Deutsche Bank Mexico Reit

Good morning, and welcome to Fibra Macquarie's fourth quarter 2025 earnings call and webcast. My name is Diego, and I will be your operator for this call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If at any time you require operator assistance, please press star zero, followed by zero, and an operator will be happy to assist you. I would now like to turn the conference over to Nikki Sachs. Please go ahead.

Nikki Sachs Thank you, and hello, everyone. Thank you for joining Pfeiffer-McQuarrie's fourth quarter and full year 2025 earnings conference call and webcast. Today's call will be led by Simon Hanna, our Chief Executive Officer, and Andrew McDonald-Hughes, our CFO. Before I turn the call over to Simon, I'd like to remind everyone that this presentation is proprietary and all rights are reserved. The presentation has been prepared solely for informational purposes and is not a solicitation or an offer to buy or sell any securities. Forward-looking statements in this presentation are subject to a number of risks and uncertainties. Actual results, performance prospects, or opportunities could differ materially from those expressed in or implied by the forward-looking statements. These forward-looking statements are made as of the date of this presentation. We undertake no obligation to publicly update or revise any forward-looking statements after the completion of this presentation, whether as a result of new information, future events, or otherwise, except as required by law. Additionally, on this conference call, we may refer to certain non-IFRS measures, as well as to U.S. dollars, which are U.S. dollar equivalent amounts, unless otherwise specified. As usual, we've prepared supplementary materials that we may reference during the call. If you've not already done so, I'd encourage you to visit our website at FibraMcQuarrie.com and download these materials. A link to the materials can be found under the Investors, Events and Presentations tab. And with that, it is my pleasure to hand the call over to Fibra McQuarrie's Chief Executive Officer, Simon Hanna. Simon?

Thank you, Nikki, and hello, everyone. Thank you for joining us for Fibra McQuarrie's fourth quarter and full year 2025 earnings call. I'm pleased to report that FibroMQ concluded 2025 with another quarter of solid operational performance, capping off a year that demonstrated the resiliency and quality of our real estate platform. While navigating a challenging macroeconomic environment, we delivered consistent results that underscored the strength of our strategic execution and the effectiveness of our disciplined approach to capital allocation, positioning us on a path for continued growth. Our results demonstrate the ongoing commitment to four key strategic priorities, optimizing net operating income across our portfolio, disciplined and accretive capital allocation, maintaining a well-positioned balance sheet with embedded firepower, and deepening our commitment to sustainability, safety, and operational excellence. We strive to maximize total returns on a per-certificate basis, and we're very proud to have delivered a total shareholder return of 33% in U.S. dollars, or 19% in Mexican peso terms for FY25. Reflecting on our results, we finished the year with strong momentum, posting record quarterly consolidated revenues and NOI, contributing to a record full-year AFFO in underlying U.S. dollar terms, reflecting both the quality of our asset base and the effectiveness of our operational platform. We remain disciplined in our approach to growth capex, and it's worth calling out a couple of highlights we achieved throughout the quarter. First, in Monterey, in December, we leased a 200,000 square foot flagship development property, achieving a development yield of 10%. Second, we completed the opportunistic acquisition of an under-rented warehouse comprising approximately 165,000 square feet in Mexico City. following a similar 250,000 square foot deal we completed in the third quarter. The lease on this new investment is scheduled for a mid-2026 renewal, with a stabilised cash yield expected to be within our 9% to 11% target range. The Industrial Development Programme has been carefully calibrated to current market conditions. While we've maintained discipline in initiating new projects given the subdued demand environment, We've continued advancing infrastructure and pre-development work across multiple sites. This positions us to accelerate development activity when market conditions align with our investment thesis, and we are currently assessing some likely near-term opportunities to do so on our existing land bank. Beyond our existing land bank, we're also encouraged by our development pipeline, and we look forward to reporting positive news on this front in the hopefully not-too-distant future. Turning to our fourth quarter performance, starting with our industrial portfolio, our stabilised industrial assets continue to generate reliable cash flows, with occupancy levels remaining robust despite the broader market headwinds. We executed meaningful leasing activity during the quarter, ending the year with an uptick in occupancy, closing at a healthy 95.5%. We executed new and renewal leases on approximately 1.2 million square feet of GLA in the fourth quarter, capping a very active year, where we completed 60 leases comprising almost 5 million square feet with a broad range of customers within the industrial portfolio. Notably, we delivered strong full-year lease renewal spreads on commercially negotiated leases of 20%, comfortably exceeding our initial expectations at the start of the year. This progress has been particularly valuable given the current market environment, where tenants are prioritising stability and our existing customer base has demonstrated stickiness, giving us confidence as we approach a manageable lease renewal cycle in 2026, comprising approximately 15% of our annualised base rents. Our retail portfolio also delivered a strong performance in the fourth quarter. with continued occupancy gains driven by a total leasing comprising 26,000 square metres, representing our highest quarter of leasing activity in almost two years. We ended the year with occupancy of 94.1%, up 75 basis points from the end of the prior year. The necessity-based nature of our retail properties has proven to be a competitive advantage, with strong cash collections and tenant retention supporting steady NOI growth of 4% for the year in Mexican peso terms. We are very pleased with the continued improvement in our retail portfolio, with fourth quarter car and foot traffic reaching a post-pandemic high. Having stabilised its overall performance, and notwithstanding some scheduled move outs to work through in the first half of 2026, Overall, we are well positioned to realise further value from our retail portfolio during the year. What makes our approach particularly compelling is MPA, our scalable, vertically integrated platform, which is a proudly unique feature in the Mexican industrial fibro sector. MPA provides us with deep market knowledge and operational expertise that maximises value and customer engagement. Our new developments incorporate the highest sustainability standards, which not only align with our ESG commitments, but also generate operational efficiencies for our customers. As of December 31, our green building certification coverage represented 44.4% of consolidated GLA, an increase of approximately 260 basis points year over year. A highlight for the quarter was the LEED Platinum certification achieved on our 200,000 square foot development property in Mexico City. With a score of 91 points, we're excited to announce that this is a new LEED Platinum category world record, surpassing our previous developments that achieved 90 points. The property has now been installed with solar panels that are poised to achieve incremental green energy income from this year. accretively adding to the existing 12% stabilised yield we already achieved upon lease-up. Our balance sheet remains a key competitive advantage, providing both stability to weather market fluctuations and flexibility to pursue value-creating opportunities. Indeed, our embedded firepower is approximately half a billion US dollars when considering our available credit lines, portfolio recycling opportunities and investment-grade style leverage targets, positioning us well to capture accretive growth opportunities. Before turning the call over to Andrew, I want to emphasise our confidence in Fibra Macquarie's positioning to sustainably deliver on our total returns. We are pleased with the new leasing prospects on our development portfolio and the incremental capital allocation opportunities that should continue to drive both earnings and NAB enhancements. Throughout 2025, we navigated an environment characterised by significant geopolitical uncertainty, particularly around trade policies and the USMCA renegotiation process. While we consider this has impacted market-wide net absorption activity and contributed to more cautious decision-making among potential customers, we remain absolutely confident in Mexico's fundamental role in North American supply chains. Our portfolio is strategically positioned in key manufacturing hubs and transportation corridors, serving our customers, many of whom operate in industries where proximity to the US market is fundamental. Their substantial investments in facilities, workforce development and supply chain integration reinforce their long-term commitment to the region and underpin the stability of our lease income. We're also encouraged by the Mexican government's continued focus on policies that support the manufacturing sector, including infrastructure development initiatives and targeted programs to attract investment in high-value industries. These initiatives reinforce Mexico's position as a premier destination for global manufacturing and logistics operations. While near-term uncertainty persists, We believe our high-quality, diversified portfolio, combined with our disciplined capital allocation approach and strong balance sheet, positions us to continue delivering reliable returns to our certificate holders. I'd like to thank our entire team for their dedication and execution throughout 2025, and all of our stakeholders for your continued support. Andrew.