Fibra Prologis Reit Ctfs

Thank you for standing by and welcome to the FEBRA Prologis Second Quarter 2026 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 that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Matsarat Chavez, Head of Investor Relations. Please go ahead.

Thank you, Tiffany, and good morning, everyone. Welcome to our second quarter 2026 earnings conference call. Before we begin our prepared remarks, please note that all information disclosed during this call is proprietary and all rights are reserved. This material is provided for informational purposes only and is not a solicitation of an offer to buy or sell any securities. Forward-looking statements made during this call are based on information available as of today. 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 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. If you have not already done so, I invite you to visit our website at FibraPrologis.com and download our earnings materials. On today's call, we will hear from Jorge Girault, our CEO, who will disclose our strategy, market conditions, and will review results. Also joining us today is Federico Cantú, our Head of Operations. With that, it is my pleasure to hand the call over to Jorge.

Thank you, Montse. and good morning everyone. As I begin my tenure as CEO, I'm honored to lead Fibra Prologis. With an exceptional team and benefiting from the strength of Prologis platform, we are well positioned to enter this next phase with strong continuity across the leadership team, the strategy and operating approach. Our strategy remains unchanged. We will continue to run this business with discipline, focusing on high quality industrial markets in Mexico, serving our customers, and allocate capital thoughtfully to create long term value. Today, our portfolio comprises approximately of 87 million square feet across more than 500 properties in 14 markets throughout Mexico, making Fibra Prologis the largest publicly traded industrial real estate company in Latin America by market capitalization. We manage the portfolio as one integrated business, while directing new investments toward the market with the strongest long-term fundamentals, such as limited land availability, modern logistics infrastructure, and customer demand. Our relationship with Prologis, as our sponsor, is a significant competitive advantage. It provides access to global customer relationships, market intelligence, Capital Market Expertise Technology and operating capabilities that strengthen our execution and help us serve our customers better. Turning to Mexico, after an exceptional period of growth driven by e-commerce and nearshoring, industrial near-term environment has become more challenging than it was several years ago. With uncertainty surrounding USMCA, In the context of slower economic growth and infrastructure constraints, customers remain measured in their living deficient, while elevated meal supply in certain areas continues to pressure occupancy and market price. Net absorption increased to 6.1 million square feet from 4.3 million in the first quarter, but remained below completions of 7.4 million square feet. As a result, market vacancy increased 10 basis points during the quarter. Despite these near-term headwinds, Mexico's long-term fundamentals remain intact. Its strategic location, skilled workforce, integrated manufacturing base, central role in North America's supply chain, and sound monetary policy continue to support long-term demand for modern logistics and manufacturing facilities. Our portfolio End of the quarter with occupancy 250 basis points above the market, reflecting the benefits of the Prologis platform. In addition, we have a 30% embedded lease mark to market, which reflects an opportunity to keep on growing cash flow over time. As we all know, markets move in cycles. Our objective is not simply to perform well where conditions are strong, but to outperform across the cycle. The last several years rewarded market momentum. The next phase is likely to reward execution, capital discipline, and operating excellence, which we believe are enduring strengths of Fibra Prologis. Moving to our financial results for the quarter. FFO totaled $102 million, or 6.13 cents per CBFI, a 4.4% growth year over year, on a CBFI basis, mainly driven by rent increase and the contribution on a fully integrated Serafina portfolio. AFFO was approximately $86.5 million, in line with our expectations. On the operation front, we live 2.3 million per feet, Ciudad Juarez being the largest contributor of leasing volume. Period end occupancy was 95.8%, while average occupancy was 96.1%. Same-store cash and net affected NOI increased approximately 13% and 9% respectively. Net affected rain change remains strong at approximately 41% for the quarter and more than 53% over the trailing 12 months. On the capital front side, we acquired a 590,000 square feet facility in Mexico City for $94 million. The properties 100% leased in U.S. dollars to our global e-commerce customers. During the quarter, the performance threshold under our promote structure was achieved, resulting in $115.5 million fee up payable to Prologis in CBFIs. Since our IPO, Fibra Prologis has delivered a 16% annualized total return to investors, which is the highest among peers. Turning to the balance sheet, We continue to maintain a prudent financial profile. Our loan-to-value was approximately 25% and FEBRAC Rated Rating was ratified at BBB+, with a stable outlook in May. Financial flexibility remains one of our greatest strengths, and we will continue to deploy capital selectively while keeping balance sheet capacity. Moving to ESG, we have released our 2025 Impact and Sustainability Report. which introduces FEBRA Prologis 2030 goals and includes disclosures prepared in accordance with IFRS S1 and S2. This is the first regulator climate risk filing across the Prologis network and provides an important foundation in our global footprint. I'm very pleased that the Mexican team is part of this important milestone, which reinforces our commitment to sustainability, transparency, and long-term value creation. Finally, regarding guidance, we are keeping our guidance unchanged, which you can find in page 8 of our supplemental financial information. In closing, I want to thank our entire team for their dedication and execution. Their commitment is what allows us to deliver strong long-term results through changing market conditions. We enter this next phase with a high-quality portfolio, a conservative balance sheet, and an experienced team. and the capabilities of the Prologis platform. With that, Tiffany, please open the line for questions.