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Edited Transcript of TERRA13.MX earnings conference call or presentation 24-Feb-17 4:00pm GMT

Thomson Reuters StreetEvents

Q4 2016 TF Administradora S de RL de CV Earnings Call

Mexico, D.F. Feb 24, 2017 (Thomson StreetEvents) -- Edited Transcript of TF Administradora S de RL de CV earnings conference call or presentation Friday, February 24, 2017 at 4:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Maria Barona

i-advize Corporate Communications, Inc. - IR

* Enrique Lavin

Terrafina SA de CV - Interim CFO

* Alberto Chretin

Terrafina SA de CV - CEO

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Conference Call Participants

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* Eugenio Saldana

GBM - Analyst

* Alejandro Lavin

Citigroup - Analyst

* Francisco Suarez

Scotiabank - Analyst

* Marimar Torreblanca

UBS - Analyst

* Jaime Garza

ACM - Analyst

* Froylan Mendez

JPMorgan - Analyst

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Presentation

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Operator [1]

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Good morning, my name is Chelsea, and I will be your conference operator today. At this time, I would like to welcome everyone to the Terrafina Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After this presentation, we will conduct a question-and-answer session, instructions on how to ask a question will be given at that time. Thank you for your attention.

I will now turn the call over to Miss Maria Barona of i-advize Corporate Communications. Please go ahead.

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Maria Barona, i-advize Corporate Communications, Inc. - IR [2]

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Good morning, and welcome to Terrafina's fourth quarter and 2016 year-end conference call. I am Maria Barona from i-advize Corporate Communications. We are pleased to have with us today from Terrafina, Mr. Alberto Chretin, Chief Executive Officer; Mr. Francisco Martinez, Chief Investor Relations Officer. And also with us today, Mr. Enrique Lavin, Interim CFO at Terrafina, as well as Executive Director, Head of Portfolio Management and Business Development at PGIM Real Estate. They will be discussing the Company's results prior to the Q&A session.

Before we begin, we would like to mention that information expressed or implied during the conference call could potentially include forward-looking statements, which could involve certain risks and uncertainties. Terms such as estimate, project, plan, believe, expect, anticipate, intend and similar expressions may identify such forward-looking statements. The Company wants to caution the audience that any forward-looking statements made today by the Company's management involve risks or uncertainties that may change based on various important factors not under the control of the Company. These statements represent the Company's judgment at this time of the call. The Company disclaims, however, any intent or obligation to update this forward-looking statement.

Thank you for your attention. Mr. Alberto Chretin, Terrafina CEO will speak in the call. You may begin, sir.

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Alberto Chretin, Terrafina SA de CV - CEO [3]

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Thank you. Good morning, everyone and thank you for your participation here today. We are very pleased to be closing yet another successful year for Terrafina. One that was marked by strengthening occupancy and leasing rates, consolidation of existing operations and positive momentum for the future.

Let me begin with a brief review of developments in the market. First, given the current situation in the Mexican market as a result of the US Presidential Elections, we have been very close to our property managers as they're (inaudible) lines on their ground. Our main priority is to remain in touch with the tenant base through the property managers in order to maintain proactive. Their feedback is invaluable for us in order to outline our strategy going forward. So far these conversation with our key tenants had been very encouraging. The prevailing theme is that the current operations in Mexico are very important to the overall business, and as such, the general plan right now is for them to maintain existing operations and continue doing business in the region.

First, and this is a very important point, barring any unforeseen circumstances, we do not expect that our current portfolio will be affected. That is, we're looking ahead to occupancy in the mid-90%s and stable rental rate. Secondly, and to add to my first point, Terrafina has a proven track record in terms of contract renewals and early renewals. In 2016, as you saw in the report, leasing activity reached 6.7 million square feet, 45%, which corresponds to early renewals and 24% to lease renewals. These represented an annual renewal rate of nearly 87%. These track record confirms our ability to maintain our excellence in terms of occupancy levels and average rental rates per square foot.

For 2017, our emphasis will be more on organic growth, on maintaining a strong and stable portfolio and a prudent and accretive acquisitions, which does not deviate from our usual policy. But I will mention more on our strategy going forward in a few moments.

Let's continue with the quarterly operation results. We reached a record occupancy level of 94.8% with a very stable average leasing rate per square foot of $4.88. Occupancy at the end of 2016 experienced a 160 basis point increase versus a comparable period in 2015. Also (inaudible) after signed letters of intent, occupancy for the quarter will reached 95.2%.

Moving to the occupancy and rental rate results by region, the Northern region performed strongly with a 96% occupancy at $4.78 per square foot per year. Bajio was 92.3% occupancy at the rate per square foot of $4.94. And in the Central region, occupancy was 94.6% with a leasing rate of $5.08 per square foot per year. These rates are in line with expectations. Thus, for the time being, we are very confident that there will be no major changes regarding maintaining this level in the near future. We expect continued vitality in the various sectors that we serve.

Leasing activity, as I mentioned, remained quite active for the year with renewal activity in (inaudible) contracts out of 91, which expired in 2016. Moreover, combined with early renewals, Terrafina managed to sign leases for 4.6 million square feet during the year.

In terms of new contracts, there were a total of 2.1 million square feet, which is positive news for the real estate industrial market, particularly given the challenging macroeconomic scenario.

In terms of the main financial metrics, rental revenues for the quarter reached $33.4 million, nearly 6% higher than the rental revenues achieved during the fourth quarter of 2015. Net operating income rose 7.5% to $33.1 million, with a margin of nearly 93%. EBITDA for the quarter rose nearly 10% with a margin of 83%, which represented a 306 basis point increase.

AFFO and AFFO margin for the quarter was $20.4 million and 57% respectively. All of the aforementioned was evidence of Terrafina's ability to create and retain business opportunities with tenants by providing world class properties that facilitate their growth in Mexico. This in turn generated distributions for $20.4 million, which will be reflected in the fourth quarter distributions of MXN0.66 per CBFI or $0.035 per certificate. Consequently, this resulted in an annualized dividend yield for the fourth quarter of 8.9%. Overall, we consider Terrafina delivered a very solid year.

With regards to our growth strategy, 2017 already began with the closing of two acquisitions valued at $422 million. These transactions concluded in January, 2017 and included 51 Class A industrial properties with100% dollar-denominated contracts in triple-net structures. These portfolios, not only solidify our position, but also significantly strengthen our operational and financial metrics as they fit seamlessly into the Company's existing structure.

As we look ahead, we plan on maintaining the momentum we have worked so hard to generate. This includes organic strengthening of the existing portfolio in terms of maintaining strong tenant relationships, high occupancy rates and rental rates. In terms of new acquisitions, we are actively seeking new market opportunities that are in line with our strategy. That is, these must conform with our selecting methodology that includes varying price properties that are 100% stabilized, with very strong occupancy rates, located in prime locations and immediately accretive to the portfolio.

Finally, let me provide some color on our guidance for 2017. As we mentioned previously, we expect operational metrics to remain stable with occupancy levels staying in the mid 90%s and rental rates adjusted in line with US CPI. With regards to the portfolio financial performance, here we expect a 2% increase on NOI on a same-store basis to reach a $134 million for 2017 and a 2% increase in AFFO to reach $76 million. Moreover, including the recent acquisitions, we expect an additional contribution of 11 month to Terrafina's results with a 22% to 24% NOI growth and a 27% to 29% AFFO growth. As for our distribution policy, we remain with a target to distribute a 100% of the AFFO for 2017.

Thank you for you attention and I will now turn the call over to Enrique Lavin, our Interim CFO for the financial review. Go ahead, Enrique, please.

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Enrique Lavin, Terrafina SA de CV - Interim CFO [4]

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Thank you, very much, Alberto and thank you to all of the participants on the call for joining us today. I will begin with a brief review of the Terrafina financials for the final quarter in the 12-month period 2016. Please note that all figures are in US dollars. However, Mexico peso figures can be found in the report for your convenience. Additionally, NOI, EBITDA and FFO figures exclude non-cash items as well as non-recurring and transaction related expenses, the latter of which are only included as part of the AFFO.

As Alberto mentioned, 2016 was a successful year, in which Terrafina strengthened its financial profile and experienced sound results across its operations, existing as well as new ones. To begin, Terrafina made substantial progress during 2016 in terms of [growth strategy[, which include enclosing of an acquisition that will raise profitability in the range of 27% to 29% in additional AFFO. The results will be reflected in the first quarter of 2017.

For the full year, Terrafina's stable operations experienced rental revenue increases of 2.7% for a total of $131.7 million. And on a quarterly basis, rental revenue reached $33.4 million or a 5.9% increase. At the NOI level, for the year, we had $131.8 million were contributed, which represented a 92.1% of NOI margin. For the quarter, we had $33.1 million generated with a 92.9% NOI margin. This (inaudible) the result of the operational efficiencies reached due to improvements to occupancy levels. All of these allow us to reduce relative operating expenses from $30.2 million year ago to $29.8 million during 2016.

EBITDA levels improved by 46% compared to 2015, reaching $118.2 million. Most importantly, the EBITDA margin rose by 278 basis points, thanks to significant 36.8% decrease in G&A expenses. EBITDA for the fourth quarter reached $29.6 million, contributing to $2.6 million increase compared to the previous quarter.

With regard to the AFFO level, $83 million were generated in 2016. Here, we experienced a slight decrease compared to 2015, given the full effect of interest expense from the bond issuance, which happened in November 2015. Nevertheless, for 2015, AFFO levels rose 1.4%, reaching a total of $74.5 million, reflecting the strength of topline results and offsetting the incremental financing costs. Total distributions per share were $0.1227 for the entire year, which represents a 7.6% dividend yield considering the average price of [MXN30.16] for the year. In Mexican pesos, Terrafina will distribute a total of almost MXN1.4 million or MXN2.29 per certificate, which represents a 20% increase compared to 2015.

In terms of the fourth quarter, Terrafina will distribute $20.4 million or $0.0355 per certificate, which in Mexican pesos represents MXN400.4 million or MXN0.659 per certificate. Additionally, the annualized dividend yield is 8.9%, considering the average price of the quarter of MXN29.48.

Now on to net income. For the 2016 period, the Company generated $51 million compared to $46.6 million for 2015. If we include the currency adjustments, this reflected a profit of $270.8 million, which compares favorably to $237 million of the previous year. Thus confirming once again that Terrafina is a [dollarized] vehicle. On a quarterly basis, net income rose from $29.2 million in fourth quarter of 2015 to $35.4 million in the fourth quarter of 2016.

Now in the balance sheet (inaudible) the Company's equity. Terrafina has a cash position of $208 million, most of which will be used to finance the acquisition recently announced in January 2017 in combination with the revolving facility and MXN1 billion facility to fund the VAT from these transactions. Furthermore, based on prior experience and track record, we expect this VAT reimbursement to occur in the next six months to nine months.

Total debt by the end of 2016 was $704.7 million and finished the year with a 36.5% LTV and a 5.7 times debt service coverage ratio as well in full compliance with the bond covenants.

Before we move on to the question-and-answer session, allow me to mention that Terrafina successfully completed the refinancing strategy we announced in the fourth quarter of $150 million unsecured facility at the cost of LIBOR plus 200 basis points to refinance half of the Blackstone facility, while the rest of the loan for $119.7 million and $22 million credit facility with MetLife. We're also refinanced last week with $150 million ten-year loan at a fixed rate of 4.75%. With these milestones, Terrafina will benefit from lowering the risk of the debt, and improve its weighted average maturity to reach better conditions and with a more flexible capital structure.

Thank you for your time and your attention. At this point, I will ask the operator to open the line for the Q&A session.

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Questions and Answers

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Operator [1]

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Okay, thank you. At this time, we will open the floor for questions. (Operator Instructions)

Eugenio Saldana, GBM.

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Eugenio Saldana, GBM - Analyst [2]

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I have a couple of questions on the operating side. The first one is, I wanted more color on the one-off item between FFO and AFFO that produced, I mean the rise in AFFO for this quarter?

And second question is, I mean the average maturity of your leases has been slightly reduced -- been reducing over time, over the last five quarters at least. I mean, is this reduction something your tenants are asking you when they renew with you or it's something else or you could give us more color on that? That will be all. Thank you very much.

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Alberto Chretin, Terrafina SA de CV - CEO [3]

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Okay, thank you. In terms of the second question, the renewals that we've been signing as well as the early renewals have been for longer period of times. I think that -- I need to take a look at that particular -- because as you mentioned, but what I can tell you is that during the last quarter, the renewals that we made and we signed five contracts with [CCI] in relation of the US Elections I guess that the number is very clear in mind. And the leases were for above five years. So I think that -- I can tell you that the renewals, and the early renewals had been happening for longer periods than the original contracts. And in addition to that, the acquisitions that we may also have longer period of terms -- longer renewals, so I think that -- I will have to take a very close look at what you're referring to, but I can tell you with certainty that once we incorporate the acquisitions, the remaining period is going to increase.

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Enrique Lavin, Terrafina SA de CV - Interim CFO [4]

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And regarding your first question, Eugenio, this pertains to sale of a lot (inaudible) portfolio that obviously for some time has not been able to -- to be developed and consequently leased. So the Company took the decision given a good opportunity to dispose of it. As a result, there was a one-off item, as you correctly addressed of $32.3 million, which would -- if you back it out, you have a [nice flow of] $368 million, which will represent an EPS of almost $0.61.

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Operator [5]

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Alejandro Lavin, Citigroup.

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Alejandro Lavin, Citigroup - Analyst [6]

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Two questions, if I may. First on lease expirations here for 2017. It's a relatively small amount, about 10% of total GLA, but the implied rents look low at around $4.30 a square foot. Can you give an idea on whether or not you -- were you expect to release those that are expiring in 2017? And an overall kind of picture where you see your rents relative to market?

And then the second question is on the guidance, you just mentioned, I think I got the 2% same-store, but the consolidated growth because of the acquisition will be a lot higher. Wondering given the discount to NAV and the high dividend yield, could you comment a little on the rationale to -- or whether it's under discussion to potentially not payout 100% of AFFO if it's not being valued and perhaps either improved dividend coverage or propose a stock buyback program? Thanks.

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Alberto Chretin, Terrafina SA de CV - CEO [7]

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Well, in reference to the target of the 100% of the AFFO, as I mentioned, that is a target, certainly, we are -- with some turbulence sometimes that may change, but the way we see this done is that -- we maintain our target to reach through the 100% of the AFFO. We feel that the (inaudible) combine this with your question. We think that the lease expirations that we experienced in renewal rents continue to beat market rents. As we mentioned before, we don't forecast growth based on rental growth in that. So that's why we anticipate that we will not be able to renew our lease contracts (inaudible) will be at the same or better rent.

And they are -- in order to answer your question, I think our rents gravitate around market rents, in that we have a very good opportunity to defend, not only the occupancy, but the rent with our approach that we have to CapEx. If you remember, we have about $0.20 per square foot for the entire portfolio for CapEx that we deploy at the time of renewals. So many times, and I can give you many instances, which when we are negotiating the renewal of the lease contract, we deploy that budget that we have for CapEx, and that allow us to maintain or even increase our rents. In that -- and we look forward to continue with the strategy, which has worked and we think that is what we will see for 2017.

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Alejandro Lavin, Citigroup - Analyst [8]

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Great, thanks, Alberto. Maybe just one comment on the share repurchases. Is there any plan to propose a share repurchase program?

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Alberto Chretin, Terrafina SA de CV - CEO [9]

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We have the program approved and we are going to evaluate opportunities as they come. But at this point, we have, as I mentioned, a program approved, but not applying in the short future.

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Enrique Lavin, Terrafina SA de CV - Interim CFO [10]

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And I guess I would -- that'll be assessed in conjunction with the leverage, right? Leverage of the Company?

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Alberto Chretin, Terrafina SA de CV - CEO [11]

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Correct.

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Operator [12]

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Marimar Torreblanca, UBS.

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Marimar Torreblanca, UBS - Analyst [13]

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So follow-up on buybacks. What would be your -- the way you decide on further acquisitions and broadly when using the program you have for issuing shares and how do you make the capital allocation decisions between this and you were asked before going to buybacks, what level of cap rate or implied cap rate would make it attractive enough for you to start investing in your own shares? And would you cancel those shares or have you not decided on that yet?

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Alberto Chretin, Terrafina SA de CV - CEO [14]

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Okay. Well, we look at the acquisition opportunities that have to be first of all have to be accretive to our portfolio. And then we will re-analyze the possibility of buying the shares, to buy back the shares or the share registration, you will have to be, if we go to a share registration, it will have to be with a deal on our hand and that is going to be accretive in the (inaudible) propositions.

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Enrique Lavin, Terrafina SA de CV - Interim CFO [15]

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Yes, and as you correctly arrived, Marimar, it's still something that the Company is discussing, for the time being the focus is on integrating the new portfolios and the new acquisitions. And little later on, it may be a time in which our Company name may assess where to allocate -- what kind of capital allocations and capital allocation decisions we'll do once the Company has successfully integrated existing portfolio. So that is your answer.

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Operator [16]

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(Operator Instructions) Francisco Suarez, Scotiabank.

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Francisco Suarez, Scotiabank - Analyst [17]

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Congrats on the results and my question relates with how stable, regardless of the non-recurrent item that we saw in your AFFO and of course the offset which we see on your liability efforts on reducing your funding costs. How stable the margin of AFFO excluding that recurring gain might be in the future, considering above all the CapEx requirements and perhaps the preference for tenants to either -- I mean as you mentioned, Alberto, to being able to increase a bit rents in exchange for more CapEx in your properties? That will be my first question.

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Alberto Chretin, Terrafina SA de CV - CEO [18]

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Thank you, Franco. So relative to your first question, I guess it was in regards to the one that the Company has, which is --- it's actually to one-off, as I mentioned previously, when you back out that one-off item, the EPS is around MXN0.061] which is the recurring activity for the Company. What -- this, again may not be a recurring activity, the Company has done a couple of sales in this regard, small sales or small landlords. But again, it's not part of the recurrent activity.

In regards to your second question regarding CapEx, right, can you repeat that second question, Franco?

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Francisco Suarez, Scotiabank - Analyst [19]

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Yes. Basically, what are the chance to see more CapEx per square feet allocated in the future?

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Alberto Chretin, Terrafina SA de CV - CEO [20]

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I think, no, the budget that we have for CapEx, I think it's stable. We think that it's within deploying that amount successfully, and we think that is going to maintain that, if anything maybe, somewhat it will be around $0.20 per square foot per year for the entire portfolio. But given also the incorporation of the new portfolios that are very new portfolio, if you recall, what we bought -- this is a very, very new portfolio. So we don't anticipate an increase or anything, we may even have a reduction because of several of these facilities.

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Operator [21]

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Jaime Garza, ACM.

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Jaime Garza, ACM - Analyst [22]

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I just have a simple question. Can you give us an update on when your next ratings review will be coming up, we see it's still at BBB minus, but wondering if the agencies are now working with you or when can we see an update on your ratings? Thank you.

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Alberto Chretin, Terrafina SA de CV - CEO [23]

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Thank you, Jaime. Well, as you know, we are in constant communication with rating the agencies. And usually this takes, during summer time, they'll be reviewing our rating. So what we have heard from their side and we just had a meeting recently at the beginning of January and end of December were that they were comfortable with the strategy, they just want to see how we're deploying our growth strategy. As you know, we concluded the acquisition. So as of today, everything is stable. We think that our review during summer will have same feedback from their side.

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Jaime Garza, ACM - Analyst [24]

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Thank you. And just to confirm, is the outlook currently stable for both agencies or is it different?

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Alberto Chretin, Terrafina SA de CV - CEO [25]

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That is correct. They confirm that they have stable rating for both agencies.

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Jaime Garza, ACM - Analyst [26]

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Okay, well, thank you very much. One last question, follow-up if you don't mind. Is there any particular metric that these guys are most focused on with respect to confirming your ratings during the summer? I know they look at a variety of indices and that's all fine, but was there anything that you can share with us in terms of what they're mostly focused on with respect to your ratings and outlook?

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Alberto Chretin, Terrafina SA de CV - CEO [27]

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Sure. Well, I think that one of the metrics that they are constantly analyzing is our net debt to EBITDA looks like, which should be at levels of close to 6 times. And also in line with what (inaudible) reviewing, which is the LTV, they see at levels at 60% as you know, the Company has maintained low LTV levels, with the acquisitions it will be going on the range of mid-40%s and once we get the VAT reimbursement, we'll get back through what the Company has always stated in terms of internal policy, which is in the range of 38% to 42% LTV.

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Jaime Garza, ACM - Analyst [28]

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Got it. Any further acquisitions, are you planning to utilize additional leverage for any potential growth, if you may during the year that's been discussed at the Board level?

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Alberto Chretin, Terrafina SA de CV - CEO [29]

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Well, we do have the [assumption] for the share registration program available and we feel that if -- we do consider at all any acquisition opportunities that we're analyzing and if we do -- we may more probably go through with the share registration program for future acquisitions.

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Jaime Garza, ACM - Analyst [30]

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You broke a little bit, and I apologize for that. But did you mention -- if I understood you correctly, any further acquisitions will come through further issuance of certificate, not necessarily increased debt? Is that correct. Did I get that right?

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Enrique Lavin, Terrafina SA de CV - Interim CFO [31]

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Yes, that is the plan. Correct.

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Alberto Chretin, Terrafina SA de CV - CEO [32]

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That is the plan.

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Enrique Lavin, Terrafina SA de CV - Interim CFO [33]

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To use our share registration program. Correct.

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Operator [34]

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(Operator Instructions) Froylan Mendez, JPMorgan.

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Froylan Mendez, JPMorgan - Analyst [35]

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I have two questions (inaudible) if I may. First, I would like to understand a bit better why don't we see stronger margin expansion, if in theory you are receiving US dollar rents and most of your costs are in pesos. I don't know what am I missing?

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Alberto Chretin, Terrafina SA de CV - CEO [36]

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Thank you for the question, Froylan. If you take a look at the report, you may be able to see that on our press releases, topline increase about 20%, which compares to the dollar basis 1.5%. That's an important point. Another important point is that we were able to, as you may have already noted, increase occupancy in some of the submarkets and properties that were challenging, property that is in Queretaro specifically. And in those properties, the rent was not as stellar one, it was probably at market or slightly above market.

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Enrique Lavin, Terrafina SA de CV - Interim CFO [37]

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So that's the reason. And another way of also explaining why the Company didn't capture the full margin is because there was an important increase in the financing cost, also described in the call, which is, as a result of the migration of the Company from (inaudible) rate to fixed rate financing, which have been occurring since November 2015.

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Froylan Mendez, JPMorgan - Analyst [38]

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Okay, thank you. And my second question is, I see here that you say that you completed 620,000 square feet of new developments in 2016. So how much do you currently have under development and how much CapEx will the developments require?

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Alberto Chretin, Terrafina SA de CV - CEO [39]

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I think that in leverage -- we have about, I would say that for 2017, it's going to be about half of the 620,000, it should be about 300,000 square feet. And these are mainly going to be expansions and that we are going to provide to our recurring tenants. So to answer your question, it will be about, for 2017, it will be about half of the period for 2016.

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Froylan Mendez, JPMorgan - Analyst [40]

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Okay. And I guess, half of the CapEx, right?

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Enrique Lavin, Terrafina SA de CV - Interim CFO [41]

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Correct.

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Operator [42]

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(Operator Instructions) Francisco Suarez, Scotiabank.

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Francisco Suarez, Scotiabank - Analyst [43]

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Hi again, just a follow-up question on your asset sale. On that building, particularly what was the return that you get out of that? I mean, did you -- were you able to fully recover your investment or you actually made a profit out there? Thank you.

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Alberto Chretin, Terrafina SA de CV - CEO [44]

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Thank you, Francisco. It was mainly a cost, so there was no profit. And the intention of the Company was of disposing of an asset that have not been able to unlock value. That's it.

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Francisco Suarez, Scotiabank - Analyst [45]

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Okay. Got it. And lastly, on your (inaudible) that you may have for further acquisitions now considering the last one, and considering of course the level of where your certificates are trading, is it fair to assume that you will be trying to reduce your leverage perhaps by reducing your overall payout ratios or perhaps by not implementing further, I mean any stock repurchases or the like? I mean, in other words how flexible do you think you are in order to fund new acquisitions if you might not be able to raise more equity in the market?

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Enrique Lavin, Terrafina SA de CV - Interim CFO [46]

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Thanks, Francisco. So as mentioned by Alberto, the Company's plan is to, if an when an acquisition opportunity comes right to [activate] the share registration program, market conditions permitting. Any if so such acquisition will be made basically or close to an all-equity transaction so that the Company achieves two purposes. One, growth by means of the acquisition itself and secondly to specifically deleverage by growing the denominator of the LTV formula. So that's the plan.

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Operator [47]

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Okay. Well, we currently have no further questions in the queue. So I would like to turn the call back over to Mr. Chretin for his closing remarks.

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Alberto Chretin, Terrafina SA de CV - CEO [48]

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Thank you very much for your interest and attention today. And before we conclude our conference call, I want to thank Mr. Lavin for his temporary support as acting CFO. We are into final stages of the hiring process of our CFO. And we expect to announce the new position shortly. Please do not hesitate to contact us with any questions you may and thank you very much and have a great day.

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Operator [49]

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Alright. Well, thank you, ladies and gentlemen, this concludes today's teleconference. And you may now disconnect.