US investors remain eager to invest in Mexican real estate investment trusts known as Fibras though market volatility related to the outgoing government’s constitutional reform agenda could delay transactions, a California-based money manager told LatinFinance.
“Yes, there is appetite. I think it is in ups and downs, and I think from what we see in the stock prices as well,” Gerardo Zamorano, a portfolio manager at advisory firm Brandes Investment Partners, said in an interview.
While there are some concerns about the constitutional reforms, investors recognize the long-term value of investing in Fibras, he said.
“We see the value in the very long term, and we see a bit of the upcoming political and economic volatility, which is something shorter term,” Zamorano said.
Investors also need to consider risks and opportunities in the next three to seven years regarding US trade relations with Mexico and China, he said.
“The reality is that the United States can be protectionist, but the more protectionist it is with China, the more opportunity there is for Mexico,” should companies with operations in Asia could relocate them closer to the US market, he added.
SWINGING STOCKS
According to Zamorano, investors are waiting for less market volatility before investing.
Mexican stocks plunged after the June 2 presidential election, which the ruling Morena party’s candidate Claudia Sheinbaum won by a landslide and secured a supermajority in the lower house of congress, making it easier for the government to pass legislative amendments that investors fear could weaken institutions and governance.
“Mexico has the opportunity to grow more, but I think that it is important to attract international capital to have rule of law, less volatility, less concerns about changes in the laws,” Zamorano added.
Real estate investment is expected to increase, driven by higher demand for logistics, e-commerce, electronics, automotive, offices and supermarkets, he added.
TERRAFINA DEAL
Zamorano holds shares of multiple Fibras in his portfolio, including Terrafina, which put itself up for sale earlier this year and has received offers from the industry’s biggest players. He said he expects a deal to be closed “in the short term.”
The bidding has dragged on for months because some potential suitors amended their offers multiple times, according to Zamorano. “Every time there is a change the deadline is pushed,” he said.
In a sign that a deal may finally be in the offing, Fibra Prologis said late on Thursday that it had received signed acceptance letters for its offer from holders representing 50% plus one of Terrafina’s stock. The firm last month increased the cash component of its proposal, which was due to expire on August 2.
Meanwhile, US private equity firm Blackstone and Mexican real estate developer MRP Group decided to terminate their joint bid, after having increased their all-cash offer last month, Terrafina said Friday in a securities filing.
A rival bid from Fibra Macquarie expires on August 12.