Logistic Properties of the Americas

is Camilo Yoa with LPA's Investor Relations Team. Joining me on today's call are Esteban Saldarriaga, our Chief Executive Officer, and Paul Smith, Chief Financial Officer. Before we proceed with our review of LPA's financial and operating results, please note that information presented during this call is intended for informational purposes only and does not constitute and offer to buy or sell any securities. Forward-looking statements made during this call are subject to a number of risks and uncertainties, which are discussed in LPA's filings with the SEC. Our actual results, performance, and prospective opportunities may differ materially from those expressed or implied in these statements. We undertake no obligation to update or revise any forward-looking statements after this call. We have prepared supplemental materials that we may reference during the call. We encourage you to visit our website, ir.lpamerica.com, to download these materials. Please also note that all comparisons that we will discuss during today's call are year-over-year, unless we note otherwise. Esteban will begin today's review. Esteban, please go ahead.

Thanks, Camilo, and good morning, everyone. Thank you for joining our call. LPA's regional platform continued growing at a solid pace in the second quarter, during which we continued to lay the groundwork to expand our property portfolio further to capture more growth in our target markets, where barriers to entry remain elevated in highly strategic locations. During the second quarter, rental revenue increased 6.4% to $11.7 million and through 9.6% on a six-month basis. This growth was led by properties in Colombia and Peru during the quarter, at the end of which our entire operating portfolio was 98% leased, a commitment that we made when going public last year and which reflects the strength of our customer relationships in the region. Net operating income increased 3.7% in the quarter and 4.8% during the first half. While certain one-time factors impacted our growth, as Paul will elaborate later, it is important to emphasize that LPA's underlying fundamentals are in line with our expectations and that our growth trajectory continues to strengthen, both with regard to near-term opportunities and over the long run. On the expense side, you'll note that second quarter SG&A grew at a far slower pace, as we have now achieved a steadier base, and the costs related to taking LPA public in the first quarter, 2024, are now mostly behind us. Because of this, our cost base should remain fairly stable going forward, and therefore, we expect to benefit from significant operating leverage as we expand our regional platform to our fourth country, Mexico. generate additional rental income, as well as increase our growth optionality. That expansion includes the ongoing construction of Building 300 at Parque Logístico Callao in Lima. This new building is comprised of two modules, A and B. Coming online in the fourth quarter of this year, Module A, which is currently under construction, will be fully occupied and is expected to contribute materially to our company's near-term growth. It represents 239,000 square feet, or 65% of the total building, and will be leased by a major food and beverage brand under a 10-year dollar-based agreement as previously announced. This will also be the first LEED Gold facility in our portfolio. During the second quarter, we also began construction of Building 200 in the same logistics park, the strategic location of which provides seamless connectivity to the shipping port of Callao and to Jorge Chavez International Airport in Lima. At just over 227,000 square feet and already 76% pre-leased, this building will be another source of significant dollar denominated revenue beginning in the second quarter of next year. further ramping up our growth as we enter 2026. As we announced last month, we appointed Eduardo Nakash as Country Manager for Mexico, and he has hit the ground running. He shares our entrepreneurial drive and passion for operational excellence, and will spearhead LPA's penetration of this key market, where mid to long-term demand for premium logistics and industrial real estate is expected to remain as relevant, or even more so, as it has been for the last 25 years. Michael brings a wealth of experience in real estate investment and development with a strong track record of originating and executing high-value projects. As we have emphasized before, success in real estate requires deep local awareness. His extensive understanding of the country is critical to our strategy of selectively acquiring and building a core portfolio of institutional quality logistics assets. which will strategically extend LPA's regional platform into this highly important and dynamic industrial real estate market. On another note, the completion of our purchase of two logistics facilities in Puebla, Mexico, is taking longer than expected. This has been a result of administrative delays that trustees have been dealing with since Mexican regulators intervened the major bank trustee that serves the country's real estate industry. We have no doubts about building this transaction, which remains as attractive as ever, if not more. These strategically located assets will be the cornerstone of the key component of our long-term growth strategy. It will enable us to serve in Mexico many of the top global and regional companies that currently occupy LPA facilities in our foundational markets, as well as provide premium logistics solutions to other high-quality companies operating in Mexico. The foothold that we are establishing there will be underpinned by our strategic partnership with ALES, a company that has been operating in Mexico for over 65 years. In addition to their deep knowledge of the country's real estate market, ALES has extensive relationships with Mexico's key landowners, as well as a solid network of corporate clients and property developers. Our local partner also has significant design-build expertise. To be clear, we are acutely aware of the continued uncertainty surrounding U.S. tariff policies, which are still in flux, and the potential impact of which is unknown. Accordingly, we will remain disciplined and highly selective when investing further in Mexico, whether that's acquiring properties or building them. We will continue avoiding sectors that are heavily reliant on certain exports, investing in facilities that serve the country's key submarkets, where demand is primarily driven by domestic consumption such as that found in our foundational markets. Importantly, demand in our target markets continues to outstrip supply for premium industrial real estate, like that of LPAs. I'll now hand over the call to Paul, who will review our second quarter results in more detail.

Thank you, Esteban. Good morning, everyone. Colombia led the quarter's revenue growth, increasing 19%, followed by Peru. where rental revenue grew 10.7% while decreasing 1% in Costa Rica. These results were largely in line with our internal projections, although there were several non-recording items that partially offset our growth in the quarter, as I will explain. Colombia's growth primarily reflects two new lease agreements with Porsche and VSD that were signed in the third quarter of 2024. This high-quality tenant subsequently occupied just over 125,000 square feet of total space that had been vacant. We also achieved a 28% increase in average rent for this space. Peru's growth mainly reflects new leases also signed in the third quarter of last year with the logistics companies Sharp and Signia for a little more than 92,000 square feet of combined space in our Parque Logistico Callao in Lima. This additional rental revenue was partially offset by the reimbursement of an above-standard tenant improvement loan to another tenant, a one-time year-over-year effect. Although our portfolio in Costa Rica benefited from the stabilization of Building 400 in LPA's La Verbena Park, this was offset by the early termination of a lease at our Coyote 4 logistics park, as well as by a decrease in interest income from another tenant's lump sum prepayment of the tenant improvement loan they have with us. This also affects same-store growth figures, but it's consistent with our customer electing to prepay. The growth of LPA's property portfolio remains solid, with operating GLA increasing 6.6% year-over-year to 5.3 million square feet and developing GLA expanding 48% to 478,000 square feet. with our total GLA increasing 9.1% to 5.8 million square feet. This expansion is expected to be a foundation for the next cycle of LPA's NOI growth even before acquisitions are factored in. Average net effective rent per square foot during the quarter was $8.07, an increase of 2.5% versus second quarter 2024. Our operating expenses increased 21.7%, mainly due to deferred maintenance last year and the stabilization of building 400 in LPA's La Bravena Park in Costa Rica. The office increase also stemmed from two buildings that became operational in April 2024 improve, as well as higher real estate taxes there. Another notable contributor to the quarter's increase in optics was a provision that we took in relation to the financial condition of a customer in Colombia. As Estela pointed out, the growth in SG&A was substantially slower than last year's quarter. Now that we've been a public company for a full year and no longer have the unfavorable year-over-year comparisons related to higher compliance, auditing, and reporting expenses, the 0.5% increase in SG&A was primarily due to higher compensation related to restricted stock units, and to a lesser extent, due to higher RSEs. Our financing costs decreased again this quarter, falling just over 15%. This was mainly due to interest rate reductions in Colombia, resulting from a lower interest rate environment. Also noteworthy was our operating cash flow, which increased 23.5% year over year to 8.9 million. Lastly, in addition to the strong fundamentals of our regional platform, we maintain a healthy debt maturity profile and a net debt to investment properties or LTV of 42.2% at the end of the second quarter. That concludes our review of our second quarter results. Operator, please open the call for any questions.