Fibra Prologis Reit Ctfs

Hello, everyone, and welcome to the February 2nd Quarter Earnings Conference call. Please note that everyone is on listen-only mode to avoid any background noise. You'll have an opportunity to ask a question to our speakers later in the Q&A session. If you'd like to ask a question by that time, please press star followed by one on your telephone keypad. I'd now like to hand over the call to Alexandra Violante, head of IR. Please go ahead.

Thank you, Ellie, and good morning, everyone. Welcome to our second 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 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 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 this call as well. If you have not already done so, I will encourage you to visit our website at FibroApologist.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 Giro, our Senior Vice President of Finance, who will review results. Also joining us today is Federico Cantu, our head of operations, and Alejandro Chabelas, our head of evaluations and research. With that, it is my pleasure to hand the call over to Hector.

Thank you, Ale, and good morning, everyone. Early last month, we had presidential elections in Mexico. Setting aside political preferences, we are pleased to see that Claudia Sheinbaum has placed special attention to our sector. As part of the new administration agenda, for the first time, there is a specific focus to enhance industrial parks growth and development. We are having initial conversations where specific plans regarding energy, entitlement, and security have been highlighted. We expect this trend to continue, as nearshoring development will be an important priority on the national agenda going forward. We had strong results continue to demonstrate a well-executed strategy. We remain optimistic for the remainder of the year. Let me provide you some highlights of the quarter. Market demand in the quarter was at record high levels at 11 million square feet, growing 10% year over year. Accelerated e-commerce activity drove this. As a reminder, e-commerce sales in Mexico grew 25% last year, much higher than the 10% global average. E-commerce players in the country are responding proactively, increasing their footprint. Occupancy in our portfolio remains at great levels, above 98%. We reached a new record in our rent change and rollover with 58% and we continue to see a strong same-store cash NOI growth. Additionally, last week we announced an acquisition from our sponsor. It is a facility located in Reynosa in one of our parks, leads to a prologist customer that is expanding its operation in Mexico. Also, as you all know, we made a public tender offer for Terrapina. I believe we can add important value to those assets through customer service and the adequate properties improvement. I am optimistic about the outcome of our plan, and Jorge will provide more color about the process. Talking about market conditions, net absorption in our sixth market was 5.5 million square feet, a strong number, but down versus the exceptional level seen on previous quarters. The strong leasing activity did not translate fully to net absorption due to a high level of pre-leasing and to a lesser extent due to some space consolidations. Net absorption is still well ahead of pre-pandemic levels. Vacancy increased 100 basis points to 2.7%, a very healthy level. As a reference, our underwriting standards always include a 5% vacancy as common practice. Our third-party appraised values increased approximately 1%. This is the sixth quarter in a row where we have experienced appreciation in the value of our portfolio. Let me provide additional color. Mexico City saw practically no net absorption due to the lack of suitable product for clients' needs. Vacancy remains at low levels of 1.6%, and there were no deliveries of space in the quarter. We expect net absorption to ramp up meaningfully in the second half of the year, as we expect substantial deliveries of pre-listed space, particularly for e-commerce. Monterey keeps on being the market with the highest net absorption at 3.7 million square feet, stable versus last quarter. However, we saw significant acceleration in deliveries, leading vacancy to increase slightly. vacancy remains at very healthy levels below 2%. Guadalajara vacancy stands at 2.5%. We believe this market will continue with upward trends as the construction pipeline is low, while tenants are actively looking for additional space. Regarding the border markets, vacancy reached 3.9%, which was led by elevated supply in these markets. However, Space on the construction in these markets has declined by half from its peak, and we expect balanced supply-demand conditions going forward. To summarize, we had a strong operations and all-time record rent change during the first half of the year. We have visibility through our portfolio and remain optimistic on market conditions for the rest of 2024. We have a 51% in-place rent to market, This allows us to continue pushing rents up and be able to create value to our portfolio. On the external front, we ratify our acquisition guidance, and we expect to reach the mid to high end. Our sponsor currently has 4.8 million square feet under development, and we are working as well on sizable third-party acquisitions. Our balance sheet is one of our important competitive advantages. that provides us flexibility and ample firepower going forward. Finally, as you all know, we remain committed to our shareholders and always placing their interests first. With that, I will pass the call over to Jorge.