Logistic Properties of the Americas

Good morning, and welcome to LPA's first quarter. My name is Jade, and I will be the operator for today's call. At this time, all participants are in listen-only mode, and please note that this call is being recorded. There will be an opportunity for you to ask questions at the end of today's presentation. Now, I would like to turn the call over to Mr. Camilo Ulloa, Head of Investor Relations. Please go ahead.

Welcome to LPA's Second Quarter 2026 Earnings Conference Call. My name is Camilo Ulloa 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 the information presented during this call is intended for informational purposes only and does not constitute an offer to buy or sell any securities. Forward-looking statements made during this call are subject to a number of risk 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 audit 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.lpamericas.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 know otherwise. Esteban will begin today's review. Esteban, please go ahead.

Good morning and welcome everyone. Thank you for joining us. This was a breakthrough quarter for LPA in terms of both our financial results and the strategic steps we took to crystallize value and position our platform to build an exciting growth pipeline for 2027 and beyond. I am pleased to report that we extended our strong momentum in the second quarter, while once again outperforming our peers on occupancy, which held at 100% across our regional logistics platform. Revenues materially accelerated again, increasing 26.1% year over year, led by Peru and Colombia, where rental revenues increased 50.4% and 29.3% respectively. In Costa Rica, revenue grew 5.6%, reflecting a fully stabilized operation within LPA's portfolio. Our additional progress was driven by strong leasing activity and occupancy at our newest facilities, together with rising market rents that we captured through renewals, expansions, and re-leasing. NOI growth was equally strong, increasing 27%, with same property NOI up 14.5%. The sustained growth in our profitability was thanks to the exceptional customer service we provide and the pricing power that our advantageous market position and strong brand afford us. Both reflected in still rising average rent per square foot, which increased 10%. Also driving profitability was our operating leverage, which is gradually improving as we scale our platform across the four countries we operate in. In addition to our strong financial and operating results, the second quarter marked a major strategic milestone with the divestment of our Lima Sur Park in Peru for $145 million, representing an in-place cap rate of approximately 7%. In line with our strategy and the repositioning of our business, we will allocate almost all of this transaction's net proceeds into the expansion of LPA's footprint in Mexico. That's roughly $65 million after repaying approximately $60 million of debt and paying capital gains taxes. Selectively taking profits from stabilized, seasoned assets like Limassol and allocating the resulting capital into properties that generate high returns is a distinct advantage of being a multinational, vertically integrated real estate company. It enables LPA to capture the strategic benefits of a balanced and diversified portfolio while also opportunistically capitalizing on different phases of each country's real estate cycle rather than being beholden to a single set of economic events in one geography. It is also a new and proven lever of value creation within our core business. Put another way, the monetization of our Limassol Park represents a successful round trip across the entire real estate value chain, from greenfield development to leasing, stabilization of a meaningful part of our portfolio. It is the first of several potential transactions and partnerships to come in the years ahead, followed by reinvestment to create a virtuous cycle of value creation for our fellow shareholders. This will also make LPA more capital light in our foundational markets as we realign our balance sheet more towards Mexico while keeping the vast majority of our assets U.S. dollar denominated and transitioning to a more capital efficient business model. It is important to note that we sold Lima Sur at roughly 18% above its independently appraised carrying value in our books. That premium and the cap rate behind it are hard and clear evidence of our ability to execute on what we have set out to do with discipline and resolve, keenly aware of the verifiable underlying value of our assets and their operating platform that has just begun to bear fruit. We trust this evidence will not be lost on the market and that it sheds more light on the considerable dislocation between our current public share price and the hard asset value of our company on a book value per share basis. For reference, at the end of the second quarter, that intrinsic value net of capital gains tax stood at $8.62 per share, an increase of 16% year-over-year and 8.2% sequentially. Moreover, in our view, this figure excludes the value of the operating platform itself, which we think should sit on top of any fair appraisal of the hard assets underpinning LPA's business. The Limassol transaction also reflects the attractiveness of our facilities to institutional third parties, such as Fiuda Prime, the preeminent REIT in this geography. Furthermore, our agreement with Fiuda Prime gives LPA the option to repurchase the park four years after closing the current sale. Optionality like this is yet another way that we are creating long-term shareholder value. The monetization of Lima Sur has also served as a springboard for the strategic alliance that we have formed with Prime, which owns a diversified and stabilized portfolio of commercial real estate in Peru. Our alliance contemplates similar transactions that strategically combine LPA's strong development and operational capabilities with Prime's local and institutional capital base to further exploit Lima's underpenetrated logistics property market. As a reminder, through the Alliance, LPA will manage and operate Limassol on behalf of Prime, generating ongoing fee income in the process. As the parks operator, we retain control and will continue maintaining tenant relationships and delivering service excellence. As we have emphasized in prior calls, shifting our portfolio center of mass towards Mexico is a key component of our strategy, enabling us to tap this substantially larger and dynamic industrial real estate market to further diversify and rebalance our property portfolio and tenant base and to strengthen LPA's unique cross-border offering to global and regional companies. More specifically, our goal in Mexico is to earn higher risk-adjusted returns and further capitalize on our platform's underlying value. We will re-deploy capital from the divestment of Lima Sur into our acquisition pipeline, starting with a programmatic purchase agreement for Central Park 57, Class A facilities which are located in a key logistics corridor of the greater Mexico City area. As we have highlighted in the past, the properties that we are set to acquire from Fortum Capital over the next 12 to 18 months under that $200 million agreement will comprise the stabilized assets, effectively eliminating the risks associated with developing and leasing up facilities. Thank you so much for joining us. He previously held senior roles in real estate advisory and brokerage, brings over 30 years of experience in the Mexican market, and has deep relationships with blue chip companies across the country. To give context to the Central Park 57 purchase program, the 2.1 million square feet represents approximately 34% of our current GLA. and within two to three years, we anticipate Mexico will be home to more than 50% of LPA's property portfolio based on our current opportunity set, which is about $1 billion of facilities located in key logistics corridors surrounding major metropolitan areas and those along Federal Highway 57D. There, we intend to deploy capital at cap rates of 89% depending on the quality of tenants and lease agreements in place. Beyond redeploying the capital freed by asset divestitures, we will fund our broader expansion with a similar mix of conventional bank debt and local equity capital, as we have done successfully in the past. Where we source equity capital from insurers and family offices, LPA would, in some instances, hold a minority but significant stake in an asset's equity while also retaining control provisions for the financing, leasing and day-to-day operations of the asset, given our core expertise. We have steadily built and institutionalized this capability, cultivating local alliances while earning market and incentive aligned fees for value added services along the way. A few words about the current macro picture. Although the USMCA trade agreement remains unresolved, our conviction on Mexico is steadfast. Thank you very much. further strengthening the country's position as a highly desirable nearshoring destination. Interestingly, the recent increase in the US trade deficit with Mexico is a consequence of companies shifting more of their supply chains to Mexico in response of the US tariffs placed on Chinese imports. More importantly though, strong prevailing e-commerce trends and resilient domestic consumption remain significant structural drivers of long-term demand for modern logistics facilities and key sub-markets of Mexico, where we will focus additional expansion investments. A newer and increasingly powerful tailwind is the build out of artificial intelligence and data center infrastructure across the United States. While attention is often focused on the data centers themselves, the more relevant dynamic for a platform is the substantial logistics demand this activity generates across the supply chain, with industry estimates suggesting that each trillion dollars of data center investment can drive 30 to 40 million square feet of incremental logistics space. This is an additive multi-year source of demand that complements the e-commerce and domestic consumption trends I've described. And it reinforces the appeal of the logistics corridors we're targeting for investment. Recent market data is also encouraging. New construction in Mexico's industrial real estate sector is close to the 2023 peak, and this follows the 47 million square feet of space that was absorbed last year, although demand levels are lower thus far in 2026. Demand for facilities remains strongest in Mexico City and Guadalajara, while it varies across norther industrial markets like Tijuana and Monterrey due to the uncertainty surrounding USMCA. In Guadalajara in particular, this strength is increasingly reinforced by demand tied to electronics and the data center supply chain as manufacturers serving hyperscale customers expand their footprint in the region. Thank you very much. The trend also reflects a long term positive evolution in domestic consumption as the country's middle class continues expanding and as household incomes continue rising. In other words, demand for distribution infrastructure to serve an expanding consumer driven economy will be sustained for the foreseeable future. As we have communicated in the past, the consolidation underway among Mexico's large industrial real estate companies is expected to create additional opportunities for us to acquire mid-sized property portfolios in the range of $70 million to $150 million as acquirers eventually prune their newly acquired portfolios. For LPA, these properties would be located in key sub markets that are also attractive to the global and regional companies that we serve and target, but not property sizes or areas that are typically the focus of our larger competitors. Select high quality assets, such as those in Central Park 57, also present many opportunities for us to expand in Mexico. Avoiding highly competitive auction processes, we continue prioritizing off-market and proprietary acquisitions, leveraging our local team and relationships, and, if needed, using partnership structures like the one we have with Fortum. We favor properties that are home to high quality tenants focused on logistics or light manufacturing that is domestically oriented, while generally pushing out investments that are vulnerable to the near term volatility of rapidly changing trade policy, such as those located in Mexico's northern markets. Thank you very much. Accordingly, our platform will remain invested in Peru, anchored by Parque Logístico Callao, which is a cornerstone of our ongoing operations and future growth in the country. To be clear, we expect our foundational markets to remain consistent sources of value, particularly because the structural supply of modern logistics space is still quite low in them. Moreover, we're encouraged by the recent presidential elections in Peru and Colombia where new business-friendly administrations are now governing these countries. The change in business sentiment has been immediate and palpable with pent-up demand and general activity rushing in. Domestic consumption trends remain solid. The penetration levels of e-commerce remain effectively low, despite the sector's rapid rollout. And our foundational markets are also expected to benefit, like Mexico, from the regionalization of supply chains that has been underway. For all these reasons, we are firmly committed to Peru, Colombia and Costa Rica, which are integral to LPA's seamless cross-border offering. Turning over to the development front, which is focused on Peru currently, we remain on budget and on schedule with the two facilities that will add a total of 440,000 square feet of GLA at Parque Logístico Callao, which is located in one of Peru's most supply-constrained logistics sub-markets. Together, they are now 92% pre-leased, reflecting continued strong levels of demand for institutional quality facilities. Building 200 is nearing completion and will contribute $1.3 million of annual NOI, beginning in the third quarter, while Building 400 will contribute $1.6 million, beginning later in the fourth quarter. It is important to note that in addition to the incremental growth that these facilities will generate, their NOI levels equate to development yields of roughly 13%. Further ahead is the remaining shovel-ready pad where we will develop a fifth building in that same park and which we intend to pre-lease this year. Adding to the new building deliveries, we have a sustained tailwind of mark-to-market rental updates that are embedded across our existing portfolio, which will help drive additional organic revenue and NOI growth. Contributing to this will be the fee income that we receive for managing Lima Sewer Park that we sold to Feudal Prime. This is a new capital-like revenue stream going forward, with more to come as we divest other mature assets in the future. Beyond the new fee income, we expect any future asset sales to make the big difference between LPA's book value and share price even clearer to investors, as I noted earlier. In the meantime, to help close the current valuation gap, we have increased our investor outreach, stepped up our participation at industry and investor conferences, and enhanced our digital presence with the aim of bringing LPA to the attention of a wider audience of market participants who could help drive additional demand and liquidity for our shares. That effort is starting to pay off as LPA's improved trading activity indicates. One final comment before I turn the call over to Paul. Three firms have recently initiated equity coverage on LPA. BTG Pactual, one of the region's most relevant investment banks, initiated coverage, which broadens our reach to institutional investors across the region and in key US and European capital markets. Watertower, an equity research and investor engagement firm, also initiated equity research coverage, along with Sidoti, a broker dealer, which recently launched sponsored research as well. You can find the reports on each firm's website. We view this as an important step in explaining our equity story and our business, as well as in raising LPA's market visibility. We hope the new coverage helps improve the market's understanding of our platform and its relative value. Paul? Please go ahead.