Terrafina Renegotiates $300M Credit Facility

The new facility extends maturity and includes lower interest rates. Credit amount will be lower, although it could increase.

Carlos Gomez
Carlos Gomez

Terrafina, a leading Mexican owner of industrial real estate, has successful renegotiated the terms and conditions for its syndicated revolving credit facility, the company announced late Tuesday.

The primary changes are: extension of the maturity date to 2023, a four-year maturity with the option to extend one additional year; a 20–basis point interest rate reduction, from LIBOR plus 265 basis points, to LIBOR plus 245 basis points; and an adjustment in the credit line amount from $375 million to $300 million, with the option to increase that amount to up to $400 million.

This renegotiation improves our average maturity profile, with added flexibility to continue managing Terrafina’s business plan,” Terrafina CFO Carlos Gomez said in a prepared statement.

Terrafina is a FIBRA (Fideicomiso de Infraestructura y Bienes Raíces), an entity similar to a U.S. REIT.  It’s externally advised by PGIM Real Estate and focused on the acquisition, development, lease and management of industrial real estate properties in Mexico.

Terrafina’s portfolio consists of strategically located warehouses and other light manufacturing properties throughout Mexico’s Central, Bajio and Northern regions. Terrafina owns 280 real estate properties, including 268 developed industrial facilities with a collective GLA of about 37.8 million square feet, along with 12 land reserve parcels intended to preserve the portfolio’s organic growth capability.

An active market with high occupancy

Terrafina’s expanded credit facility is far from the only big sign of Mexico’s active industrial real estate sector. In October, Grupo IGS acquired a 2.9-million-square-foot, 27-property industrial and logistics portfolio from Hines. The latter had purchased the portfolio two years earlier and in the interim had pulled it up from 73 percent occupancy to 90 percent.

Net absorption of industrial space in Mexico looked to hit 20.7 million square feet in the first half of 2017, which was very close to the figure for a year earlier, according to a mid-2017 report by CBRE. More significantly, the average nationwide vacancy fell to just 5.2 percent, though the other side of the coin was that 26.9 million square feet of industrial space was under construction as of mid-year.

Image courtesy of Terrafina