Fibra Shop (FSHOP13) Earnings Call Transcript & Summary

Good morning. My name is Patricio Villasenor, ESG analyst at Fibra Shop. I would like to welcome everyone to Fibra Shop 2025 Second Quarter Results Conference Call. And just a reminder, today, we are celebrating our 12th anniversary. Please note that this call will be recorded for documentation purposes. By remaining on the call, you consent to the recording. Since the last quarter, our conference calls will be conducted via Zoom, allowing us to present the results on the screen. Fibra Shop issued its earnings report yesterday. If you did not receive a copy via e-mail, please do not hesitate to contact us at [email protected]. I would like to remind you that forward-looking statements made during this conference call do not account for future economic circumstances, industry conditions, company performance or financial results. These statements are subject to a number of risks and uncertainties. All figures presented have been prepared in accordance with the International Financial Reporting Standards and are stated in nominal Mexican pesos, unless otherwise noted. Joining us today from Fibra Shop in Mexico City are Gabriel Ramirez, Chief Financial Officer; Irvin García, Controller; Mary Carmen Fernandez, ESG and Investor Relations Manager; and myself. Now I will turn the call over to Mary Carmen. Please begin.

Thank you, Patricio. Good morning, everyone. Before I begin, I would like to highlight Salvador's message for this conference. Over the past 6 months, we have focused our efforts on 3 key strategic pillars: debt restructuring, sustainable finance and company growth. Fibra Shop continues to strengthen its portfolio. With the stabilization of La Perla, we have decided to seek new growth opportunities through a strategic partnership with Grupo Link Arquitectura for the development of a property in Nuevo Laredo. Its privileged location and strong market demand positioned the project to be successful and value generating for both the company and our investors. Now, let's move on to relevant events. In line with Fibra Shop's commitment to transparency, the strengthening of corporate governance and the protection of the trust assets, three key events related to the trustee took place in July 2025, removal of the Banco as trustee, appointment of Banco Actinver as new trustee, and signing of the trustee substitution agreement with Actinver. As of July 21, Banco Actinver officially assumed the fiduciary duty of the trust. As a result of the change, Irrevocable Trust F-00854 is replaced by the name Irrevocable Trust 6206. It is important to note that this change does not interrupt or affect the day-to-day operations of the trust nor its obligations to investors, tenants and other third parties. All activities continue to be carried out normally and in strict adherence to best practices in corporate governance, transparency and asset protection. Debt restructuring. In the financial report for the first quarter of 2025, Fibra Shop disclosed its strategy to complete its debt structure, which consisted of refinancing maturities totaling MXN 7,250 million, of which MXN 4,250 million were the refinancing of syndicated loans and MXN 3,000 million were the payment of FShop 19U bond. [indiscernible] strategy was therefore relaunched, meaning it did not involve additional leverage through simultaneous operations in both the banking and the capital markets. The total amount of the syndicated loan will be defined once the bond issuance was completed. Given the prevailing financial and market conditions in recent months, Fibra Shop decided to optimize the terms of its financing in favor of all the company's shareholders. As a result, the following transactions were closed. Bank composition divided in 2 tranches: Tranche A revolving credit facility of MXN 1,600 million with a 3-year term. Tranche B, simple loan of MXN 5,000 million with 5-year term. Both tranches were issued at a rate equivalent to the 28-day TIIE 225 basis points, 25 basis points lower than the previous financing. Debt market composition. Debt bond in the amount of MXN 700 million denominated in [indiscernible] with a 5-year term and a fixed interest rate of 7.61%. Additionally, the credit agreement was signed under our new financing framework with 2 KPIs. Renewable energy consumed aiming to reach 50% by 2030. As of today, we are at 45%. Percentage of certified construction square meters aiming to reach 50% by 2030. As of today, we have 37%. With this, 88% of our total bank debt is green or linked to sustainable KPIs. As you can see, there are no significant maturities in 2025 and 2026, allowing our efforts to focus on reducing leverage levels and continuing to strengthen financial position. With this, we achieved an extended maturity profile, elimination of maturity concentration on a specific date and improved financial conditions regarding collateral and interest rate. Company growth. With the consolidation of La Perla, we are pleased to announce our next investment for the development of a project in Nuevo Laredo, Tamaulipas. Fibra Shop has established a strategic alliance with Grupo Link Arquitectura in which all parties will participate equally with a 50% investment in the commercial property. Grupo Link will contribute the land valued approximately MXN 200 million, while Fibra Shop will assume construction costs of the same amount. The remaining capital will be financed through jointly contracted debt via a trust. The construction project will last from 2025 to 2027 with the property expected to open to the public in 2028. Fibra Shop's investment will be funded through cash flow without additional leverage. This transaction has operational and financial benefits, growth and diversification plan, portfolio optimization, increase the value portfolios, improve the financial and operational metrics and improve in credit ratings. In the next slide, you can see some pictures of the project. Nuevo Laredo is a border city with high economic growth potential, thanks to its strategic location, connectivity with United States through several borders crossing and its international airport. These characteristics position it as a key point for investors in companies seeking to capitalize near sharing opportunities. Currently, the city has limited supply of shopping centers and does not have a Liverpool department store, which is also part of the project as the anchor tenant and will invest in a building store of 12,000 square meters, further enhancing the attractiveness of this new development. Project progress will be communicated through relevant channels. Dividend distribution. The Technical Committee in its session on July 21 of this year decided to declare a dividend of MXN 105 million, which represents MXN 0.1648 per CBFI. Financial results. Consolidated revenue for the quarter was MXN 650 million represent an increase of 10% compared to the same quarter of the previous year. The consolidated NOI for the quarter was MXN 493 million with an NOI margin of 76%. Consolidated NOI increased by 8% compared to the same period last year. Consolidated EBITDA for the quarter was MXN 475 million representing an increase of 8% compared to the second quarter of the previous year with a margin of revenue of 73%. The FFO for the quarter was MXN 177 million. As you can see from this report at the close of this quarter, we continue to make progress towards achieving our goals. At this time, I would like to open the floor for any questions. Please raise your hands.

[Operator Instructions].

Enrique [indiscernible]. You said that the new project is going to be financed through a trust. It's going to be financed by the banking institution.

Enrique, can you please repeat your question?

Sure. You said that the new project is going to be financed through a trust. Is there any banking institutions involved?

Enrique, this is Gabriel Ramirez. Thank you for the question. Today, in respect to finish the executive project for -- develop the project, go to the vehicle, constitute the vehicle, the trust for the project right in that legal process. The idea is to put the land in the trust and Fibra Shop, a good money for the construction. And in the near future, we are looking for a finance for that project inside the vehicle. Today, we don't have to decide what is the banks involved in this finance. Maybe in the future, maybe in a couple of months or 3 or 5 months, we are starting the process to decide what is the banks involved in the project.

[indiscernible] quickly go ahead.

I have a couple. So the goal or the former goal to reach MXN 1 distribution. I know that was removed. Just want to hear any thoughts on where that could be in the short to medium term? That's my first question. And my second question is on -- well, first, to congratulate you guys on the new development in Laredo. Is there going to be any potential acquisitions of the minority stakes of La Perla or any other properties that -- in which you guys don't have the full 100% stake in the assets?

For the distribution of the gold of MXN 1 per certificate, we are expecting that if you see the last semester or the last quarter for the next year for 2026. If you analyze the dividend, we are very, very close or a little above the MXN 1. We are -- the idea is increase gradually to distribute MXN 0.25 for certificate per quarter. We are close to the MXN 1 at the end of the next year. And the second question is about Nuevo Laredo. We have some problems with the speak here in the room. We don't understand very well the second question. Could you repeat?

Yes, of course. So my question was more on the minority stakes. So for example, you guys have the JV in Los Cabos, right, what on Via Paraiso as so you guys don't have 100% of the stake. And then, for example, in La Perla, I think you're also missing like a small minority stake. So just wondering if that's still on the table? Is that something you guys are considering or something that we can see in the short term?

Well, thank you. Well, the idea of this association in terms, for example, for Los Cabos is because the expansion of Los Cabos is new. The idea is to try to stabilize this part of the mall. The idea is to manage it together because it's door by door. If you walk in for the property, you don't know if you are in Paraiso, Via Paraiso is basically the same. And the idea is when that part of the mall, we will close to consolidate or stay in consolidation, maybe we'll take the decision to buy all of the property. In terms of the La Perla, the minority proportion is very low, 7% of the property. We have an option in the contract to buy in certain time this part of the mall, maybe we will take the opportunity to buy 100% of the mall. And in terms of Nuevo Laredo, the idea of this has sustained because Grupo Link Arquitectura is the owner of the land and they have the appetite to invest in the property. But maybe in the future that is the same way that we buy the Centura in [indiscernible]. We started with a portion of the property and some years after that, we buy the 100% of the property. The idea there is not a decision today, but the idea maybe in the near future or in the future is to buy 100% of these 3 properties to buy instead of Fibra Shop.

Great. That was very clear. And just one last follow-up. So this new Nuevo Laredo project, are you guys consolidating it? Or will it come as an equity investment?

We need to have this discussion with the team about the property because in accounting standard, there is some aspect that we need to consolidate. Today, it's in a project, we only put it in our financial statement, the investment of the project. When the project is open, maybe it's basically the idea that Fibra Shop manage the property and maybe we consolidate the property, but we take the decision with [indiscernible] and the audit committee of Fibra Shop, what is the rules to consolidate in the same way that Centura, the same way that La Perla when we co-invest with a third party, the idea is to consolidate. The same way this is quite under price, so we have managed the property and today, we consolidated all the properties. But it's not the time to say that, it's very probably that we consolidate this new property.

Does anyone have another question? Okay. At this time, that concludes our Q&A session. Thank you all for joining us today, and have a great day.

Thank you for the call. Congratulations on the 12th anniversary as well.

Thank you.

Thank you very much, Enrique.