Fibra Danhos

Good day, everyone, and welcome to the Fibra Danhos second quarter 2026 conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. You may register to ask a question at any time by pressing star 1 on your phone. Please note, this call is being recorded, and I'll be standing by for assistance. Now, I'll turn the call over to your host, Rodrigo Martinez. Please go ahead, Rodrigo.

Thank you very much, Elisa. Hello, everyone. I am Rodrigo Martinez, and I run Investor Relations for your company. At this time, I'd like to welcome everyone to Fibra Danhos 2026 Second Quarter Conference Call. Sir, according to the report yesterday, if you did not receive a copy, please do not hesitate and contact us. Please be aware that they are also available on our website and in Mexico's Stock Exchange website. Before we begin our call today, I would like to remind you that forward-looking statements made during today's call do not account for future economic circumstances, industry conditions, or financial resource. These statements are subject to a number of risks and uncertainties. All figures included wherein we're prepared in accordance to IFRS standards and are stated in nominal Mexican unless otherwise noted. Joining us today from Fibra Danhos in Mexico City is Mr. Jorge Serrano, CEO of Fibra Danhos, and Mr. Elias Misrachi. Now I will turn the call today to Jorge Serrano for opening remarks on financial and operating means. Jorge, please go ahead.

Good morning, everyone. Thanks for joining us today. Let me share some initial remarks on a solid and steady second quarter for fibra Danhos. Total revenues of 2 billion pesos were 9.4% higher against last year and reflect increases of 8% on fixed rent and 18% on overage and on parking revenues. NOI reached 1.6 billion An increase of 8.5% year over year with a 78% margin. AFFO reached 1.2 billion pesos that accounted for 75 cents per CBFI. Distribution per CBFI with economic rights remained at 45 cents. Our dividend is equivalent to 1.6 times taxable income and represents a payout ratio relative to AFFO of 60%. With has been used to partially fund close to 50% of our CAPEX needs, which are complemented with additional debt. Balance sheet, however, remains strong at 14% leverage. During the quarter, we refinanced our Danhos 16 bond maturity with two new SLB issuances and other credit facilities. The structuring process continues revealed a strong appetite for Danhos' debt risk profile, finding strong demand from institutional investors and banks. Following this transaction, we improved our debt profile while preserving the financial flexibility and competitive funding costs. Overall, portfolio occupancy reached 89%, with retail occupancy reaching almost 95%, and office portfolio occupancy at almost 80%. While industrial occupancy stood at 86%, explained by the conclusion and delivery ahead of schedule of Building 2 at Palomas, which increased GLA and weight on occupancy as it is only partially leased at 30% at the time being. Lease spread. on our operating portfolio, calculated on 32,000 square meters, renewal agreements reached 4.6%, as it was triggered once again by strong performance on our retail portfolio. On our CapEx pipeline, Danhos Industrial Palomas Building 2 has been completed and delivered. Building 3 on its first phase at Palomas and Buildings 1 and 2 at Perum Express Projects are scheduled to be delivered later this year. Finally, Oaxaca and MISU construction phase continues and advances on time and within volume. Thanks. We will be happy to address any questions you may have.

If you'd like to ask a question, please press star 1 on your phone now and you'll be queued in order. And we'll pause briefly to form our queue. Our first question today comes from Alejandra Obregon of Morgan Stanley.

Hi, good morning. Thank you for taking my question. I actually have two. The first one is on your non-property revenues, so particularly when I look at media and parking, they seem to be accelerating quite meaningfully this quarter and perhaps growing faster than the core rental business. So I was hoping if you can elaborate on the key drivers behind this performance. Are there any specific perhaps commercial or advertising or media initiative that you are implementing that are contributing to this momentum and then the second question is a little bit more strategic so when we look at your portfolio clearly retail and industrial continue to drive growth so I just wonder if there's a scenario where perhaps retaining all these assets just creates a higher opportunity cost for you than just recycling some of them maybe into development opportunities in in what is clearly your core growth engines. So just wondering how do you evaluate that trade-off today? Those are my two questions. Thank you.

Hi, Alejandra. This is Javier. Thank you for the call. Regarding parking revenues and marketing revenues, I would say marketing revenues were positively impacted by the World Cup this second quarter, especially during the month of June, which was obviously a very important month for our shopping malls. So that's probably more of a systemic one-time effect. But I mean, marketing revenues have been growing, but just I think not at the same pace that we saw them this last quarter. Regarding parking, this is more of a structural increase, so this is not a one-off. We have been able and we continue to be able to increase the parking revenues and the parking terrace at our malls. So every year we do adjustments to our parking terrace, and that's been the main driver for the increase in revenues. Regarding your second question, we're not in the market of selling properties. We haven't been an active seller. And, you know, the office assets that we have, you know, Torre de Reyes, Reformados 22, Toreos, which I would say these three account for probably 80% of our portfolio. These are not properties which we believe are replicable or would be able to sell. So we do intend to keep on developing retail and industrial, but we just don't see recycling the office as one of the sources of capital to do so.

got it and perhaps I may follow up so when you evaluate whether to develop or hold or perhaps if monetizing an asset would be ever an opportunity what will be the KPIs that would guide your decision making how do you measure your projects internally we think a lot about replacement cost and we think about not only as a financial metric but if we were able to

sell, for instance, a building such as Torre de Reyes or Reforma 222, and we would try to build another one, we wouldn't be able to do so. So I think that's something that drives the way we think about our portfolio, which is irreplicable assets. So even if we have a great offer to buy Torre or to buy Torre de Reyes, we would get that money and we wouldn't be able to build another Torre de Reis because it's a duplicable asset in the best location in the city. So that's one of the ways that we think about our portfolio. As you know, we don't have hundreds of properties. We're very keen and very specific on where we want to develop and what kind of assets we want to own.

And just to complement Elias, I think our strategy has been and will always be to focus on quality assets, having a portfolio of quality assets, including the office sector. I think it's on our vision for the medium and long term. So I think that's the most important measure to consider with my new question. Thanks.

Thank you, Jorge. That was very good.

Next, we'll hear from Igor Machado of OpenTax.

Good morning, team. Thanks for taking my questions. I have two questions here on the industrial portfolio. So, first one is on the problem of Building 2. As it was delivered with 31% of the rate, I'm just trying to understand here what you expect on the timeline to stabilize the updates of the assets. And the second question, also on industrial, how much further capital do you expect to invest in the industrial portfolio and what returns you can cause prioritizing?

That's it.

Thank you.

Hi, Igor. So building two at Palomas, was a spec building that we developed. So during the of the construction, we were able to lease 20,000 square meters to a logistics tenant, which is now operating and will soon start paying rent. There has been a lot of interest for this building. A lot of clients coming in and looking at the building. It was just recently finished, actually. We're finishing the last of the buildings, so it just came to market. And we expect it to be released, you know, within, I'm going to be conservative, but within a year at the most. So we believe before that it should be released. With this building, Palomas is basically fully developed. We've almost finished the construction there. And along with building three, which will come into operation in December, but it's already built to suit a building one, which is already leased. Iron Man is basically finished. And just to give you some more information on our industrial portfolio in Tultepec, we're going to deliver two buildings in , sorry, we're going to deliver two buildings in September, between August and September. So those are 100,000 square meter buildings. We actually just launched the construction also of a 30,000 square meter building, which is a spec building and should be ready by year end, so December, January. And we also have additional land to do a 70,000 square meter building there, which we're looking at potential build-to-suit options. So, you know, industrial continues to be an attractive proposition for us. I think that we don't have a specific capital target that we want to achieve. It's more, I would say, project and opportunity driven. So if we continue to find great locations and specifically with opportunities where we can lower the risk of the development and have basically tenants before starting or as we're starting the works, We're going to continue to invest capital if it makes sense to us as a business opportunity. And, you know, the returns we're achieving, I would say, are in the low double digits, so low deeds.

Very good.

Thanks.

From J.P. Morgan, we have Felipe Barragan.

Hey, good morning, Danhos Sintet. Thanks for the call for taking my question. So I just want to understand the component of the variable rents. So obviously right now in the macro environment that we're at, we're seeing a decelerating and the sort of depressed consumer environment. So I just want to understand what drove the growth of the variable rents in your quarter. If this is more of a roadmap effect, if there's something a bit more structural as in where your assets are located within Mexico City where you guys saw a bit more certain type of consumer segment. I just want to get more color on that. Thank you, guys.

Hi, Felipe. This is Jorge. I mean, of course, this recent event has effect on revenue for tenants and has an effect on overage. But there was also an effect, a change in agreements with an important retail chain that changed agreements from fixed rents to variable rents. And that has had an impact beginning a couple of years ago. So that's, I would say it's a combination of you know, consumption dynamism that is still being seen in our shopping centers, and this change on the agreement with a specific retail chain. And that has had an important effect on overage.

Got it. So, just a quick follow-up. So, can we expect overage to continue accelerating, or do you think we can see it at these levels still?

Well, it will stabilize as we reach the time of where the agreement was changed. It will, let's say, it will become steadier, the growth on the bridge.

I think if you compare quarter over quarter or year over year, obviously when you're comparing versus a year that didn't have that agreement, then the growth is going to be higher. once we start doing, I would say, apples-to-apples comparison, then that should be a more, I would say, realistic indicator of growth. Got it. Thank you very much, guys.

Next, we have Alain Macias of Bank of America.

Hi. Good morning, and thank you for the call. Just a question on the office segment. The trend has been positive. Do you think you can obtain 90% levels in over a year or more than that? What are your thoughts on that? Thank you.

I mean, we're looking at new tenants who are leasing space. Gradually, we think that the market has reactivated, and it's a much better market than it was two or three years ago. So we continue leasing. We're getting some momentum. I think it's hard to commit to a specific number, but we're obviously putting a lot of effort, and our team has put a lot of effort in getting the deal done. Perfect. Thank you.

Once again, everyone, if you have a question, please press star one. And we'll hear from Gordon Lee of BTG Petulant.

Hi, good morning. Thank you very much for the call. I have a question, which I guess is a question that extends from Alejandra's question on M&A, but more thinking about the buy side. I know Danhos historically has preferred to develop. But I wonder, given your increased interest in the industrial sector, and considering that over the next 12, 18, 24 months, we're going to have a lot of flow of properties coming from secales and serpies that are maturing, would you consider acquiring industrial properties to increase your GLA there? And similar, what would be the KPIs that you would look at? Thank you.

Hi, Gordon. Again, this is Elias. I mean, I think we've never been close to doing M&A, I think, to be done at the right price, and it's something that needs to be, I would say, equivalent in terms of quality, and it needs to be comparable to our portfolio. So, obviously, there's an interesting deal that at the right price makes sense, and the locations are something we should work with, and the quality is something that we should work with. For sure, we're going to explore it. I think for us there is trying to figure out how does one of these portfolios, which we've seen have traded at 6.5% or 7% cap rates, pairs with our development yields. So if we can develop a AAA building with a AAA tenant at a low double digit yield, and that same building in probably not as great as a location is trading at a six and a half, then that's the case which makes it hard for us to go and buy. Usually the buyers of those portfolios don't have the development capability. That is the truth. So we will for sure examine all possibilities and at the right price and the portfolio is a good fit for us, we will for sure explore it.

And if I could just have a quick follow-up, and thank you, Elias. Thinking about development, it looks so far like the bulk of what you've developed on the industrial side has been more in logistics or logistics-type markets. Are you looking to expand that also more into sort of light manufacturing areas or no?

I think the areas or the cities that we're targeting are mostly logistics-oriented. Right now, our main focus has been Mexico City. We have been looking at projects in Monterrey, Guadalajara. We haven't seen anything in the border markets. Naturally, because of these cities and the project that look out in these cities, I would say our portfolio is probably mostly going to be logistics driven, at least in this phase.

Super. Thank you very much.

We have no further questions at this time. Eddie, it's back over to you for any additional or closing comments.

Thank you, everyone, for joining us today.

Please do not hesitate in contacting us, and we ask for further questions. We are always available, and we'll see you on our next conference call.

That concludes our meeting today. Thank you for joining.