Clarion to Sell Mexican Industrial Portfolio for $202M

Clarion Partners is selling a 22-building industrial portfolio located in Mexico to FIBRA Uno, a Mexican public REIT, for $202 million.
Tecma, Ciudad Juarez
Tecma, Ciudad Juarez

National leading real estate investment manager Clarion Partners is selling a 22-building industrial portfolio across Mexico’s five metropolitan areas for $202 million.

Mexican public REIT FIBRA Uno purchased the portfolio, including four land reserves containing a total  of 67 acres in the total transaction amount.

The portfolio is 91 percent occupied by 19 tenants that include American, Mexican and international companies, totaling 2.8 million square feet of net rentable area across five metropolitan areas: Monterrey, Saltillo, Reynosa, Ciudad Juarez and San Luis Potosi. Some of the U.S.-based multinational companies included in the portfolio are: Whirlpool, Cequent (Trimas), Mary Kay, Mueller, and Expeditors.

In Mexico, the overall industrial market remains strong. The border may have some challenges, but is attracting users, while Mexico City and Monterrey remain quite strong, according to John Morris, leader of Industrial Services for the Americas at Cushman & Wakefield. “Lingering uncertainty has activity below what we have felt is possible, but we remain bullish on this market,” Morris told Commercial Property Executive.

Rising manufacturing costs in China and investor-friendly legislation in Mexico is encouraging tech, apparel and manufacturing firms to ‘re-shore’ production, which in turn has boosted demand for industrial real estate, according to Clarion.

“Favorable market conditions in Mexico garnered attractive pricing for the portfolio of properties, many of which had completed their development life cycle (others were acquired),” Alejandro Cuadros, a vice president at Clarion Partners and head of the transaction team told CPE. “These favorable market conditions were driven by Mexico’s strong economic fundamentals and the creation and development of the Mexican public REIT market in 2011 (REITS are known in Mexico as FIBRAs, Fideicomiso de Infraestructura y Bienes Raíces).”

The buyer, FIBRA Uno was Mexico’s first public REIT to list on the Mexican stock exchange in 2011 and is the largest of its kind in market capitalization. The REIT primarily acquires, owns, develops and operates real estate properties, including industrial, commercial and office properties, focusing on Mexico locations.

“The creation of FIBRA Uno, with its strong balance sheet and plans to grow within the industrial real estate market, made it an attractive strategic buyer,” Cuadros added.

The sale is expected to close by the end of the year.

“For a company like Clarion return on equity is a key metric to which they manage carefully on behalf of investors, and, perhaps, when modeling the expected return on this portfolio, and the price they were offered, there was an opportunity for Clarion to do better with its ROE and with these proceeds, elsewhere,” Morris concluded. ” FIBRA certainly wanted the acquisition, and we can assume must have paid some type of premium relative to Clarion’s position.”