The great demand for investment in real estate in Mexico, due to its high profitability and resilience to economic crises, has given rise to the emergence of more financial instruments.
Since their 2011 arrival in the Bolsa Mexicana de Valores (BMV) (Mexican Stock Exchange), FIBRAs (Fideicomiso de Infraestructura y Bienes Raíces) (Infrastructure and Real Estate Trust) have become an attractive asset to obtain capital gains from real estate, such as offices, industrial buildings, shopping centers and hotels.
There are currently 14 FIBRAs in Mexico, which are based on the US REIT (Real Estate Investment Trust) investment model, developed in the North American real estate market in 1960.
The director of operations and acquisitions of FIBRA MTY, Javier Llaca, says that the objective of this instrument is to make real estate projects that generate income available to the investing public.
“This vehicle is very good for those who are interested in investing in real estate but do not have the capacity to purchase a complete building or a commercial asset; and so, they do it through certificates.”
These certificates, called CBFIs (Certificados Bursátiles Fiduciarios Inmobiliarios), listed on the BMV and issued by the FIBRAs, grant the holder—owner of the certificate title—95 percent of the annual profit obtained from the real estate.
“You own the proportion of certificates you have from a series of assets, and these generate income. This income is distributed—normally quarterly—to the owners of the certificates or holders of the certificates in such a way that you have the benefits of having a professional administration covering the assets you own.”
The trust is an investment vehicle managed by experts in the real estate market who are responsible for the maintenance, marketing and administration of property.
“You have a professional administration that is responsible for maintaining the building in good condition and having it rented with a series of tenants with good credit.”
Llaca stresses that by investing in a FIBRA one can be sure that the asset will have a constant capital gain and that it will not lose its value but will increase it with better returns on income.
“For us, therein lies the strength of the FIBRA; it is an asset class that is very solid, with very low risk and with a great capacity for repositioning.”
He indicates that investors can even continue to receive the value of the rent when one of their assets has been vacated for the time being.
“If you own a certificate and there are 55 properties in the FIBRA, but an office floor is vacated, your impact is minimal, even null, because you continue to receive the dividend or assets in a normal manner.”
In addition, by using this type of instrument, the investor can make new acquisitions from the FIBRA property portfolio to expand his real estate products.
He shares that this vehicle is a democratic investment option that offers possibilities to the entire market, from Millennials to Baby Boomers who want to invest their capital in real estate.
ABCs of Investing
What do you need to access a FIBRA? Llaca notes that you need to have an investment account in a brokerage house that suits the investment needs and profile.
Then you submit your application by filling out a form online, in person or by phone. The brokerage house you have chosen will provide you a contract, and once signed and deposited in your investment account, you can buy and sell in the market.
According to FIBRA MTY, it is not necessary to buy in large quantities. Finally, dedicate time and watch your investments. You can buy and sell when you see fit.
Llaca emphasizes that real estate trusts have become an attractive option for pension administrators, since it has allowed them to diversify their investment portfolios.
“It is a vehicle that AFOREs really like to invest in and manage the resources of the pensioners.”
He notes that in the case of FIBRA MTY, in the last four years (trust operation time), the accumulated return was 50 percent higher than those given by the Índice de Precios y Cotizaciones (IPC) (Price and Quotation Index) of the Bolsa Mexicana de Valores (BMV) (Mexican Stock Exchange), as well as above the FIBRAs index in the country.
As of today, FIBRA MTY has a portfolio of 55 properties, equivalent to about 7,319,460 square feet in total, distributed in nine of the country’s states.
$13,200,000,000 pesos is the valuation of FIBRA MTY’s portfolio of properties.