Debut Mexico REIT Fails to Launch

What was to be Mexico’s first REIT has been postponed, according to bankers managing the transaction. The Fibra Uno deal brought by Grupo E, expected to raise around MXP5bn, failed to generate demand within its target MXP21-MXP23 range, according to sources familiar with the deal. They add that the book was well bid at MXP18. The 230m certificate deal would have raised MXP4.1bn at that price, assuming the maximum number of shares was sold. It started marketing last month and was targeting a February 3 sale. Mexico has been waiting years for its first REIT. Such a deal, known as a fibra locally, is possible following regulatory changes last year. Fibra Uno was to consist of 12 industrial, commercial, office, and mixed-use properties located throughout Mexico and totaling 484,000m2. The commercial properties had an average occupancy rate of around 90%, but the industrial properties’ rates were lower, notes a banker away from the deal. He also says that a fibra with more institutional backers might have received more interest, versus one backed by family investors. Grupo E consists of 60-70 owners, led by the El-Mann and Attie families. Santander was lead coordinator in Mexico, with BAML and UBS as global coordinators and Mexican bookrunners and Protego as a Mexican bookrunner. Proceeds were to have been used to fund the acquisition of 5 additional commercial and mixed-use properties totaling 189,000m2. About 50% of the deal was aimed at international investors, who were heard keenly watching it. “There is a great deal of wealth tied up in Mexican buildings and property,” says a London-based EM equities portfolio manager who had planned to participate. He notes that he was hoping the debut would inspire a string of similar deals, creating a potentially strong asset class. The suspension of Grupo E leaves the asset class with an uncertain fate. A second fibra, from Construtora Planigrupo was filed recently, targeting MXP2.75bn.