The Business Year

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Simón Galante ZAGA

Director General, Fibra Hotel

Four years ago we started the Fibra brand with 17 hotels. From 17 hotels in 2012, today we have 85 hotels. It was impressive growth and a great opportunity to consolidate a fragmented business in Mexico. It is risky to get into one enterprise rather than get into 85 and is risky to get into a developer that a company does not know through a public holding company. Many institutional investors are not allowed to get into a real estate risk structure, and this gives us a great opportunity in a tax-efficient structure with Fibra to invest in a liquid option other than real estate, where in order to get liquidity a company has to sell the building. There is a lack of supply in the market, and there are great opportunities.

Daniel Braatz

CEO, FHIPO

We brought competition and foreign investment to this market, as around 60% of FHIPO’s IPO resources came from institutional investors outside the country. This is important because it is the first time that private capital comes to fund mortgages in Mexico. One of the strongest attributions of our portfolio is that, in Mexico, the origination of Infonavit and Fovissste represents 80% of the mortgage market, and these institutions have created a sort of utility for originating and servicing mortgages. Currently, we have, in the Mexican stock market, the highest dividend yield in the country. We are a much-differentiated stock, because we are a hybrid between a bond and stock. As long as we are able to originate and monitor on a safe basis, it is a low-risk vehicle with a high dividend yield.

Óscar E. Calvillo

Director General, Óscar E. Calvillo

In the year ahead, we will focus entirely on creating value. We do not need to grow more to create value; we need to grow the NOI and dividend per share. It is not the right time to buy more properties because of the high valuation of the individual properties compared to our portfolio, so we will sell instead. If we can make a great return in developing a joint venture where we commit 20% of the equity and then put some of our staff to work for a fee to make the investment more profitable, then that is how we will create value in the coming year. We need to wait and see what happens politically between Mexico and the US. We are also exploring investments in the three main leisure markets: Riviera Maya, Riviera Nayarit, and Los Cabos. Also, in terms of joint ventures we are looking at the major cities of Mexico City, Guadalajara, Monterrey, Puebla, León, and Tijuana primarily.

Juan A. Monroy

CEO, Fibra Macquarie

Our investments from day one have been in industrial and retail. We have a small number of offices as part of our mixed-use properties. That has allowed us to acquire a higher quality portfolio, which creates value for our investors. We acquired 100% of the industrial properties owned by GE and about a third of the properties from another developer. This transaction was subject to us raising capital in the public markets. We held our IPO in December 2012 for USD1.1 billion, which was the largest real estate transaction in the region at that time. Combined with credit facilities from both Metlife and GE, we completed the formation transactions for around USD1.5 billion. We are the third FIBRA in Mexico and have since invested over USD2.5 billion to become one of the largest property owners in the country.

Jorge Ávalos

Director General, Fibra MTY

We are focusing on the states that have grown above average in the country, which is mainly in the northern corridor of the country, the Bají­o part of the west coast, and obviously, Mexico City and central Mexico. We also took into consideration the economic and trade activity. The NAFTA corridor which is Mexico City going through Bají­o and northeastern Mexico into the US is a key market for us. Tijuana has access to Asia Pacific markets, and we believe that the trade between Mexico and South America is going to explode. Finally, the transpacific corridor, which is everything that is between the Pacific and the Gulf of Mexico around the Bahia area, is going to be interconnected. By asset class, we are a diversified FIBRA. We are not only invested in hotels and retail. Our focus is office space and corporate real estate, and right now, we have about 60% of our net worth coming from office buildings.

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