Background on Fibra Uno and its Relevance
Fibra Uno, a real estate investment trust (REIT), has announced the signing of an agreement to internalize its real estate advisory services, investing a total of 10,467 million pesos. This move is part of their strategy to align with industry best practices and respond to recommendations from institutional investors.
Details of the Agreement
As part of this agreement, Fibra Uno will transfer real estate assets as payment, including Samara, MidTown Jalisco, and Montes Urales 620. These assets total more than 260,000 square meters and represent a diversified mix of uses: 60% in offices, 34% in retail, and 6% in hospitality.
Jorge Pigeon’s Explanation
In an interview with the media, Jorge Pigeon, Vice President of Investor Relations at Fibra Uno, explained that this transaction has been requested by the market. He emphasized that internal management is considered a better international practice.
Benefits of Internalization
By internalizing advisory services, Fibra Uno aims to eliminate the perception of conflict of interest associated with traditional external advisory models, where commissions are paid to third parties for investment, development, and real estate management advisory services.
Pigeon added, “This does not imply significant operational changes, but it does change the investor’s perception. We expect to see an improvement in Fibra Uno’s capitalization rate, though it will take time. We also project an annual savings of between 250 and 300 million pesos.”
Unique Internalization Practice
The internalization of real estate advisory services at Fibra Uno is subject to approval from Mexico’s Federal Competition Economic Commission (Cofece) and meeting certain conditions, such as an orderly transition period, audits, key personnel hiring, and other agreements to ensure business continuity.
Most real estate investment trusts (REITs) in Mexico operate under external advisory schemes, with few exceptions like Fibra Monterrey. In the case of Fibra Uno, this initiative was approved in 2023 but only recently materialized.
Continuity of Key Figures
Pigeon assured that the advisory role remains, but the scheme changes. The founding partners still hold significant capital participation and continue as advisors, alongside key figures like André El-Mann, Deputy General Manager of Fibra Uno.
Key Questions and Answers
- What is Fibra Uno’s main objective with this investment? Fibra Uno aims to internalize its real estate advisory services, investing 10,467 million pesos to align with industry best practices and respond to institutional investor recommendations.
- What assets will be transferred as part of this agreement? Fibra Uno will transfer real estate assets, including Samara, MidTown Jalisco, and Montes Urales 620, totaling more than 260,000 square meters.
- How will internalization benefit Fibra Uno? Internalization aims to eliminate conflict of interest perceptions, improve the capitalization rate, and result in annual savings of 250-300 million pesos.
- What is the significance of this unique internalization practice? Fibra Uno’s internalization is subject to Cofece approval and specific conditions, distinguishing it from most Mexican REITs operating under external advisory schemes.
- Who are the key figures involved in this transition? Founding partners will retain significant capital participation and continue as advisors, alongside key figures like André El-Mann.
