U.S. Markets closed

Terrafina Announces Fourth Quarter and Full Year 2018 Earnings Report

MEXICO CITY, Feb. 27, 2019 (GLOBE NEWSWIRE) -- Terrafina® (“TERRA” or “the Company”) (BMV:TERRA13), a leading Mexican industrial real estate investment trust (“FIBRA”), externally advised by PGIM Real Estate and dedicated to the acquisition, development, leasing and management of industrial real estate properties in Mexico, today announced its fourth quarter 2018 (4Q18) and full year 2018 (FY2018) earnings results.

The figures in this report have been prepared in accordance with International Financial Report Standards (“IFRS”). Figures presented in this report are presented in millions of Mexican pesos and millions of U.S. dollars, unless stated otherwise. Additionally, figures may vary due to rounding.

Terrafina’s financial statements that are included in this report are internal and have not yet been audited by the external auditors, nor have they been approved at the Ordinary Shareholders’ Meeting. As a result, the mentioned figures in this financial report are preliminary figures and could be adjusted in the future. Once the audited 2018 financial statements are available and have been approved by the Annual Ordinary Shareholders’ Meeting, these will be made available to the market as per applicable law.

This document may include forward-looking statements that may imply risks and uncertainties. Terms such as "estimate", "project", "plan", "believe", "expect", "anticipate", "intend", and other similar expressions could be construed as previsions or estimates. Terrafina warns readers that declarations and estimates mentioned in this document, or realized by Terrafina’s management imply risks and uncertainties that could change in function of various factors that are out of Terrafina’s control. Future expectations reflect Terrafina’s judgment at the date of this document. Terrafina reserves the right or obligation to update the information contained in this document or derived from this document. Past or present performance is not an indicator to anticipate future performance.

Operating and Financial Highlights as of December 31, 2018

Operating

  • As of December 31, 2018, the occupancy rate was 95.3%, a 20 basis point decrease compared to the fourth quarter of 2017 (4Q17). Additionally, considering signed letters of intent (LOI), occupancy for 4Q18 was 96.5%.
     
  • Annualized average leasing rate per square foot at  the year-end was US$5.15, a US$0.11 increase compared to 4Q17.
     
  • At the end of 2018, Terrafina reported a total of 41.1 million square feet (msf) of Gross Leasable Area (GLA) comprised of 287 properties and 295 tenants.
     
  • 2018 leasing activity totaled 9.0 msf, of which 11.7% corresponded to new leases, 46.1% to lease renewals and 42.2% to early renewals. Leasing activity was mainly concentrated in the Cuautitlan Izcalli, Chihuahua, Ciudad Juarez, San Luis Potosi,  Ramos Arizpe, Saltillo, Monterrey, Guadalajara, Silao, Toluca, Irapuato, Reynosa, Queretario, Hermosillo and Tijuana markets.

Financial

  • FY2018 rental revenues reached US$191.0 million, of which US$48.0 million were generated during 4Q18, a 9.6% or US$4.2 million increase compared to 4Q17.
     
  • FY2018 NOI was US$190.0 million, of which US$48.0 million was generated during 4Q18, a 9.1% or US$4.0 million increase compared to 4Q17.
     
  • The NOI margin reached 92.3% in FY2018 and 93.3% in 4Q18, a 32 basis point increase compared to 4Q17.
     
  • FY2018 EBITDA reached US$170.9 million, of which US$42.8 million was generated in 4Q18, an increase of 8.0% or US$3.2 million compared to 4Q17.
     
  • The EBITDA margin for FY2018 was 83.1% and 83.1% for 4Q18, a 53 basis point decrease compared to 4Q17.
     
  • FY2018 adjusted funds for operations (AFFO) reached US$111.1 million, of which US$26.4 million was generated in 4Q18, an increase of 2.9% or US$0.7 million compared to 4Q17.
     
  • The AFFO margin was 54.0% for 2018 and 51.2% in 4Q18, a 287 basis point decrease compared to 4Q17.
     
  • Total distribution for FY2018 were US$111.1 million; distributions per CBFI were US$0.1407. Considering the average share price for 2018 of US$1.44 (Ps.27.71), Terrafina’s dividend yield for the year was 9.7%.
     
  • 4Q18 distributions totaled US$26.4 million. As a result, Terrafina will distribute Ps.0.6611 per CBFI (US$0.0334 per CBFI) for the October 1 to December 31, 2018 period; considering the average share price of US$1.28 for 4Q18 (Ps.25.39), Terrafina’s dividend yield for the quarter was 10.4%.

Comment by Alberto Chretin, Chief Executive Officer and Chairman of the Board

Throughout 2018, Terrafina’s operations continued strengthening, as we reached our objectives to execute record-high occupancy and leasing activity. Even under complex macroeconomic conditions, the industrial real estate sector maintained its growth dynamics, due to a solid manufacturing-for-export sector, as well as the strength of the logistics and distribution sector. With total leasing activity of 9.0 million square feet, Terrafina stands out as one of the industry’s leaders in supporting the Mexican industrial real estate sector’s overall progress. At the end of the year, we reached a strong occupancy level of 96.5% (including letters of intent), driven by the average 2018 renewal rate of 90.7%. Leasing activity for the year was mainly concentrated in the markets of Cuautitlan Izcalli, Chihuahua, Ciudad Juarez, San Luis Potosi, Ramos Arizpe, Saltillo, Monterrey, Guadalajara, Silao, Toluca, Irapuato, Reynosa, Queretaro, Hermosillo and Tijuana. As part of the Company’s annual results, renewal activity, reached a total of 8.0 million square feet. These renewals convey a message of confidence and support from our multinational tenants as their manufacturing operations are a key component of their business strategies and enable them to achieve their objectives in terms of superior quality and production costs.

Average annual leasing rent for 2018 reached US$5.15 per square foot and by region, average rent remained stable throughout the year, with US$5.08 per square foot in the Northern region, US$5.21 per square foot in the Bajio region and a US$5.34 average rent per square foot in the Central region.

Additionally, one of the highlights of the year was the consolidation process of our acquisitions from 2017 and in the beginning of 2018. These properties contributed to the portfolio with higher cash flows for our investors and operational stability for Terrafina in the medium and long-term. Today, with a total of 41.1 million square feet in industrial properties and 97% dollar-denominated leasing contracts, we are better positioned to take advantage of potential opportunities that could arise in the future. With this business vision, we maintain our objective of preserving solid occupancy levels via close working relationships with our tenants, as we seek to help them satisfy their growth requirements.

Our financial objectives for 2018 were in line with our guidance in terms of NOI generation, reaching US$190.0 million, as well as surpassed our distribution per CBFI target generating US$0.1407. With regards to the main financial results for 2018, we reached substantial increases compared to 2017. Proof of our success was US$191.0 million in Rental Revenues, EBITDA of  US$170.9 million with an EBITDA Margin of 83.1% as well as generating US$111.1 million in Adjusted Funds from Operations and a 9.7% dividend yield, considering the average CBFI price for 2018.

Finally, for 2019, we believe that the performance in terms of both our operations as well as industry dynamics will continue to be positive, given the assurance and confidence that exists in manufacturing-for-export operations in Mexico. This setting represents continued growth opportunities for the industrial sector and specifically for Terrafina as we retain our focus on supporting tenant operations, generating new projects via expansions and built-to-suit properties.

Thank you for your interest in Terrafina.

Sincerely, 

Alberto Chretin
Chief Executive Officer and Chairman of the Board

About Terrafina
Terrafina (BMV:TERRA13) is a Mexican real estate investment trust formed primarily to acquire, develop, lease and manage industrial real estate properties in Mexico. Terrafina’s portfolio consists of attractive, strategically located warehouses and other light manufacturing properties throughout the Central, Bajio and Northern regions of Mexico. It is internally managed by highly-qualified industry specialists and externally advised by PGIM Real Estate.

Terrafina owns 299 real estate properties, including 287 developed industrial facilities with a collective GLA of approximately 41.1 million square feet and 12 land reserve parcels, designed to preserve the organic growth capability of the portfolio.

Terrafina’s objective is to provide attractive risk-adjusted returns for the holders of its certificates through stable distributions and capital appreciations. Terrafina aims to achieve this objective through a successful performance of its industrial real estate and complementary properties, strategic acquisitions, access to a high level of institutional support, and to its management and corporate governance structure. For more information, please visit www.terrafina.mx

PGIM Real Estate
PGIM Real Estate is the real estate investment business of PGIM Inc., the global investment management business of Prudential Financial, Inc. (PRU).  Redefining the real estate investing landscape since 1970, PGIM Real Estate has professionals in 18 cities in the Americas, Europe and Asia Pacific with deep local knowledge and expertise, and gross assets under management of US$72.7 billion (US$50.8 billion net) as of December 31, 2018. PGIM Real Estate’s tenured team offers to its global client base a broad range of real estate equity, debt and securities investment strategies that span the risk/return spectrum. For more information, visit www.pgimrealestate.com

About Prudential Financial, Inc.
Prudential Financial, Inc. (PRU), a financial services leader with more than US$1.4 trillion of assets under management as of December 31, 2018, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit www.news.prudential.com

Forward Looking Statements
This document may include forward-looking statements that may imply risks and uncertainties. Terms such as "estimate", "project", "plan", "believe", "expect", "anticipate", "intend", and other similar expressions could be construed as previsions or estimates. Terrafina warns readers that declarations and estimates mentioned in this document, or realized by Terrafina’s management imply risks and uncertainties that could change in function of various factors that are out of Terrafina’s control. Future expectations reflect Terrafina’s judgment at the date of this document. Terrafina reserves the right or obligation to update the information contained in this document or derived from this document. Past or present performance is not an indicator to anticipate future performance.


Conference Call

Terrafina
(BMV:TERRA13)
Cordially invites you to participate in its
Fourth Quarter 2018 Results

Thursday, February 28, 2019
11:00 a.m. Eastern Time
10:00 a.m. Central Time


To access the call, please dial:
from within the U.S. 1-877-830-2576
from outside the U.S. 1-785-424-1726
Conference ID Number: Terrafina

Audio Webcast Link: https://webcasts.eqs.com/terrafina20190228

  Conference Replay
U.S. 1-844-488-7474
International (outside the US) 1-862-902-0129
Passcode: 71941678


For the full version of this report please visit: www.terrafina.mx under the Investors section