Fibra Mty FFO hit 1.52 pesos per certificate, topping the 1.50 mark for the first time. Rent gains and lower vacancy drove the beat. The next report is due late October.
Fibra Monterrey reported second-quarter funds from operations of 1.52 pesos per certificate, breaking above the 1.50-peso mark for the first time. The figure beat the company's own forecasts and analyst estimates, driven by rent increases across its industrial and office portfolios.
Same-property net operating income rose 8.8% in the quarter, Jaime Martínez Trigueros, the chief financial officer, told analysts on the Aug. 3 call. That came from contractual rent escalators and higher occupancy. The weighted average lease term extended to 7.5 years from 7.1 in the first quarter, a sign tenants are locking in space at current terms.
The vacancy rate fell to 4.8%, below the company's own 5.5% midpoint guidance. A 28.4% occupancy gain from leasing activity more than offset move-outs. The largest new tenant came from the automotive supply chain, taking 200,000 square feet in a build-to-suit project, Jorge Avalos Carpinteyro, the chief executive, said.
Debt metrics stayed within the range Fibra Mty has held since 2021. Loan-to-value stood at 34.9%, down slightly from 35.1% in the first quarter. The cost of debt rose about 16 basis points quarter-over-quarter to 9.51%, reflecting rate resets on floating-rate tranches. Martínez said the company has no material refinancing needs until late 2027.
Development starts totaled 310,000 square feet in the quarter, all of them pre-leased. The build-to-suit pipeline sat at 800,000 square feet, a size that would represent roughly a 10% increase in the portfolio's leasable area. Avalos said the company is being selective about new starts, prioritizing tenant commitments over speculative construction.
The distribution per certificate was 1.07 pesos, covering 70% of FFO. That payout ratio is in line with the company's stated policy of distributing between 65% and 75% of quarterly FFO.
On the analyst call, Adrian Huerta of JPMorgan asked about the pace of lease-up in the office segment, which has lagged the industrial side. Martínez said office vacancy now sits at 14.2%, down from 15.8% a year ago, and that the company has signed two new tenants this quarter for a combined 35,000 square feet. He did not provide a timeline for reaching the pre-COVID occupancy level of about 90%.
Goldman Sachs analyst Wilfredo Jorel Guilloty asked about the potential impact of nearshoring demand on the portfolio's vacancy trajectory. Avalos said Fibra Mty is seeing inbound interest from logistics operators that serve cross-border e-commerce clients. Those leases tend to be shorter, typically three to five years, versus the manufacturing tenants' average of 10 years.
Fibra Mty's outstanding certificates traded recently at about 12.80 pesos, implying a dividend yield of roughly 8.3% based on the current distribution run rate. The next quarterly report is due around late October.
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