Fibra Prologis Reit Ctfs

Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to the FIBRA Prologis third 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, again, Press the star 1. I would now like to turn the conference over to Alexandra Violante, Head of Investor Relations. You may begin.

Thank you, Desiree, and good morning, everyone. Welcome to our third 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 had 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 Giro, our CFO, who will review results and guidance. Also joining us today is Federico Cantu, our head of operations. With that, it is my pleasure to hand the call over to Hector.

Thank you, Ale, and good morning, everyone. Today, I would like to start by talking about the most important transaction that Fibra Polois has made to date. In early August, we successfully closed the initial tender offer for Fibra Terafinas outstanding certificates, resulting in our acquisition of 77% ownership. Since then, we have taken control of Terafinas governance and have been working to take the buildings to our operational standards. The integration of the company is on track and moving as expected. We will continue with the strategy that Fibra Prolois has followed. which has proven to be successful, and we expect to unlock important value creation from Terrafina's assets of providing service and solutions for customers. Early next year, we will enter into an accretive process of asset recycling. We will sell non-strategic assets in order to continue investing and enhancing our market participation within our six markets. Moving into another topic, I'd like to provide some highlights of the quarter. Occupancy in our portfolio remains at great levels, above 98%. The Terrafina portfolio is 95% occupied. We continue to have an impressive rent change on rollover of 56%. Additionally, since our last call, we acquired properties in Mexico City and Tijuana, adding 2 million square feet, evidence that our teams are advancing goals even as we integrate Terrafina. Describing market conditions, I will start by addressing the broader macro environment. Volatility increase in the quarter as the judiciary reform in Mexico was approved and U.S. elections are at peak intensity. These factors slow down decision-making from clients, particularly in the manufacturing markets. On the other hand, domestic consumption continues on a favorable trend, with year-to-date retail volumes up 2.4% and retail sales for the quarter up 3.2%. In alignment with this, we have seen robust leasing activity from logistics, e-commerce, and retail players, which are clearly showing an interest in increasing and improving the quality of the footprint. Net absorption in our six markets was 7 million square feet, in line with the average of the last four quarters. Leasing activity was robust at 9.5 million square feet, benefited by pre-leasing activity in Monterrey, taking the year-to-date figure to almost 34 million square feet. Still, as we mentioned, we have observed a decline in energy in urgency from tenants to get space, causing vacancy rates to marginally increase in some markets. Overall, vacancy increased 30 basis points versus last quarter. reaching 3%. Despite of lesser speed on decision making, market trends increase 1%, a number slightly below our expectations. We are adjusting our market trend growth expectations for 2024 to meet single digits, still a very healthy rate for our business. Let me provide some additional color per market, as we are seeing different trends at local level. In Mexico City, vacancy remains exceptionally low, at 2.2%, with moderate absorption of 1.3 million square feet due to the lack of adequate space. We continue to see a strong underlying interest from clients, particularly in the CTT corridor, where vacancy is less than 1%. Mexico City now represents almost half of Fibra Prologis assets value, with 90% of such exposure in these main CTT corridors. Monterrey is showing mixed trends. New leasing activity of 4.2 million square feet was in the high end of the range of recent years, mostly from manufacturing and e-commerce. However, vacancy increased 80 basis points to 2.7% because of limited and speculative leasing. We are taking a more cautious approach on this market considering elevated construction activity from non-institutional landlords. In Guadalajara, A strong demand pushed vacancy down to 1.3%, with minimal new supply and rising pre-leasing activity. This tech hub is attracting more tenant interest, and we are optimistic about its continued growth. Regarding Tijuana, vacancy declined 50 basis points to 2.5%, benefited by healthy absorption and a slow progress on completions. The few buildings that were delivered have been quickly absorbed, which is a positive read-through of our portfolio. Regarding Juarez vacancy, reached 7.6%, impacted by elevated completions. We believe vacancy should stabilize gradually as the construction pipeline has declined to less than half from peak. Similarly, Reynosa vacancy increased 70 basis points to 5%. We think these markets have been particularly impacted by slow decision making and should start posting healthier figures once that there is more clarity in the macro environment. A brief comment on the non-prologist markets such as El Bajio and Saltillo. We have seen a decline in vacancies well below the historical average, as some demand from our key markets has flown to these markets aiming from energy availability. These solid trends should support our asset recycling strategy going forward. In closing, we remain confident in our portfolio's resilience and our ability to navigate these fluctuations. We are seeing strong fundamentals in key markets that represent 80% of our portfolio. In addition, our best-in-class balance sheet leaves us well positioned for growth in any environment, as Jorge will discuss. Finally, as you all know, we remain committed to our shareholders and always placing their interest first. With that, I will pass the word to Jorge.