Fibra UNO ($FUNO11)

Ladies and gentlemen, thank you for standing by, and I'd like to welcome you to Fibra UNO's First Quarter 2026 Results Conference Call on the 30th of April 2026. At this time, all participant lines are in listen-only mode. The format of the call today will be a presentation by the management team followed by a question-and-answer session. So without further ado, I'd like to pass the line to the CEO of Fibra Uno Mr. Andre El-Mann. Please go ahead, sir.

Thank you, Louis. Thank you, everybody, for listening to our call. We want to discuss our first quarter of 2026 results. We have posted yesterday, which we believe are very solid results for our company. We closed at 95.7% occupancy level overall. That being said, we have above [indiscernible] on the retail segment, close to 98% on the industrial segment. And close to 83% on the office segment. I think that these numbers can say a lot about our company. or can say very little about our company. Depending on the memory spend that we have, we have a very large span memory. So we believe that these are very strong -- this quarter represents various milestones for our company in our history. It's our very first quarter fully consolidated with Fibra Next, our carve-out of last quarter last year and is the first quarter completely internalized in our manager. So we believe that the numbers are only to improve in the next quarters to come. We have very strong renewals in all of our segments. 11.4% in Mexican pesos in the industrial cement, 14.7% in U.S. dollars in that very segment. 7.2% in the retail segment. And surprisingly, we had a 23% -- above 23% on the office segment. This is a very small hint of the recovery of that particular segment. We have been talking about the recovery of the segment for many quarters right now. We talked about that the recovery will come first in the occupancy and then in the pricing. I think the occupancy level is almost reached prepandemic level. Remember that the pandemic hit the most to the office segment. And we are almost as market-wise, almost on the level of the prepandemic. So we expect that this continuously growing occupancy level that we have been struggling with for more than 5 years now. ,6 years almost. We expect that it will be reflected in the increase on the rents per square meter. So we will be seeing strong quarters in the rent -- in the level of the rents of the office segment. This quarter, FIBRA Next, our sister company made an offering for Mac. We support that decision, and we think is the best for the company. And we think that we can add some value with -- within the portfolio of Macquarie as a segment of retail, we think that we can be a lot of help for FIBRA next in the retail segment. Jorge will talk to you in more abundance later on. We are very pleased to welcome Ms. Mari Marto Relance, joining our Board. This appointment of Marimar will strengthen our corporate governance. Her knowledge of the industry and profound experience in our market will bring formal benefits in our institutional practices. So welcome Marimar as an independent board member. All in all, we began 2026 strong. We expect that we will continue to be strong throughout the year. We began with a record setting in our main lines yet again, and we expect to bring on good news to our shareholders as cores go by. We are very confident on the performance of the company for the remaining of the year. and we are positive that we will deliver to our investors with double-digit growth across our main lines through 2026. So with no further ado, I would like to pass the mic to Jorge to talk in that about the numbers. Jorge, please?

Thank you very much, Andrea, and thanks, everybody, for joining our quarterly call. As usual, I'll start with the MD&A. And I do believe that we did have a very solid quarter, indeed. On the revenue line, we had an increase of MXN 133.7 million or 1.7% compared to the previous quarter. I think this is particularly remarkable considering the fact that we sold or took out of the balance sheet to pay for the adviser the properties of Samara, Mitanalisco and Montesurales-620. In addition, during the quarter as well, we also sold a portion of the Memorial portfolio. 8 properties. So despite the fact that we sold those properties and obviously stopped receiving the revenues associated with this property, we still manage to grow our revenues quarter-over-quarter by almost 2%. Considering the inflation in the year is 4.5% is below 5%. We do believe that this is an extremely remarkable feat. At the end of the day, the quarter revenues reached a little over MXN 8 billion, MXN 8 billion [indiscernible] MXN 7.2 million in total. The other drivers for the growth in revenues, obviously, are a 20 basis points increase in the overall portfolio you can see inflation driven increases on active contracts, rent lease renewals, Andrea mentioned the very exciting renewal we got a very positive surprise in the office sector. the effect of the consolidation of [indiscernible]. This is the first full quarter of operations of FIBRA Next, where we actually have the combined -- the total combined portfolio. So that obviously reflected also on our numbers. So very pleased with the growth of the revenues despite the fact that we took out some properties [indiscernible] . In terms of occupancy, the portfolio closed at 95.7%. Again, it's a 20 basis points increase compared to the previous quarter. On the retail segment, we are at $94.1 million basically 40 basis points above the fourth quarter of 25%. The office portfolio, we are at 82.1%, which is 80 basis points below the fourth quarter 25%; however, we are very comfortable with this number because -- this happens despite the fact that we took out primarily, if you recall, megennalization, over 60% of the property or the GLA that we were including in internalization model was office primarily Monte sural 620, Samara, which has almost 100,000 square meters of office space and MitanKalisco. So all of them heavily weighted towards the office segment. So despite the fact that we had these properties move out, we had only a drop of 80 basis points, which means if we would have left the properties inside the company, we would have had an increase of above 83% in the occupancy of the sector. So we're very pleased with the performance of how the office segment is behaving. DAS portfolio, 99.2%, 10 basis points below the previous quarter. Again, part of the internalization process and the sale of Memorial portfolio. The industrial portfolio continues to have incredibly solid performance with a 97.8% occupancy rate, 10 basis points above the fourth quarter of 25. And the service portfolio recorded a 10.1% increase percent compared to the previous quarter. In terms of operating expenses, property taxes and insurance, total rating expenses increased by $90 million or 8.3% compared to the previous quarter. And this is mainly due to reclassification of some expenses as part of the internalization process as well as the effect of Euronext consolidation. Property taxes decreased by MXN 2.7 million or 1.3%. Again, this is -- variation is mainly due to the exit of properties from the internalization of the advice Insurance expenses decreased MXN 11.7 million quarter-over-quarter, minus 8.2%. Again, this is the effect of the internalization process. And obviously, these decreases were offset by expense increases from the next consolidation basically because we had 1 full quarter of operations of FIBRA next under our belts for this quarter. Net operating income resulting from all of the changes in the above decreased by MXN 153.9 million or 2.5% versus the fourth quarter of 2025. and the NOI margin calculated over rental revenue was 85.1% and 74% compared to the first quarter of 2025. Net interest expense and net interest income, we had a decrease of [ $243.1 ] million or minus 8.2%. And this was mainly due to the exit of the Samara loan for MXN 1.8 billion under interest payments associated with that loan. The effect of interest rate reduction in pesos and it's effective on our variable rate debt. The depreciation of the peso dollar exchange rate, which went from 17.96 to 18.07 quarter-over-quarter a decrease in interest capitalization, the impact of pricing of our derivative financial instruments and obviously offset by profit generated on the investment of IBANEXT cash resources raised in the market. as a result of all of the above, controlled -- the AFFO controlled by Funo decreased by MXN 7.5 million quarter-over-quarter and adjusted funds from operation increased by $3.8 million or 0.1% compared to the fourth quarter of 25. Basically, the difference against the FFO arises from the gain on the sale of the Memorial portfolio, which yielded 23% IRR or return on our investments. So very pleased with the investment we had in the memorial portfolio. We still hold some of the Memorial portfolio properties still on our balance sheet. We haven't fully divested from those assets. So very pleased with the performance of the. [indiscernible] Basis, we did not issue or repurchase any CBFIs. So the number of CBFIs at the closing of the quarter remains the same at 3.81 billion outstanding. FFO and AFFO per CBFI, average CBFI were 0.65 and 0.67 0.20, respectively. -- with variations of minus 2.1% and plus 0.1% compared to the fourth quarter of '25. again, compared to a year ago, the average FFO and the AFFO increased by 3.9% and 7.3%, respectively. In terms of the quarterly distribution on the first quarter 26, we reached MXN 2.62 billion or $0.62 per CBFI with a quarterly AFFO payout of 0.92%. And -- we are signing this at 100% correspondent to fiscal results, and it's an increase of 11.7% compared to the same quarter a year ago. Now moving to the balance sheet. Accounts receivable for the quarter totaled $2.7 billion, an increase of $642 million or 3.1%. This is primarily due to the consolidation of FIBRA -- next and not only the consolidation of Ibranext, but the fact that FIBRA next in and of itself is the combination of different portfolios. So we were invoicing, for example, our tenants as FedicoMisocator Serono. FIBRA NEXT is doing the invoicing. So there is some lease in payments associated with that mechanical process, nothing of concern, but just an explanation of that is what's basically behind this movement, not just the consolidation, but the fact that there's a transfer of ownership from an invoicing perspective for our tenants and they have to deposit a different account, and that takes a little bit of time. So this is something that will correct itself. It's something that we have seen normally in every 1 of our acquisitions, large acquisitions before. So normal standard operating procedure. In terms of investment properties, the value of our investment properties, including financial assets and investment and associates, increased slightly, MXN 352 million compared to the fourth quarter of 25 million. This is a result of consolidation of IBRA NEXT the exit of the 8 properties of the Morial portfolio as well as the 3 properties that we used for the internalization of the adviser. CapEx invested in our portfolio and the fair value adjustment of investment properties, financial assets and investments in associates. In terms of debt, the first quarter of 26 the debt stood at 151 million compared to MXN 152 billion the previous quarter. variation is primarily explained by the following the exit of the Samara mortgage loan for 1.8 billion associated with the internalization of the adviser and an increase of MXN 1 billion by later credit lines, payment of credit amortizations of MXN 60.8 million and the gain rate effect as the peso appreciated from 1,797 to [indiscernible]. As a result of all of the above, total equity increased by MXN 11.4 billion decreased or by MXN 11.4 billion, which is basically most of it as relinked with the internalization process of the adviser as well as net income generated from quarterly results, the valuation, shareholder distribution and the employee compensation plan. Now moving to the operating results. In terms of the leasing spreads, increases in renewed contracts in pesos when 23.7% or 2,370 basis points in the office segment. Again, a very pleasant surprise to see that we were able to have the type of an increase in a segment that has been sluggish, but definitely on a recovery path. So clearly, on that recovery path that we have been describing, the closer we get to 85%, we started to have some pricing tension and you're starting to see some of this transferring the portfolio. We had an 11.4% begspread on the industrial segment. 720 basis points or 7.2% of the retail segment and 5.3% in the Other segment. So very pleased with the performance of that. For dollar-denominated lease renewals we had 14.7% lease spreads in Industrial segment, 120 basis points for the retail segment, and we had a decrease of 1,050 basis points in the office segment. So Again, as I mentioned, the other segments still a little bit sluggish, but definitely, we're very pleased with the performance and on a recovery track as we have been mentioning. In terms of constant properties, the rental price per square meter for constant profit decreased by 1.7%. However, if we take out the annual appreciation of the peso, which is 16.4% on the increase would have been 5.6%. So again, happy with the constant property performance. At a subsegment level, -- the portfolio's total annual rent per square foot went from 13.5% to 13 per square foot, which is a decrease of 4.1% compared to the previous quarter and this is primarily explained by the exit of office segment square meters, which are the highest rent per square foot. So as well obviously, the depreciation of the FX and the effect in U.S. dollar-denominated rents. But primarily, this is explained by the fact that we have less office square meters, which have the highest rent per square meter in our portfolio. At the property level, when we start looking at the NOI on a subsegment level for the quarter, we had an increase of 6.7% compared to the previous quarter. Very pleased with that. Fashion Mall subsegment grew 3.5%. And Regional segment came in very strong with 10.3%. -- stand-alone increased 7.5%. The office segment NOI decreased 7.4%, again, no surprise there, given that most of the internalization came from that segment. The other segment decreased by 7.4%. Again, no surprise there given that we sold the Memorial portfolio. The industrial segment NOI increased 14.5%, primarily due by the consolidation of the FIBRAXTportfolio. And with that, I close the MD&A discussion. Luis, if we can please pause to the floor for a Q&A session.

[Operator Instructions] So our first question is from Carlos Peyrelongue from Bank of America.

Wanted to first -- 2 questions, if I may. First one, the EBITDA level or FFO level -- do you have an idea of what the growth would have been on a like-to-like basis without the properties that you sold that are not related to the internalization -- that would be the first. And the second question, can you comment what do you see as the key drivers for growth at we see multiple drivers, but just wanted to see what are the key ones that you would highlight that should support your growth, both this year and next ?

I don't have the number, Carlos, on the calculation, but it shouldn't be that large. However, we happy to get back to you with a specific calculation on that -- on the impact of the sale of the Memorial portfolio. Now as for the growth drivers for Fun [indiscernible] to Andre.

A, we expect, Carlos, we expect that the savings on the overall through the year will be in the surroundings of MXN 400 million to MXN 500 million. That will be impact -- that will make impact on the NOI and the FFO later on. through the year should be around the number .

On the expectations for the year, we should be shooting to have an that is close to MXN 75 to 80 per for the year. Last year, we were closer to 250....

No. I think that will be larger than that. I think that the number that Jorge just gave you should be the dividend yield. The FFO should be $0.10 or $0.15 above that. So we expect to deliver [indiscernible] to MXN 2.75 as a dividend yield for the year, and that will represent, in our view, maybe 95% of the control.

Understood. And that's, I guess, driven by higher GLA from next. Also on offices, you mentioned that you expect higher occupancy that should also result in higher rents. And lastly, on the interest expense side, obviously, rates are coming down in Mexico continue to come down sharply, plus slightly lower leverage. So should that also help in terms of the growth that you're mentioning. Is that included in your numbers? .

I think everything keeps in order to achieve this. This represents last year. So everything is accounted for.

Our next question is from Andre Mazini from Citi.

Two questions as well. The first 1 on the office segment leasing spreads. The peso 1 were pretty high 20%, but USD 1 was actually low, minus 10%, so a big difference there. So maybe what caused that difference? And if the office segment break down with 60% USD 40 MXN give or take. This is the first one. And the second 1 is around the act. I mean, the very long-term trajectory of margins, now that the company is internalized. I think there's more gains to scale, right, probably more dilution of G&A. So if you can expect some upside risk to margins as the company grows being internalized, right, as it is right now?

In terms of the office sector, Andre, obviously, we're pleased to be able to get such a solid leasing spreads in the peso terms. This is not something standard or normal that happens. -- neither is the drop in 10% in the dollar. That's one-offs that happened to coincide this quarter. The trajectory should be the 1 that we have been mentioning, which is the closer we are to 85% and above occupancy. The more pricing tension we are going to have a more consistent ability to increase rents we are going to have. There are some segments, for example, we go to reform, you have higher occupancy compared to other markets in the city. So we're starting to go definitely in that direction. But this quarter were a couple of one-offs that we had both in the peso side and on the dollar side. for the office segment. And obviously, to your other question, long-term margin trends, we are always seeking to control expenses. We're always seeking to make the company more efficient. We have been sort of stagnant for a while without the ability to really take advantage of a lot of opportunities that we see, for example, in the retail sector right now for additional investment and things of that nature. Those opportunities are there. Clearly, with the internalization of the adviser, there will be, as Andre mentioned, savings in the neighborhood of or to MXN 500 million on a yearly basis. And I think that in order to see the effect of the internalization, I would like to be able to be sitting in December of 2026. Looking back tell you what the final amount was, but the expectation is that it will be somewhere in that neighborhood. And I'm sure we're always shooting to have better margins than what we have right now. It's obviously not an easy task. And unfortunately, we have had the, let's say, spillover effect of the increase of the minimum wage hitting our margins because a lot of the -- it's not that we paid or the people that we hire pay minimum wage, but it's affected by the increase of minimum wage because we have sort of labor-intensive services for the operation, primarily of the shopping mall. So hopefully, that wave of specific inflation is behind us, and we can start seeing more stable expense line. It's something that we have been working very strongly in the last couple of years to contain.

Our next question is from Ernst Mortenkotter from GBM.

Just a quick one. If you could provide some color on your disposition pipeline. I mean wondering if you could share a little bit of detail on why those assets or was disposing from those specific regions or sectors that you're mentioning. And if you could share a range on possible disposition cap rates? .

Yes. Actually, what we have published is around MXN 3.5 billion of potential sales probably almost half of it will be coming of other assets, not offices or retail, in particular. And the other half is a mix in between offices and retail. And the cap rates that we are seeing on those especially on the ones of the other sectors will be in between 8% to 9%. And on the retail side, there's a mix. There are some that are close to 7%. Those that are mainly anchored by triple credit-rated companies. and the other ones are in between 8% to 9% again.

Thank you. Our next question is from Felipe Barragan from JPMorgan.

Question. I just wanted to get an update on Mitica Phase II, if you could give us some color on what you guys are expecting in terms of an asset segment...

I would love to be able to elaborate a lot more of that project because it's really a fantastic project, and we've been massively successful with it. But right now, we have it on standby, and it will remain so for a little bit longer, but we'll be happy to share those with you guys when we have more information. .

Our next question is from Jorel Giotti from Goldman Sachs. .

I have 2. So my first question is on the performance in your retail portfolio. specifically, if I saw this correctly, your regional centers saw material NOI growth year-on-year. It's about 10% -- and I was just wondering what drove that? Is that due to some seasonality, some efficiency on operating expenses, revenue, what have you. And then the other question is more on the on the long-term expectations for your office portfolio. So it keeps on occupancy keeps on going up, you're around 82%, 83% right now. But in the longer term, say, you like 90% or so below 10% vacancy. Are we to expect your office portfolio to be of the same size within Fibra Uno -- or could you potentially reduce exposure, monetize these assets, maybe for leverage, maybe to have more exposure to other portfolios. So I just wanted to get a sense of what the long-term expectation or rather what the long-term objective is for the office portfolio?

On the office portfolio, obviously, on the long term, we expect that probably in the next months, we will be hitting the 90% occupancy. In the interim, we will be seeing also rent increases on the offices. And in terms of selling or buying, we are on both moods. We are always open to hear some non-solicited offers from our offices and always open to see what's going on in the market. And if we get to see an opportunity to buy, we will be taking it. And probably as normal cycle of the company, probably we will be seeing some sales of noncore assets. And probably, we will be buying some core assets or great opportunities that we will be seeing on the market.

In terms of overall size, I don't think that there's significant variation. We remain, let's say, if you recall, we've always said that we had this 40-40-20 concept for the company as a whole for industrial for the retail point in the office and others segment that remains the case. We continue to have that 40-40-20 view. And we are pretty much in line with that. I believe we are around 37% in terms of the retail portfolio, 15 is the office segment. Industrial represents some 40%. So we're almost smack on the 40-40-20 rate down. You shouldn't expect us to deviate much from that. That's where we would like to remain as of the performance specifically of the regional centers, let me get back to you to see if there was something specific with variable rents or something like that, that gave that a little bit of a boost. But I think we have to look at it on a yearly basis to see exactly what's going on to see if it's a trend. But happy to get back to you on any specifics.

Our next question is from Elisa Gomes from BTG.

My question is related to Andres -- and this is the first quarter reflecting the internal decision. We saw a meaningful step-up in the operating expenses driven by this, which impacted the NOI margin? And how much of that increase is transitional? Or related to integration costs? And should we expect the same levels in the next quarters before reaching as per state?

Thank you for the question. It's very important to consider that the fourth quarter corporate and administrative expenses are influenced by a reverse on our provisions every year, at the end of the year, we reevaluate our expected loss model. And we have reverse in that quarter that influenced in the margins of the fourth quarter. So comparing our current margins with the margins of the fourth quarter are not, let's say, a fair comparison. However, as Jorge explained before, we are expecting our margins to improve gradually, not only because of the seasonality of our rents. As you know, our rents are gradually increasing month by month. but also because of the efficiency that we're expecting from the internalization. So you have to consider that in your analysis.

Our next question is from Carolyn Raj from Bank of America. Do you have an updated guidance for the year-end 2026 key metrics, factoring next full first year of contribution. .

Sorry, what was the last part of the Luescher. .

So do you have -- have any updated guidance for the year-end 2026 key metrics, factoring next full first year of contribution. So I believe speaking next .

Not yet Caroline, but we did have a chat today, and we're going to start providing guidance -- more specific guidance on the different metrics of the company. So we'll get back to you and obviously, the rest of the investors in public with a specific guidance that we expect to have for the company. this change in policy that I'm also announcing right now, we are going to start giving guidance as of this year. .

[Operator Instructions] Okay. It looks like we have no further questions, and I'll hand it to Fibrant for the closing remarks. .

Well, thank you, everyone, for your interest on these results. we expect to have a solid result as well during this quarter. And you will be informed through the media and the web site of the future results of the negotiations of NEXT backed off by Funo on the Macquire acquisition. Thank you very much. .

That concludes the call for today. Thank you, and have a nice day.