss of income and principal invested and (b) none of Macquarie Bank or any other Macquarie Group entity guarantees any particular rate of return on or the performance of the investment, nor do they guarantee repayment of capital in respect of the investment.

THIS RELEASE IS NOT AN OFFER FOR SALE OF SECURITIES IN THE UNITED STATES, AND 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.

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