• Record quarter as AFFO increases 18.0% on 1Q15 and 32.8% on 2Q14
  • Signed accretive acquisitions to achieve 64% deployment of funds from follow-on offering
  • Fourth consecutive quarterly increase in portfolio-wide occupancy
  • Declared Ps.0.3800 distribution per certificate for 2Q15, up 4.8% on 1Q15.

FIBRA Macquarie México (FIBRA Macquarie) (BMV:FIBRAMQ) announced its financial results for the quarter ended June 30, 2015, posting year-on-year growth in revenue and Adjusted Funds from Operations (AFFO) of 21.9% and 32.8% respectively. The increases in both metrics were primarily driven by the positive contribution of the acquisition completed in February, an improvement in occupancy and the appreciation of the US Dollar against the Mexican Peso.

“FIBRA Macquarie’s strong performance during the second quarter reflects the positive market fundamentals, as well as the ongoing execution of our strategic plan,” said Juan Monroy, chief executive officer, FIBRA Macquarie. “I’m pleased to be reporting our highest quarterly AFFO result since inception and our fourth consecutive quarter of increases in occupancy.”

Distribution for Second Quarter 2015

FIBRA Macquarie declared a distribution for the period of Ps.0.3800 per certificate, expected to be paid on August 11, 2015 to holders of record on August 10, 2015. Certificates are expected to commence trading ex-distribution on August 6, 2015. The distribution represents 88.4% of the current quarter’s AFFO and brings total distributions to 93.5% of AFFO on a year-to-date basis.

FIBRA Macquarie’s current distribution policy is to pay quarterly cash distributions. The payment of a cash distribution is at all times subject to the approval of the board of directors of the Manager, the continued stable performance of the properties in the portfolio and prevailing economic conditions.

Acquisitions

FIBRA Macquarie announced two acquisitions in 2Q15.

On June 22, 2015 FIBRA Macquarie announced the signing of an agreement to acquire a ten-property industrial portfolio with a Gross Leasable Area (GLA) of 201,060 square meters (2.2 million square feet) located in the cities of Monterrey, Reynosa, Tijuana, Ciudad Juarez and Saltillo in Northern Mexico. The portfolio has 93.9% occupancy comprising high-quality tenants. The portfolio will be acquired for US$105.0 million (approximately Ps. 1,575.0 million), excluding transaction costs and taxes. This acquisition is expected to close within the third quarter of 2015.

On June 30, 2015 FIBRA Macquarie announced the signing of an agreement to acquire an eight-property industrial portfolio located in Monterrey, Nuevo León, which includes four stabilized properties, two build-to-suit (BTS) development properties and two land parcels. The GLA of the portfolio is 40,700 square meters (438,500 square feet), out of which 10,800 square meters (116,300 square feet) correspond to the two BTS development properties. The two land parcels, with a combined surface area of 25,100 square meters (270,500 square feet), are adjacent to other properties owned by FIBRA Macquarie, offering the possibility for expansion by existing tenants. The portfolio was acquired on July 23, 2015 from Desarrollos Industriales Nexxus for US$24.3 million (approximately Ps.387.5 million) excluding transaction costs and taxes. FIBRA Macquarie will pay additional consideration of US$5.6 million (approximately Ps.89.4 million) for the two BTS projects, in each case subject to development completion and the tenant having taken possession and paid the first month’s rent. The BTS projects are expected to be completed in mid-2016. Assuming completion of both projects, the total purchase price for the portfolio will be US$29.9 million (approximately Ps.476.9 million) excluding transaction costs and taxes.

Results for the Quarter Ended June 30, 2015

FIBRA Macquarie reported a 21.9% increase in proportionately combined revenues to Ps.704.3 million for the quarter ended June 30, 2015 compared with Ps.577.7 million in the prior comparable period. AFFO increased 32.8% to Ps.348.8 million in the second quarter of 2015 compared with Ps.262.6 million in the prior comparable period.

            Figures in millions     Quarter Ended

June 2015

  Quarter Ended

June 2014

  Variance

Ps.

  Variance

%

Total revenues     704.3   577.7*   126.7   21.9% Net operating income     611.8   485.7   126.1   26.0% EBITDA     553.7   433.2   120.6   27.8% Funds from Operations     389.9   287.7   102.2   35.5% Adjusted Funds from

Operations

    348.8   262.6   86.2   32.8% # certificates outstanding     811.4   604.8   NM**   34.2% * 2Q14 total revenue results have been conformed to reflect the current period presentation.

** NM: not meaningful.

 

The increase in AFFO from the prior comparable period is due to continuing upside from the appreciation of the US dollar against Mexican peso, favorable movements on same-store NOI and contribution from the Industrial properties acquired during February 2015.

Net operating income (NOI) includes lease-related income and other variable income, less property operating expenses (including property administration expenses). Earnings before interest, tax, depreciation and amortization (EBITDA) includes NOI less Fund-level management fees, corporate expenses, administrative expenses, professional and legal expenses. Funds from Operations (FFO) is equal to EBITDA plus interest income less interest expense. FIBRA Macquarie derives AFFO by adjusting FFO for normalized capital expenditure, tenant improvements and leasing commissions. AFFO may be calculated in a different manner by other market participants thereby limiting its usefulness as a comparative measure. Use of AFFO in the analysis of the financial performance of FIBRA Macquarie should be in addition to and not in lieu of other financial measures as required under International Financial Reporting Standards (IFRS).

Gross Leasable Area

FIBRA Macquarie’s portfolio comprised GLA of approximately 3.2 million square meters (34.0 million square feet) as of June 30, 2015, including approximately:

  • 2.7 million square meters (29.2 million square feet) of industrial properties
  • 253,500 square meters (2.7 million square feet) of wholly-owned retail/office properties
  • 191,300 square meters (2.1 million square feet) of retail/office properties held through the 50/50 joint venture with Grupo Frisa

For purposes other than FIBRA Macquarie’s consolidated financial statements prepared under IFRS, FIBRA Macquarie reports revenue and other financial metrics on a proportionately combined basis, including the results for the joint venture with Grupo Frisa in proportion to its 50% interest.

Industrial Segment

As of June 30, 2015, FIBRA Macquarie owned 260 industrial properties located in 21 cities across 15 Mexican states. Industrial segment operating highlights include:

        Industrial Segment

Metrics

    As at

June 30, 2015

  As at

June 30, 2014

Gross Leasable Area (square meters)     2.7 million   2.6 million Occupancy rate     90.3%   89.0% Rolling average occupancy rate (YTD)     89.9%   89.7% Average monthly rent per leased square meter     US$4.51   US$4.52 Rolling average lease

rate per square meter

(YTD)

    US$4.51   US$4.49 Tenant retention rate     88%   59% Weighted average lease

term (by annualized base

rent)

    3.3 years   2.9 years

The Mexican industrial real estate market continues to demonstrate strength, driven by continued improvement in the manufacturing sector, especially in the automotive sector as well as in a broad range of other consumer-product industries primarily serving foreign demand. This is reflected in the continued trend toward lower vacancy rates in Mexico’s Northern markets, where 76% of FIBRA Macquarie’s portfolio is located.

“FIBRA Macquarie’s 23,400 square meters (251,400 square feet) of new leasing activity for Q2 was dominated by transactions with automotive customers in Ciudad Juarez, Puebla, Guadalajara and Monterrey,” noted Mr. Monroy. “Renewal activity for the quarter involved 26 leases totaling 138,400 square meters (1.5 million square feet) of space, a FIBRA Macquarie quarterly record. We saw this activity across a broad range of industries including logistics, major appliance, and food along with auto.”

“Our leasing team has signed new leases for 41% more GLA than in the first half of 2014, even though leasing activity tends to be lower in the first half of the year,” said Mr. Monroy. “The high level of leasing activity is indicative of both the improving fundamentals of the Mexican industrial market as well as the growing capability of FIBRA Macquarie’s in-house property administration platform. This resulted in a fourth consecutive quarter of increased industrial occupancy, a trend which is expected to continue for the rest of the year. We will continue to leverage our internal platform to maximize portfolio performance as well as to provide additional drive to our acquisition activities,” stated Mr. Monroy.

Industrial Segment Leasing Activity

New and renewed industrial leases totaled approximately 161,800 square meters (1.7 million square feet). Highlights include the following leases:

  • 3-year new lease for 5,300 square meters (56,500 square feet) in Puebla
  • 5.5-year new lease for 5,100 square meters (55,300 square feet) in Guadalajara
  • 3-year new lease for 4,000 square meters (43,300 square feet) in Ciudad Juárez
  • 3-year new lease for 2,700 square meters (29,200 square feet) in Ciudad Juárez
  • 2-year renewal lease for 20,300 square meters (218,600 square feet) in Monterrey
  • 5-year renewal lease for 19,000 square meters (204,000 square feet) in Hermosillo
  • 3-year renewal lease for 11,800 square meters (127,100 square feet) in Monterrey
  • 5-year renewal lease for 5,100 square meters (55,200 square feet) in Tijuana

Retail/Office Segment

As of June 30, 2015, FIBRA Macquarie owned 17 retail/office properties in six cities, nine of which are held through the 50/50 joint venture with Grupo Frisa. Approximately 72.1% of FIBRA Macquarie’s retail/office GLA is located in the Mexico City Metropolitan Area (MCMA). Approximately 90.0% of FIBRA Macquarie’s retail space is contained in the combined MCMA, Monterrey, Guadalajara and Cancún markets.

Leased retail GLA increased as a result of three ongoing expansions: (1) a movie theater in Irapuato that is adding 600 square meters (6,500 square feet) for three new screens (2) a discount retailer that is building a new store of 1,100 square meters (11,800 square feet) in the same Irapuato property, and (3) a car dealership building a 500 square meter (5,400 square foot) pad on FIBRA Macquarie’s Coacalco property. These expansions will increase overall portfolio yield as the tenants are funding the constructions. Tenants will start paying rent once the construction of their space is completed. These expansions are also expected to strengthen FIBRA Macquarie’s retail tenant mix, since the discount retailer and the car dealer will be opening new stores, and the additional screens should attract higher visitor traffic.

Retail/Office Segment

Metrics

As at

June 30, 2015

As at

June 30, 2014

Gross Leasable Area

(square meters)1/

444,800 443,000 Occupancy rate 94.4% 94.1% Average monthly rent

per leased square meter

Ps. 141.95

US$9.12

Ps. 138.32

US$10.64

Rolling average lease rate per

square meter (YTD)

Ps. 141.30

US$9.30

Ps. 134.03

US$10.23

Weighted average lease

term (by annualized-base rent)

5.5 years 6.0 years 1/ Includes 100% of the retail/office GLA in the 50/50 joint venture with Grupo Frisa

There was improved performance from anchor tenants, including supermarkets and movie theatres, which showed year-to-date increases in revenues of 8.0% and 16.7% respectively, compared to the same period last year. FIBRA Macquarie’s marketing campaigns continued to realize increased visitor traffic in retail properties. FIBRA Macquarie is also in the process of remodeling its shopping center in Monterrey, which was a key driver for closing a 700 square meter (7,500 square foot) lease with a national retail chain.

Retail/Office Segment Leasing Activity

Consumer spending in Mexico has been recovering: Same store sales of retailers in the National Association of Supermarkets and Department Stores (ANTAD, for its acronym in Spanish) had a 2.4% inflation-adjusted increase in the first half of 2015, which is the highest half-year increase since 2008. FIBRA Macquarie’s retail segment has benefited from improving consumer spending and FIBRA Macquarie’s proactive asset management across its well-located properties, resulting in important increases in both occupancy and rental rates.

Approximately 50 retail tenants pay variable rents, and their sales had a combined year-on-year increase during the quarter, which resulted in a 38% increase in variable rent. FIBRA Macquarie reported signing 52 new and renewed retail/office leases totaling 8,400 square meters (90,400 square feet) during the quarter.

Disclosures Relating to Leverage

In accordance with applicable FIBRA regulations:

  • FIBRA Macquarie complies with the leverage limit of 50%, with leverage of 40.3% as of June 30, 2015
  • FIBRA Macquarie complies with the minimum debt service coverage ratio (DSCR) of 1.0x, with a DSCR of 1.3x as of June 30, 2015

Please refer to the Supplementary Financial Information for details of how the above ratios are calculated together with detailed disclosures regarding FIBRA Macquarie’s portfolio-level debt facilities, which are available on FIBRA Macquarie’s website, www.mmreit.com.

Webcast and Conference Call

FIBRA Macquarie will host an earnings conference call and webcast presentation on Tuesday, July 28, 2015 at 7:30 a.m. CT / 8:30 a.m. ET. The call will follow the release of FIBRA Macquarie’s earnings results for the second quarter 2015.

The conference call, which will also be audio webcast, can be accessed online at www.mmreit.com or by dialing toll free +1-877-304-8957. Callers from outside the United States may dial +1-973-638-3235. Please ask for the FIBRA Macquarie Second Quarter 2015 Earnings Call.

An audio replay will be available through July 30, 2015, by dialing +1-855-859-2056 or +1-404-537-3406 for callers outside the United States. The passcode for the replay is 81232145. A webcast archive of the conference call and a copy of FIBRA Macquarie’s financial information for the second quarter 2015 will also be available on FIBRA Macquarie’s website, www.mmreit.com.

About FIBRA Macquarie

FIBRA Macquarie México (FIBRA Macquarie) (BMV: FIBRAMQ) is a real estate investment trust (fideicomiso de inversíon en bienes raices), 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 260 industrial properties and 17 retail/office properties, located in 24 cities across 19 Mexican states (as of June 30, 2015). Nine of the retail/office properties are held through a 50/50 joint venture with Grupo Frisa. FIBRA Macquarie is managed by Macquarie México Real Estate Management, S.A. de C.V. which operates within the Macquarie Infrastructure and Real Assets division of Macquarie Group. For additional information about FIBRA Macquarie, please visit www.mmreit.com.

MIRA is a business within the Macquarie Asset Management division of Macquarie Group and a global alternative asset manager focused on real estate, infrastructure, agriculture and energy assets. MIRA has significant expertise over the entire investment lifecycle, with capabilities in investment sourcing, investment management, investment realization and investor relationships. Established in 1996, MIRA has approximately US$100 billion of total assets under management as of December 31, 2014 with more than 400 employees managing 50 listed and unlisted funds worldwide.

About Macquarie Group

Macquarie Group (Macquarie) is a global provider of banking, financial, advisory, investment and funds management services. Macquarie’s main business focus is making returns by providing a diversified range of services to clients. Macquarie acts on behalf of institutional, corporate and retail clients and counterparties around the world. Founded in 1969, Macquarie operates in more than 70 office locations in 28 countries.

Macquarie employs approximately 14,000 people and has assets under management of over US$370 billion (as of March 31, 2015).

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.

None of the entities noted in this document is an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities.

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.

THIS ANNOUNCEMENT IS NOT FOR RELEASE IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA.

All figures in this release are subject to rounding. Any arithmetic inconsistencies are due to rounding.

      FIBRA MACQUARIE MÉXICO AND ITS CONTROLLED ENTITIES             CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT JUNE 30, 2015 (UNAUDITED) AND DECEMBER 31, 2014 CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)   Jun 30, 2015 Dec 31, 2014 $’000 $’000   Current assets Cash and cash equivalents 4,521,454 5,425,062 Restricted cash 54,876 31,617 Trade and other receivables, net 109,207 116,944 Value added tax receivable 96,873 199,129 Other assets 91,602 99,925 Total current assets 4,874,012 5,872,677   Non-current assets Restricted cash 122,718 147,155 Other assets 103,065 58,682 Equity-accounted investees 938,328 930,415 Goodwill 931,605 931,605 Investment properties 29,960,250 27,612,778 Total non-current assets       32,055,966 29,680,635 Total assets       36,929,978 35,553,312   Current liabilities Trade and other payables 253,293 248,555 Other liabilities 42,371 93,598 Tenant deposits 16,567 15,474 Total current liabilities 312,231 357,627   Non-current liabilities Tenant deposits 268,759 251,025 Interest-bearing liabilities 14,865,027 14,091,738 Total non-current liabilities       15,133,786 14,342,763 Total liabilities       15,446,017 14,700,390            

Net assets

      21,483,961 20,852,922   Equity Contributed equity 18,369,994 18,376,480 Retained earnings       3,113,967 2,476,442

Total equity

      21,483,961 20,852,922     FIBRA MACQUARIE MÉXICO AND ITS CONTROLLED ENTITIES              

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 (UNAUDITED) AND 2014

CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)   3 months ended 6 months ended

Jun 30,2015

Jun 30,

2014

Jun 30,2015

Jun 30,2014

$’000 $’000 $’000 $’000   Property related income 656,892 534,610 1,267,015 1,065,983 Property related expenses     (86,268 ) (86,370 ) (193,197 ) (158,487 ) Net property income     570,624   448,240   1,073,818   907,496     Management fees (49,608 ) (36,042 ) (101,352 ) (70,672 ) Transaction related expenses (3,305 ) (708 ) (8,853 ) (29,010 ) Professional, legal and other expenses     (8,656 ) (16,466 ) (19,133 ) (33,797 ) Total expenses     (61,569 ) (53,216 ) (129,338 ) (133,479 )   Finance costs (186,369 ) (168,705 ) (367,165 ) (345,587 ) Financial income 31,103 22,524 74,959 36,751 Share of profits from equity-accounted investees 15,175 12,073 29,285 12,966 Foreign exchange (loss)/gain (361,043 ) 44,473 (740,696 ) 36,870

Net unrealized foreign exchange gain/(loss) on foreign currencydenominated investment property measured at fair value

626,947   (82,091 ) 1,278,038   (67,791 )

Profit for the period

   

634,868

223,298

1,218,901

447,226

  Other comprehensive income Other comprehensive income for the period     -   -   -   -  

Total comprehensive income for the period

   

634,868

223,298

1,218,901

447,226

  Earnings per CBFI* Basic earnings per CBFI (pesos) 0.78 0.37 1.50 0.74 Diluted earnings per CBFI (pesos)     0.78   0.37   1.50   0.74   *Real Estate Trust Certificates (Certificados Bursátiles Fiduciarios Inmobiliarios)         FIBRA MACQUARIE MÉXICO AND ITS CONTROLLED ENTITIES            

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FORTHE SIX MONTHS ENDED JUNE 30, 2015 (UNAUDITED) AND 2014

CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)  

Contributed

Retained

equity

earnings

Total

$’000 $’000 $’000 Total equity at January 1, 2014 13,673,801 342,243 14,016,044 Total comprehensive income for the period - 447,226 447,226 Total comprehensive income for the period - 447,226 447,226   Transactions with equity holders in their capacity as equity holders: - Distributions to CBFI holders - (571,490 ) (571,490 ) Total transactions with equity holders in their capacity as equity holders - (571,490 ) (571,490 )            

Total equity at June 30, 2014

   

13,673,801

217,979

13,891,780

Total equity at January 1, 2015 18,376,480 2,476,442 20,852,922 Total comprehensive income for the period - 1,218,901 1,218,901 Total comprehensive income for the period - 1,218,901 1,218,901   Transactions with equity holders in their capacity as equity holders: - Costs directly attributable to follow-on equity placement (6,486 ) - (6,486 ) - Distributions to CBFI holders - (581,376 ) (581,376 ) Total transactions with equity holders in their capacity as equity holders (6,486 ) (581,376 ) (587,862 )                

Total equity at June 30, 2015

   

18,369,994

 

3,113,967

 

21,483,961

      FIBRA MACQUARIE MÉXICO AND ITS CONTROLLED ENTITIES            

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2015 (UNAUDITED) AND 2014

CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)  

6 months ended

6 months ended

Jun 30, 2015 Jun 30, 2014 $’000 $’000 Inflows / (Outflows) Inflows / (Outflows) Operating activities: Profit for the period 1,218,901 447,226 Adjustments for:

Net unrealized foreign exchange (gain)/loss on foreign currencydenominated investment property measured at fair value

(1,278,038 ) 67,791 Straight line rental income adjustment (29,606 ) (9,562 ) Tenant improvements amortization 6,041

5,965

Leasing commissions amortization 14,838 8,643 Provision for bad debts 17,726 9,026 Net foreign exchange loss/(gain) 762,767 (37,141 ) Finance costs recognized in profit for the period 367,165 345,587 Share of profits from equity-accounted investees (29,285 ) (12,966 ) Movements in working capital: Decrease in receivables 85,813 411,242 (Decrease)/increase in payables (16,083 ) 6,849 Net cash flows from operating activities 1,120,239 1,242,660 Investing activities: Investment property and capital expenditure (1,072,155 ) (641,061 ) Investment in equity-accounted investees - (691,684 ) Distributions received from equity-accounted investees 21,372 - Net cash flows used in investing activities (1,050,783 ) (1,332,745 ) Financing activities: Proceeds from interest-bearing liabilities, net of facility charges - 255,851 Payment of interest-bearing liabilities - (663,443 ) Interest paid (341,350 ) (313,211 ) Capital raising costs (follow-on equity placement) (29,445 ) - Distributions to CBFI holders (581,376 ) (571,490 ) Net cash flows from financing activities (952,171 ) (1,292,293 ) Net decrease in cash and cash equivalents (882,715 ) (1,382,378 ) Cash, cash equivalents at the beginning of the period 5,603,834 2,347,932 Foreign exchange (gain)/loss on cash and cash equivalents       (22,071 ) 271  

Cash and cash equivalents at the end of the period*

      4,699,048   965,826   *Included in the cash and cash equivalent balance at the end of the period is restricted cash of $177.6 million (June 30, 2014: $167.7 million).

Investor Relations:FIBRA Macquarie MéxicoToe Matsumura, +52 (55) 9178 7768Cel: +52 1 (55) 4450 5018toe.matsumura@macquarie.comorFor Press Queries:CarralSierra PR & Strategic CommunicationsJose Manuel Sierra, +52 (55) 5286 0793Cel: +52 1 (55) 5105 5907jmsierra@carralsierra.com.mxorDiego Arrazola, +52 (55) 5286 0793Cel: +52 1 (55) 3977 2778darrazola@carralsierra.com.mx