REITS unharmed and even strengthened from the 'Trump storm'

By Elliot Bullman

Despite threats by Trump to hike tariffs a year ago and the threat of ditching Nafta, REITS have had good results in 2017.

Real Estate Investment Trusts (FIBRAS) are investments dedicated to the acquisition and development of real estate assets in Mexico intended for leasing.

REITS 4

A year ago to the day, the election of Donald Trump as president of the United States, was seen as a 'perfect storm' for Real Estate Investment Trusts specialized in Mexican industrial assets, since the Republican had threatened to cancel the North American Free Trade Agreement.

The fear a year ago upon Trump’s election was that REITS clients in Mexico who are largely manufacturers of auto parts, vehicles and aircraft components that export to the United States – would end up suffering higher tariffs and that this would result in lower levels of occupancy in real estate leased by the REITS.

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However, Industrial REITS have not only come out unscathed, but they are also reporting good results and expanding their businesses. In the last 12 months, the REITS sector integrated by Prologis, Terrafina, Fibra Monterrey, Fibra Macquarie and Fibra Uno increased sales by 19.2 percent compared to the same period of the previous year.

Meanwhile, its operating net income rose by 9 percent in the same period of comparison, according to the quarterly reports sent by the firms to the Mexican Stock Exchange (BMV).

Mexico has grown its industrial space by almost 3 percent in the first six months of the year. El Bajío grew 2 percent, the north 3 and the central region 4 percent in round numbers.

REITS 1

The market has rewarded the good results and perspectives of REITS. So far in 2017, Fibra Prologis shares have been revalued 21.1 percent, followed by Terrafina with 10.9 percent and Fibra Monterrey with 6.3 percent.

EXIT 'SHOPPING'

REITS specialized in industrial properties found the way to grow with the purchase of new assets, such is the case of Fibra Uno that since November of last year has made purchases for an amount of 17.31 Billion pesos.

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It is an investment in real estate portfolios such as Apollo II and Frimax, located in important cities of the country.

Meanwhile, Terrafina and Prologis have made purchases for an aggregate amount of 11.52 billion pesos in a year, according to data from the BMV.

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