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spk01: Thank you for standing by and welcome to the FIBRA Prologies second quarter earnings. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today. Ms. Alexandra Violante of IR. Thank you. Please go ahead, ma'am.
spk07: Thank you, Justin, and good morning, everyone. Welcome to our second quarter 2021 earnings conference call. Before we begin our prepared remarks, I would like to remind everyone that all information presented in this conference call is proprietary and all rights are reserved. The information has been prepared only for information purposes and is not a solicitation of an offer to buy or sell any securities. Forward-looking statements during this call speak only as of the date of this call. Our actual results, performance, prospects, or opportunities may differ materially from those expressed in or implied by the forward-looking statements. Additionally, during this call, we may refer to certain non-accounting financial measures. The company does not assume any obligations to update or revise any of these forward-looking statements in the future, whether it's a result of new information, future events, or otherwise, except as required by law. As is our practice, we have prepared supplementary materials that we may reference during this call as well. If you have not already done so, I will encourage you to visit our website at fibraprologies.com and download this material. Today, we will hear from Luis Gutierrez, our CEO, who will discuss our strategy and market conditions, and from Jorge Giró, our Senior Vice President of Finance, who will review results. Also joining us today is Hector Ibarzabal, our Managing Director. With that, it is my pleasure to hand the call over to Luis.
spk04: Thank you, Ale, and good morning, everyone. Customer demand in 2021 has been accelerating, and what we're seeing might be the best year for logistic real estate globally, and Mexico is not the exception. This is reflected in our second quarter results. We have delivered a strong financial and operational performance. Let me provide some highlights. Occupancy remains healthy. We have addressed more than half of the 2021 expirations, and the rent change increased almost 8% in U.S. dollar terms. It's from cash flow generation for the year, with the highest same-store cash NOI in any single quarter, especially after the rent concessions arrived from the pandemic. And our FFO and AFFO increased significantly This growth mainly was driven by high rents achieved through our leasing activity, a decrease in interest expense, and the recent acquisitions. In addition, as part of our financing strategy, we recently completed a restructuring of our debt. This allowed us to have lower cost of capital and a stronger balance sheet. Jorge will provide more color on this. We recently acquired a property from our sponsor for an investment of approximately $20 million, and that will contribute 243,000 square feet to our portfolio. This property fits our investment strategy of being located in an irreplaceable location and leads to some of the best global customers. Consumption and manufacturing exports have been leading the economic recovery. The strong rebound of the US economy, the continuous interest from companies to redesign their supply chains closer to the market, relocating mainly from China. The structural changes arrived from e-commerce and companies revealing their inventories will make 2021 the best year for logistics real estate. The map of space in the last 12 months was 22.8 million square feet in our six markets. which exceeded supply, lowering vacancy rate to 3% for the quarter and 90 basis points lower than last year. We expect more than 50% of additional space demand in 2020. This is brought across our markets and Mexico City, Monterey, Juarez, and Tijuana to outperform. Guadalajara is also turning around. The vacancy that we're seeing is decreasing and market occupancy is nearing 100%. Respect in this environment grants to increase in most of our markets. This is driven by federal demand and supply fundamentals, coupled with inflation pressures, high construction costs, and land prices going up in our most land-constrained markets. Let me briefly discuss what we're seeing on the ground. On the manufacturing side, our sponsor is in final negotiations to lease 100% of a building in Juarez from existing customers that are growing with us. We have seen an increased number of companies looking for built-to-suits or pre-leasing. This demand is across all of our manufacturing market and companies from different sectors and countries that are required to relocate from Asia to consolidate and or expand their operations. Prologis is well positioned to take advantage of these opportunities given the strategic land positions. On the logistic front, e-commerce continues to lead the activity in the market and we are the largest landlord for predominant pure e-commerce players. It is important to remember that the shutdown only accelerated a portion of the structural change expected outlook for the segment. There is still significant room for growth. In Mexico City, we're closing additional space with one of the market leaders. Demand for space was brought across sectors, and we are expecting rents to rise as a result of the land's scarcity. Logistic real estate has been the preferred asset class. It has attracted new investors and developers to our markets. As a result, our portfolio valuations reach a record increase year-over-year, and this will boost the overall return performance for our investors. Mexico real estate values continue to be attractive on a relative basis if compared to other countries. We believe it offers the best foreign returns and a higher risk-adjusted spread. Cedar Prologis is very well positioned to take advantage of the opportunities that this rising market is offering. Our six markets are the most active, and our focus strategy to increase our market share has worked. Our best-in-class portfolio of properties has been resilient and is positioned to capture the upside on market rents. Our exclusive access to the Pelagio development pipeline has been a competitive advantage. Our sponsor will increase its properties under development and replenish the land bank, which will be uniquely positioned for organic growth in the short and medium term. Our balance sheet is the best in the sector, as it provides the liquidity and flexibility to continue our growth lines. Finally, I'm very proud of our sustainability performance and leadership. This year, we were included for the second time in the S&P BNB ESG index, and we just published our first sustainability report. ESG is embedded in the DNA of the company, and we will continue to work on those areas that need improvement. With that, let me turn the call over to Paul.
spk03: Thank you, Luis. Good morning to everyone, and thank you for joining us. I hope everyone is staying healthy. This first half of the year has proven the strength of our operations resilient business, and strong balance sheet. This quarter, we delivered once again solid results, and we remain on target to meet guidance. FFO for the quarter was $36 million, or 4.2 U.S. dollar cents per certificate, representing an increase of 11% on the nominal and per certificate basis, if compared to last year. A SFO was $29 million for the quarter, an increase of 25% if compared to last year, and in line with expectations. We were able to achieve the results due to our outstanding operational performance. Leading activity was almost 2 million square feet, addressing on a cumulative basis 65% of total lease expiration for the year. Period end occupancy was 96.4%, a 90 basis point increase if compared to last year. Net effective rent change on rollover increased almost 8%, and for the last 12 months, it had a positive change of around 12%. For the quarter, same-store cash NOI was 15.4%, and same-store gap NOI was 10.6%. It was driven by low rent concessions given this quarter, stronger FX, rent increase on road on renewals, and customary annual bumps. Regarding our balance sheet and capital market activity, we have increased our liquidity and improved our capital structure. Ending the quarter, we are long to value of 27%. This provides us additional financial strength and flexibility. Additionally, in May, we announced that we raised $370 million through a $70 million green bond in the local market and $300 million in a partially green U.S. private agent. For this last transaction, we received the funds last July 1st. As such, the positive effect of the refinancing will be shown in the third quarter results. Having said that, let me provide you with what we expect to be the end result of all the refinancing activity. Weighted average debt expiration term increased from 7 to 10 years. Our closest debt maturity is until 2026. We took advantage of low interest rate environment. As such, we moved our long-term debt from 66% to 100% fixed rate. resulting in a weighted average cost of debt of 4%. We don't have any debt expiration in a given year larger than $150 million, which, given the size of the portfolio, we believe is a manageable amount. Our total green or sustainable financing has reached more than 60% from zero a year ago. Additionally, we have an unsecured and committed line of credit for $500 million, including its revolver facility. As you can see, we have one of the strongest and most flexible balance sheets in the sector, supporting our international investment rating. On the valuation front, our portfolio's value increased almost 4% compared to the first quarter of 2021, and 10% year-over-year. The main drivers are Additional investors entering the sector, attracted by good demand and supply fundamentals. Increasing rents, especially in Tijuana, where values are up around 10% versus the first quarter of 21, and 32% year-over-year. And higher barriers of entry, like land and energy, as well as higher replacement costs. In light of the rapid movement in valuations, we believe the values being assigned to Fibra Prologis by the street are conservative. In terms of performance, Fibra Prologis reached a 13.2% return last June 4th, which marks our seventh anniversary, triggering a promote or incentive fee to our sponsor Prologis. What this means is that, as approved in yesterday's Holder's Meeting, Additionally, 7.2 million certificates will be issued for Prologis, resulting in 85 basis points dilution overall. Having said this, we are keeping our dividend per certificate unchanged. In terms of guidance, we are holding our forecast, so please refer to page 7 of the Capital Financial Information for specifics. The combination of strong demand for logistic real estate, our operating results, and a best-in-class balance sheet in what we see is a bright outlook, positioning Fibre Prologis as one of the best players in our sector. To sum up, the second quarter was a continuation of what has already been a very good year, and I feel great about our growth outlook. With that, I turn it to the operator for Q&A. Thank you.
spk01: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Nicolaj Lichtman from Morgan Stanley. Your line is open. Please ask your question.
spk05: Good morning. Thank you very much for taking my questions, and congrats on the solid numbers. Just one question here, and it relates. So you sold out in most markets, especially in Mexico City. When we look at these numbers, the pace was strong. We wonder, I wonder why we're not seeing more of an uptick in terms of, say, install rents in that area. And I was wondering, you're looking at the contract, you have better information than we do. Can you give us a sense of when we will see that inflection of what's in terms of pricing in the Mexico City area specifically? Thanks a lot.
spk12: Thank you, Nikolai. This is Hector. Good to hear from you. In Mexico City, what we have been experiencing is customers requesting more terms in their contracts. I think that price is trending to be not the number one trigger decision for a customer. They want to have the space and they want to have certainty that they will have the space. uh we expect to have an important uh rent growth going forward uh from predicted year end uh my expectation is that we will have at least uh from eight ten percent uh rent growth and customers are giving privilege uh to the fact of securing the space So Mexico City is strong, wherever, what position. Land constraint situation in Mexico is becoming more difficult, and this is only good news for the current facilities because they will keep on increasing in rents and value. Got it. Thank you.
spk01: Your next question comes from the line of Vanessa Quirova from Credit Suisse. Your line is open. Please ask your question.
spk08: Hello, good morning. Thanks for taking my question. The one that I have is regarding the petition that you just announced in Ciudad Juarez. If you can tell us a bit about the property that you acquired, the upgrade with and without the closing costs, and also what can you tell us about the current market prices of land in Ciudad Juarez? Thank you.
spk12: Thank you, Vanessa. Since the FIBRA was launched, I have not seen Juarez in such a great position. The cap rate that we're seeing in Juarez is the minimum cap rate that we have seen. It's in the neighborhood of 7%. Land prices are going up, and we're expecting rents and price to go up probably 5% to 10% in the following months.
spk08: Thank you, Atul. That cap rate this week including closing costs, can you tell us more or less how much were the closing costs for this transaction?
spk12: Closing costs are between 4% to 5%. And what we are seeing not only in Juarez, but I can say in all of the markets in which we are participating, is cap rate compression pressure. There is plenty of new investors willing to jump into the arena. So I wouldn't be surprised if the assets value in quarters reach a record high in the following quarters.
spk08: Okay. Okay. Thank you. Can you tell us what's the current occupancy of the property, of the portfolio? The acquisition? Thank you.
spk04: Vanessa, we didn't understand the question, but our occupancy in the forest market is 100% and the occupancy of the acquisition is 100%. Excellent.
spk08: Thank you very much.
spk01: Your next question comes from the line of Pablo Monsivais from Barclays. Your line is open. Please ask your question.
spk14: Hi. Good morning. Thanks for taking my questions. I have two. The first one is whether you have an update on your acquisition plans that you mentioned in your previous earnings call. I remember it was a 1.6 million square feet M&A plan. I just wonder if there's an update there. My second question is on the occupancy rates decrease in the manufacturing segment. It went from 98, 99 to 96%. So can you please shed some light on the reasons behind this? Thank you.
spk04: Thank you, Pablo, and I'll take the question on acquisitions. So, Pablo, this is time to play offense. And, of course, we have been working in preparing the company for growth. In fact, you know, we have loan-to-value around 27%, 28%, and we have also expanded our line of credit, as Jorge mentioned. So let me tell you the sources. Number one is, you know, we are in progress to meet our guidance between $100 to $200 million. So the PLD pipeline, as you say, there is 1.6 million square feet. This is around $130 million. So we recently acquired this property that was mentioned, and it is likely that before year-end, we will act on $90 million, mainly before the end of the year. Some of it will be third quarter, and some of it will be fourth quarter. On this bracket, let me just mention that the sponsor will put the work around 3 million square feet In this next six months, this is close to $200 million, and this property will be stabilized in 2022 and 2023. In addition, the sponsor will replenish its land bank, which today sits around a capacity of 5 million square feet, and we are planning to triple that to 15 million square feet. This is mainly in Mexico City, Monterrey, Guadalajara, and Monterrey. Now, let me talk about third-party sales. So we have done, in the first half, around $30 million. We bought a property in Toluca and Mexico City last touch. And we are seeing a good environment. There is an increased sale of portfolios. And we see a good relative valuation. And, of course, we're evaluating some options. And hopefully, we will act on them before the end.
spk12: Regarding, Pablo, your question on the border markets, what you're seeing is probably part of the frictional vacancy that is a regular part of our operations. In Tijuana, we experience 100% occupancy. Luis mentioned we have 100% occupancy as well in Ciudad Juarez. We integrate into what is Hermosillo, which, you know, those are assets which do not fit our strategy anymore, and we are actively trying to sell them. Reynosa, there was a slowdown in the occupancy, but we have already executed a couple of contracts in Reynosa that will take such occupancy from 93.5 to 97.9 starting the first day of October. So the way I see the fundamentals in these three markets makes me be very confident that these markets are going to be facing not only low vacancies, but very substantial growth going forward. Reynosa is a market that we like a lot, but our sponsor is currently actively pursuing some interesting transactions. So I'm pretty sure that I will be able to announce something in that market in the short term. Perfect. Many thanks.
spk01: Your next question comes from the line of Sheila McGrath from Evercore. Your line is open. Please ask your question.
spk00: Yes, good morning. You purchased a last touch asset in the quarter. I was wondering if you could give us a little more insight on that strategy. Do some of your existing logistics tenants take space in those closer-in assets, or is it a whole new set of tenants?
spk12: Sheila, thank you for your question. And, you know, I'm thrilled with the good activity that e-commerce is showing. Hard to say, but probably 2021 is going to be even a better year in e-commerce than 2020, as we are seeing not only the big players, but we are seeing all of the retailers taking important actions on trying to reinforce the e-commerce strategy. OVNI channel is the name of the game, and e-commerce in this regard plays a very important role. On this environment, last-ditch facilities every day will become more important as competition to get the customers, make them try to be closer to the customers in order to provide faster service. Having said this, it is important to understand that e-commerce players, they always have alternative routes, and that cost is an important component of this. Our last social strategy is linked hand-by-hand with what we hear from our customers, understanding what are the locations, what are the characteristics, and what are the restrictions that they do not want to have in these type of facilities. In other words, when we launch or when we make a Last Doge acquisition, we know for sure the interest that the customers might have regarding that building. I would say that probably 75% of the demand is coming from a current customer base for these type of facilities. And we see as well a demand coming from other customers looking for other type of facilities, like the recent release that we did where the facility was directed to a research and development center. So there's plenty of demand for most types, but the most of it comes from the current customer base.
spk04: Shin, I would just add that, you know, the main e-commerce players are building the infrastructure nationwide, and the next phase of focus will be servicing with lower times. When this happens, I think there will be a boost in less-Dutch demand, and I think we're getting prepared, building a portfolio.
spk00: Okay, great. And one quick follow up cap rates for industrial have compressed meaningfully in the U. S and globally. I was wondering if you can comment on those trends in Mexico and also put from your position from the sponsor. If you put Mexico's strong market conditions in perspective with the rest of the world as Mexico, you know, stacking up among the top from a demand perspective.
spk04: Thank you, Sheila. Yes, I mean, as I mentioned in my remarks, logistic real estate is the preferred asset class, and we have been seeing a lot of demand, very good demand supply from the mentals around the world, and Mexico is not the exemption. We've seen cap rates in the U.S. trending lower than 4%. And this is an important decrease. Valuations in the U.S. increased 10% in the quarter. So you could see that, you know, even the values went up higher in the U.S. compared to Mexico. As Jorge mentioned, we had a 4% increase in the quarter. This reflects about a 40 basis points reduction in cap rates. taking maybe the average cap rate according to our standard between 6.4 and 6.5, probably Mexico City and Tijuana leading the pack with around 6.1%. And then maybe you have a moderate 25 basis above what is about 50 basis points. And so we see a good trend as, you know, investors are really looking to invest in our sector.
spk01: Thank you. Your next question comes from the line of Gordon Lee from BTG. Your line is open. Please ask your question.
spk09: Hi, good morning. Thank you very much for the call. One quick question, which is, what's your view of how disciplined development activity will be? Because obviously we've seen in the past where we've seen, you know, overdevelopment in markets like Juarez, etc., Given the enthusiasm and the amount of capital that you see flowing into the segment, into the sector, how concerned are you that, or how confident are you, maybe is a better way of asking the question, that developers will be a bit more disciplined this time? Thank you.
spk12: Thank you, Gordon. I think this is a good question that needs to take me back to our strategy. We like to participate in markets where there's high barriers of entrance. So one thing is that investors might be interested, for example, in developing in Mexico City and have different realities if they are going to be able really to get the land and to get the conditions and the development to do that type of development. Let me try to provide you some figures about our six markets. In the last four quarters, there has been a net absorption of 22.8 million square feet, and completions have only been 19.9. So there's a deficit of 3 million square feet that has been absorbed more than what completions have happened. If you analyze the supply pipeline, that is a number that we monitor permanently, we're seeing that there's 11.8 million of new supply coming in the pipeline, and 3.7 million out of these figures are already built to suit with our community. So you only have 8 million of new spec building jumping to the market. The interest is there. Developers are more active than ever. But, you know, getting entitlement has become more difficult. Getting the right piece of land, land prices are going up importantly. So investors, they do hesitate about paying 40 or 50 percent above the regular land prices. And construction costs as well are going up. So all of these represent an interesting combination that if you do not know what you are doing, you can very easily commit a mistake. We feel very confident. We have a strategy to tackle costs. We have a strategy to control land. And we have the feedback from our customers so we understand what their extraction plans are. So interesting moment in the market, a lot of interest, a lot of activity, but I need to say that there has never been as many challenges as I'm seeing today for developing new properties.
spk09: Perfect. That's great color. Thank you very much.
spk01: Your next question comes from the line of Francisco Suarez from Scotiabank. Your line is open. Please ask your question.
spk13: Thank you. Good morning. Congrats on the results. A follow-up question on Ciudad Juarez, on your acquisition on Ciudad Juarez. What exactly that asset is located in which corridor? And if you can give us a little bit of a color of what are your views on the differences across the corridor, the leases you're having in Ciudad Juarez. Perhaps you like more the healthy portion of the city. Anything that you can share with us. And secondly, It is the first time since about four years or so that I have heard you optimistic about Guadalajara. And does that mean that the sponsor might actually allocate much more efforts to Guadalajara?
spk12: Thank you. Thank you, Paco. And, you know, I'm happy on seeing what is happening now. what is happening in Juarez. This facility that was acquired for fibra is completing a park of previous properties that the fibra has had. The remaining backlog that the sponsor holds in Ciudad Juarez is in the best location. Land has disappeared from the traditional corridor, so all of the new movement is going to the market that is known as Electrolux, that is several miles away from this core market. So, Prologis is the only company that still has land to develop in the most desirable corridor, and we will take advantage of the situation. In Juarez, we are seeing demand from the auto industry, from CPLs, from logistics, from medical, and from consumer products. I can say that Juarez is in very good shape. Understanding the plans that the sponsor has, I wouldn't be surprised if for the first time our sponsor would be developing several buildings at the same time in Ciudad Juarez. Regarding Guadalajara, it's interesting because Guadalajara has two components. Guadalajara has a component of electronics slash technology, and that has a very important component of 3PL and e-commerce. So the interest that we have in Guadalajara is high. Our sponsor has just controlled an important piece of land there that would provide the space to provide expansion and to take care of the new demands. And we're seeing activity as well from companies in technology. I can make the list of at least nine companies that recently experienced activity on electronics and research and development. Guadalajara is a peso market. This is a situation that you need to understand and you need to treat accordingly. And, you know, we will not be shy and we will be playing offense in Guadalajara as well.
spk13: Thank you very much. Take care.
spk01: Your next question comes from the line of Royland Mendez from JP Morgan. Your line is open. Please ask your question.
spk11: Hello, guys. Thank you very much for taking my question. Two questions. So, can you help us rank from the strongest to the weakest of your markets in terms of rent growth expectations? You already mentioned Tijuana with almost 32% during your increase so far, but how much more can we see and how does it look for the rest of your markets? And if there is any difference between the pricing power that you have on the logistic tenants versus the manufacturing tenants. Thank you so much, guys.
spk12: Thank you, Ferland. We do not make important differentiation as quoting a logistic and a manufacturing tenant. Of course, the process with a manufacturing tenant is more complex. As in most of the cases, they require special features, and we always have the discipline not to invest in specialized allowances that the customers might be requiring. But the quote of the shell is exactly the same. We do see three markets that are pushing rents importantly. Let me put Tijuana at the very front. We do see Mexico City and Juarez in that list. In these three markets, I would be expecting a rent increase of at least two digits in the next three to four quarters. The other three markets, Monterrey, Guadalajara, and Reynosa, they are as well experiencing rent growth in a lower scale. Probably in these markets, we should be expecting something from 4% to 6%. So in the overall, the expectations that I have for rent growth going forward is as high as I have seen it. and this will bring as a consequence combined with what luis was mentioning of new interest from new investors that the value of the assets keep on growing uh you guys have heard me saying that the name of the game is increasing value in the properties the rent is important and the rent growth is a consequence of being able to increase the value of the facilities very clear hector thank you so much and congrats to to you all
spk01: Your next question comes from the line of Juan Macevo from GBM. Your line is open. Please ask your question.
spk02: Hi. Thanks for the call. So I would like to ask you about your retention rates. They seem lower than usual, although occupancy has been stable. Could you provide some colors on the drivers for these retention rates?
spk12: Thank you, Juan, for your question. The way I like to see retention is always linked to occupancy and rent growth. There's a red light when you have low retention and your vacancy is increasing and your rents are decreasing. In our case, we have been losing some business. Part of it has been because of our permanent effort of trying to increase rents. So some customers decide to go and look for a cheaper facility, lower quality. But most of the transactions have been anticipated, meaning that they were going to be happening. And they depend on personal circumstances of our customers, consolidating the spaces, expanding business, that type of situation. We have a low retention rate. And, you know, in my corporate, I received congratulations because of a low retention rate with a high rent growth in our new activity. Nothing to be concerned on this regard.
spk02: Great. Thanks for the answer.
spk01: Again, to ask a question, press star then the number one on your telephone keypad. Your next question comes from the line of Jorrell Giletti from Morgan Stanley. Your line is open. Please ask your question.
spk06: Good morning, gentlemen. The first one is I was wondering if you can quantify the opportunity for last touch assets within Mexico City in terms of available GLA or perhaps any other metric that you see appropriate. And within this, do you see the opportunities more within M&A or do you see it more towards perhaps Greenfield or Brownfield? Those are my questions. Thanks.
spk12: Thank you for your question, Joelle. In GLA, the typical size of the last storage facilities could range between 30,000 to 80,000 or 90,000 per feet. I would say that the average is more between 50 to 60. We have a program in which we plan probably to acquire from today till year end, probably four or five more of these facilities. The program for next year, I think it's going to be more important than what we have this year, as we are seeing some other markets besides Mexico City, they're starting to get some traction in this regard. On the M&A front, I think that there's opportunities. I think that the current values of the assets are becoming an incentive, particularly to some funds that are finalizing their investment period and that are trying to get a nice profit out of the investment that they have made. I think that the second half of this year is going to be more active on this regard than the first half of this year, and I'm already visualizing some important processes that are outside in the market and that few apologies participate.
spk06: So bringing it back to Last Touch, does that mean that the opportunities for asset acquisition is more M&A, so it's not necessarily that you would take a building and convert it into Last Touch?
spk12: The answer is yes. You need to get the facility, design a redevelopment plan, because it's going to be tough to get the facility the way the customers are requesting it. But, you know, it's much more difficult in Mexico City to try to start from scratch as the entire process is very complicated. Thank you very much.
spk01: Your next question comes from the line of Alan Macias from Bank of America. Your line is open. Please ask your question.
spk10: Hi, good morning. Thank you for the call. Just one quick question on the... land acquisition that the sponsor will be making. Is there any percentage, is it more towards manufacturing or logistics? Thank you.
spk04: Thank you, Alan. You know, it's in markets in which we have depleted our – the sponsor has depleted its land bank. So I think it's pretty balanced in terms of manufacturing and logistic locations. So we will see additional land in Mexico City and Guadalajara, which are the logistics markets. And on the manufacturing markets, it's Monterey. You know, the sponsor has pretty good land in Juarez and Reynosa so far. So this is a huge effort which is building for the future, and this will be a major competitive advantage as, you know, the land bank is jumping from 5 million square feet capacity today to tripling more to around 15 million feet of capacity. So we're excited about the business opportunities going forward.
spk02: Thank you.
spk01: Again, if you would like to ask a question, press star then the number one on your telephone keypad. Again, it's star one on your telephone keypad. There are no further questions at this time. I will hand the call over to Mr. Luis Gutierrez, CEO for Closing Remarks.
spk04: So thank you very much to everyone for your interest in Fever Prologis. We are very excited to see the acceleration of our business during 2021, which is positioned to be the best year for logistic real estate. and I would like to encourage you guys to read our sustainability report, which was just issued last week. It is very interesting, and this is a sector-leading effort. So I'm looking forward to seeing you guys now that the economy is beginning to reopen, to see you in person and not virtually, and looking for a great third quarter. Thank you.
spk01: This concludes today's conference call. You may now disconnect.
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