Fibra Prologis Reit Ctfs

Good day and welcome to the Fibro Prologis first quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. We ask that you please keep questions to one per person. If you would like to ask further questions, please rejoin the queue by pressing star 1. For operator assistance throughout the call, please press star 0. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Alexandra Valente, Head of Investor Relations, to begin the conference. Alexandra, over to you.

Thank you, Gavin, and good morning, everyone. Welcome to our first quarter 2024 earnings conference call. Before we begin our prepared remarks, I would like to remind everyone that all the information presented in this conference call is proprietary and all rights are reserved. The information has been prepared only for information purposes. It 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 as 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 the call as well. If you have not already done so, I will encourage you to visit our website at fibraprologist.com and download this material. Today, we will hear from Hector Ibarzabal, our CEO, who will discuss our strategy and market conditions, and from Jorge Giró, our Senior Vice President of Finance, who will review results and guidance. Also joining us today is Federico Cantu, our Head of Operations. On February 13, we announced a non-binding proposal in respect of a potential tender offer and exchange transaction for up to 100% of Terafina's certificates. This call will focus on our first quarter results. The company will not provide comments related to this transaction beyond what it is included in our prepared remarks. With that, it is my pleasure to hand that call over to Hector.

Thank you, Ale, and good morning, everyone. 2024 continues in the right momentum, which is reflected in our outstanding operational and financial results. As a consequence, we are adjusting our guidance upwards, and Jorge will provide more color on this. I would like to present some highlights of the quarter. We continue to see an occupancy of nearly 100%. In addition, we have a strong cash flow generation reflected in the company's same-store cash NOI, mainly due to our rental growth on rollover, which was close to 48%. Regarding the capital markets, in early March, we successfully raised $570 million at 70 pesos per certificate and above NAD. We plan to deploy most of these monies before year end, and we appreciate the extraordinary support received from our shareholders. Now, I'd like to talk about market conditions. Net absorption in our six markets was 8 million square feet. stable versus last quarter. Vacancy increased 20 basis points to 1.7%, still a very adequate level. Furthermore, due to the sharp increase in entitlement periods, lack of energy, and rising replacement costs, we saw a 15% decrease in construction starts to 7.1 million square feet, the lowest level since 2021. We believe vacancy will stay around current levels for the remainder of the year. Because of the tightness we see across all of our markets, as well as an increase in leasing activity in the first quarter, we are convinced that we will achieve a strong rent growth of low double digits during 2024. Our third-party appraised values increased approximately 8%, driven entirely by rent growth. We expect rents to continue growing and cap rates to remain stable. Due to this, we have a positive outlook for our values. Let me provide additional color. Energy and infrastructure availability for new development remains very limited. We believe this condition is preventing customers from having more accelerated expansion plans. As has been the case in recent years, Monterey was a market with the highest net absorption at 3.7 million square feet, with vacancies stable at 1%. We saw an important increase in Monterey leasing activity in the quarter, mainly releasing from Asian customers. As we have anticipated, Mexico City saw a sharp decline in net absorption, mainly due to the lack of suitable product for clients' needs. Vacancy remains at very low levels of 1.6%. For the first time in many years, pre-leasing represented the bulk of leasing activity in the quarter, reflecting clients' strong need to secure space in Mexico City. Tijuana continues with a low level of vacancy at 2%, with limited space under construction and stable demand. Regarding Juarez and Reynosa, while they have seen a slight pickup in vacancy, both remain below 3% and with very limited supply. To summarize, we are optimistic on this year's outlook and its favorable market conditions. Our 49% in-place-to-market provides us pricing power to continue increasing rents and values on our portfolio. On the external front, our current plan is to invest around $400 million this year. Our sponsor currently has 3.7 million square feet under development, and we will continue to evaluate some identified third-party opportunities that are accretive and aligned to our business model. In terms of our balance sheet, we believe it is the strongest in the sector and a very important competitive advantage. Finally, we remain committed to our shareholders and putting their interests first. With that, I will pass the call over to Jorge.