Retail Fibra to Test Asset Class Endurance

Mexican retail property-focused real estate fund Fibra Shop is set to price a MXP5.8bn ($464m) IPO today, in a transaction that will offer an indication of continued investor demand for the Fibra asset class. The deal was heard “comfortably” oversubscribed as of Monday afternoon. The fund is selling 214m primary shares, including a 15% greenshoe option, and 98m secondary shares at MXP17.50-MXP19.50 each, meaning a MXP5.77bn sale at the midpoint. Three property developers, Grupo Cayon, Grupo Aportante Frel and Grupo Central de Arquitectura are the secondary sellers. The trio is putting eight commercial properties into the fund to start. The proceeds raised will go to finance existing loans and real estate acquisitions, and to new purchases. BTG Pactual, Actinver, and Bank of America Merrill Lynch are international leads, with Banorte joining on the local side. “I think we’re getting close to that point where the market may tire of [Fibras]. It may not happen with this transaction, but when you have all of these transactions, valuations can stretch,” says a US-based EM equity portfolio manager who has participated in previous Fibra deals. Fibra shop would be the sixth Fibra to IPO, and the ninth Fibra transaction overall.