Good morning, and welcome to the 2025 second quarter Fibra Mty's conference call. All information presented in this conference is proprietary and all rights are reserved. The information has been prepared only for information purposes and is not a solicitation of an offer to buy or sell any securities. It is important to note that the presentation related to this conference is available at www.fibramty.com, and recordings of the call will be available on the website of the company in the next two hours. If you are connected using our webcast tool, you have the option to download the presentation in order to move the slides at your own pace. Let me remind you that the information discussed in today's call may include forward-looking statements on the company's future financial performance and prospects, which are subject to risks and uncertainties.
Additionally, during this call, we may refer to certain non-accounting financial measures. Actual results may materially differ, and the company advises not to rely on these forward-looking statements. Fibra Mty undertakes no obligation to publicly update or revise any forward-looking statement. With us this morning for Fibra Mty, we have Mr. Jorge Ávalos, CEO; Jaime Martínez, CFO; Javier Llaca, COO and CIO; Eduardo Elizondo, legal counsel; and Cesar Rubalcava, investor relations. They will discuss on the more important strategic, financial, and operating aspects of this quarter. I will now turn the call over to Mr. Jorge Ávalos.
Thank you, Rob, and thank you everyone for joining our second quarter 2025 conference call. I would like to begin with addressing the recent announcement from the U.S. government regarding the imposition of a 30% reciprocal tariff on Mexican imports starting on August 1st, 2025. This measure, which increases the previous 25% rate, has been justified by the U.S. authorities as a response to what they consider insufficient efforts by Mexico to contain drug trafficking and control its southern border, particularly with respect to fentanyl and cartel activity. At this stage, it remains unclear whether the exemption for the USMCA-compliant goods will continue to apply. However, past precedent, most notably the treatment of Canada under similar measures, suggests that such carve-outs could remain in place.
Additionally, the effective impact of this new tariff on Mexico exports may be modest considering that a large portion of trade is already covered by sector-specific arrangements, such as those for autos and steel, aluminum, or complies with USMCA origin rules. Current estimates indicate that 90% of Mexico exports meet these criteria. Still, the announcement has added a new layer of uncertainty to an already sensitive trade environment. Investor sentiment may remain cautious both from capital and real estate markets. While the USMCA is not scheduled for review until 2026, these latest developments could bring forward discussions. A constructive approach for both governments, especially from Mexico, which is likely to intensify its cooperation on border enforcement and cartel-related issues, could help reduce market volatility and preserve competitive access to the U.S. market. Against this backdrop, our strategy remains resilient.
Most of our leases are long-term U.S. dollar denominated and supported by tenants with a longstanding operational presence in Mexico. Furthermore, our recent acquisition involving Mercado Libre increases our exposure to e-commerce, a sector with a strong domestic demand and lower vulnerability to external trade shocks that our view is a combination that strengthens our position and enhances our ability to navigate potential disruptions while capturing long-term growth opportunities. Moving on to our performance, and before handing the call to Javier, I am proud to confirm that based on our estimates, we remain firmly on track to meet our yearly guidance, which despite the effects behavior and our price rally in the market, remains with an attractive 8% dividend yield. We also recently published our ESG annual report, which is available on our website. If you have not had a chance to review it, I encourage you to do so.
It offers valuable insights into our sustainability strategy and progress. Having said that, I will leave the floor back to Javier for the market and portfolio update. Javier?
Thank you, Jorge. Before turning our property performance and quarter end KPIs, I would like to take a moment to talk about the recent acquisition and disposition activities. As Jorge mentioned a few moments ago, and as you may recall from our first quarter earnings call, early in April, we completed the purchase of an 885,000 sq ft industrial facility in León, Guanajuato for $106 million. The asset is fully leased to Mercado Libre, who is now our largest industrial tenant. This transaction not only deepens our relationship with one of Latin America's leading e-commerce companies but also expands our footprint in the Bajío region with a top-tier logistics facility. The lease is U.S. dollar denominated and structured on a long-term basis of at least seven years, consistent with our all-weather strategy of securing high-quality income generating assets.
Post quarter end and within a two-day window, we executed two acquisitions and one divestment. First, on July 15th, we finalized the acquisition of the last two properties from the Battach portfolio for $73.4 million. Both properties were recently delivered, are 100% occupied, and are already generating revenue. These additions improve the average age profile of our portfolio while preserving cash flow visibility and avoiding additional leasing risk. This transaction marks the completion of a full eight-property industrial portfolio in Nuevo Leon. The entire Battach portfolio totals approximately 2 million square feet of GLA, with a total investment of $192.4 million. Both the Battach and MeLi transactions were fully funded with proceeds from our follow-on offering. That same day, we also acquired a 391,000 sq ft land plot in Nuevo Leon, adjacent to one of our existing properties.
The site has the potential to add approximately 200,000 sq ft of GLA through an expansion project, approximately 60% of which is already produced to the current tenant. The land, like our other expansions, was financed through a development-specific credit facility. The following day, on July 16th, as part of our portfolio optimization strategy, we completed the sale of the Fortaleza office property for MXN 360 million. The transaction was executed at a price consistent with the fair market value determined by our independent third-party appraiser, CBRE. Proceeds from the sale, we mainly used to prepay our BBVA revolving credit facility, which had previously been drawn to finance the repurchase of shares. In addition to this sale and the Prometeo office building currently classified as held for sale, we have received offers totaling over $70 million, primarily for office properties. These offers are currently under review.
Additional information will be provided if any of the negotiations reach advanced stages. We are approximately $200 million short of our investment goal target set in the latest equity issuance. Nonetheless, thanks to our solid balance sheet and ample financial flexibility, we have sufficient capacity to reach this goal while remaining below our 30% loan-to-value threshold. Should we extend leverage to our 35% cap, we will unlock an additional $200 million and around $115 million could be added if we successfully complete the assets disposal currently under review, reaching a potential firepower of nearly $0.5 billion without tapping the markets. Having said that, we will continue to prioritize stabilized investments in core industrial markets with minimal exposure to current macroeconomic headwinds and with properties and tenants with strong fundamentals, including inflation index, U.S. dollar denominated leases with long WALTs.
Currently, our acquisition pipeline exceeds $850 million and includes 90 industrial properties totaling close to 10 million square feet of gross leasable areas. These opportunities are at different stages of analysis and negotiations and are in key markets such as Monterrey, Juarez, Chihuahua, and the Bajio area. The scale and quality of this pipeline, together with our firepower, give us a unique position to act with conviction and discipline as we continue to build long-term value for our investors. As we begin discussing geographic exposure, I would like to transition into industrial market trends and how they benchmark against our current portfolio. Page five of the material contains a side-by-side comparison of key indicators from CBRE for the 13 prior markets in Mexico and our portfolio as of the end of the second quarter.
Total market inventory rose by 16 million square feet or 2% from the previous quarter, while vacancy rates increased by 50 basis points to 4.8%. Year-to-date net absorption reached nearly 70 million square feet, with over 10 million added in the second quarter. Despite ongoing market uncertainty and relatively low demand compared to 2023 and 2024, vacancy remains low. Net absorption for the first half of 2025 is below that of 2019, and total absorption for 2025 may be around 60% of 2024's level. Tijuana stands out as vacancy rate is now above 10%, representing an increase of more than 200 basis points from the previous quarter. The new supply grew by over 1 million square feet, including a considerable amount of subleased space, while net absorption rose only by 40,000 sq ft. Although speculative construction activity slowed down in the second quarter, overall supply continued to outpace demand.
With vacancy rates in the East and Rosarito corridors currently at over 33% and 19% respectively. Although this condition is a cause for concern, it may also offer promising investment opportunities in stabilized properties given the enduring strength of Tijuana's long-term fundamentals. Our portfolio outperforms the market in occupancy and with rent growth potential when comparing our in-place rate with asking prices. Notably for those markets where vacancy has been increasing, we stand with long duration in the leases, offering stronger short-term defensiveness, particularly during uncertainty periods like this one. The company will maintain a disciplined approach to real estate operations, including acquisitions and dispositions. Market conditions may present additional opportunities, and our business model allows for the flexibility to respond to these changes while providing cash flow predictability due to long-term growth.
I will elaborate in more detail on both markets and our portfolio conditions later during the Q&A section of the call. Turning to property performance. During the quarter, we delivered approximately 200,000 sq ft related to an industrial expansion in Querétaro. With six out of seven expansion projects now completed, we have not only increased our GLA organically, but have done so at an attractive yield on cost of nearly 10%. As expected, this has translated into incremental NOI, as illustrated in the reach on the following slide. Same property NOI increased more than 17% year-over-year in the second quarter. Excluding FX effects, expansions remain the primary driver of growth. While leasing activity and rent increases have helped offset vacancies currently in the process of being marketed. Notably, same property NOI from the industrial portfolio alone grew by more than 20%.
This was further supported by acquisitions, which bolstered our total NOI to MXN 767 million and posted a roughly 91% operational margin, remaining one of the highest of the industry and reflecting strong asset quality, operational efficiency, and solid lease structures. Going to slide nine of the webcast material. Investment property value already includes acquisitions and dispositions carried out in the last 12 months, and the reclassification of the two office buildings that as available for sale as of quarter end. This effect was more than offset given peso appreciation against the dollar. This also has implications for our NAV, as it will be explained further in detail by Jaime later in the call. It is worth noting that the current in-place cap rate for the industrial portfolio stands at 7.7%, while office continues to expand the combined portfolio to 8%.
I would like to end my piece of the webcast by briefly reviewing the portfolio's KPIs. We continue to increase the industrial share of our revenues while keeping the largest exposure to top-tier markets in the North and Bajío areas with a highly defensive portfolio with almost 85% of revenues denominated in U.S. dollars. Furthermore, our weighted average lease term remains as one of the longest amongst peers with nearly five years, giving enough cash flow visibility while keeping rent growth potential in the lease maturities in the incoming two years. Being almost entirely from industrial revenue with roughly 20% of revenue. With that, I will hand over to Jaime for the next section of the call. Go ahead, Jaime.
Thank you, Javier, and good morning to everyone. Let me begin by reviewing our financial performance, focusing on P&L and its evolution since the latest equity issuance. As shown on slide 11, during the second quarter of last year, we saw an increase in AFFO and FFO, driven by the proceeds from the follow-on, which were temporarily held in cash and generated financial income. As we've gradually deployed those funds into acquisitions and expansion, that financial income has transitioned into NOI and EBITDA. For that reason, we have seen a more moderate increase year-over-year in AFFO and FFO. However, when comparing the follow-on features to the most recent quarter, the improvement is evident across all metrics. Talking about bottom line, AFFO for second quarter 2025 totaled approximately MXN 630 million, an 8% increase year-over-year.
Such movement was mainly driven by the Battach and MeLi acquisitions, net of the reduction in financial results that I just explained, the contribution from expansion projects, and FX gains mentioned by Javier earlier. Going back to valuation as of quarter end, our certificates were trading fairly versus book value, but still at an attractive 8% AFFO yield, practically in line with our property's implied cap rate, which reflects the cost structure efficiency and limited cash flow drainage below NOI. As Javier mentioned, our valuation and cash flow is highly correlated to FX behavior. Therefore, as in previous quarters, we include a valuation sensibility analysis on the different FX scenarios for reference. Moving on to the next slide, I'm proud to highlight that our current market valuation continues to be supported by both local and international investors.
Our price experienced a positive shift early in the year and has shown resilience, proving a relatively defensive performance despite broader market volatility. We believe this underscores investors' appetite for vehicles that offer stable inflation-linked cash flow with long-term visibility, primarily denominated in U.S. dollars. In addition, our average daily trading volume has increased significantly compared to historical levels, particularly following last year's follow-on and our inclusion in some FTSE indexes. This momentum reflects not only the successful execution of our strategy, but also our ongoing efforts to maintain clear, consistent communication with the market and to broaden our investor base through multiple channels. Notably, we are proud to have coverage from most major institutions and look forward to welcoming additional firms going forward. I'd like to sincerely thank the analysts who are doing the groundwork.
Your efforts have been instrumental in amplifying our message with diligence, objectivity, and a high standard of analysis. Before we move to the Q&A, I'd like to highlight that our capital structure remains solid, with a loan-to-value ratio of 26% and net debt to EBITDA at 2.5 x. We maintain ample financial flexibility and have drawn credit lines representing nearly 20% of our total assets, providing us with the capacity to pursue new investment opportunities for up to $400 million without exceeding our 35% loan-to-value self-imposed ceiling and without tapping the markets or asset recycling. We have already begun exploring refinancing options for our nearest material maturities. Although it's still two and a half years away, our intention is to be fully prepared to act without placing pressure on our debt maturity profile.
In that context, we are confident that our investment-grade rating will continue to be a key advantage in securing competitive financing terms. With that, Rob, please proceed with the Q&A.
Thank you. Ladies and gentlemen, to ask a question, please press star one. If you are connected using our webcast tool, please write your questions in the chat section of the platform. Once again, that is star one, or you may write your questions in the chat section of the platform on the webcast. Thank you. Thank you. Our first question is from the line of Alan Macias with Bank of America. Please proceed with your question.
Hi, good morning. I wanted to confirm your leasing spread and renewals during the quarter and your expectations going forward. The second question is if you can provide us the breakdown in the industrial portfolio percentage in manufacturing and percentage in logistics. Thank you.
Hi, Alan. This is Javier. During the second quarter, we only had renewals on automatic renewal leases. So the lease spread was only that on the inflation escalation schedule on the contract. In regards to going forward, we expect between 10% and 20% positive lease spread in the following few quarters. In regards to the second question, we stand at around 75% light manufacturing and 25% logistics. Moving forward, we could expect for that figure to switch more to between 60% and 70% on manufacturing, 30% - 40% on logistics.
Great. Thank you.
You're welcome.
The next question is from the line of Piero Trotta with Citibank. Please proceed with your questions.
Hi, team. Thank you very much for the presentation. I have two questions here. The first one I would like to know if you could give us an update about the office portfolio. With this recent lease agreement, is it fair to think we might see this portfolio sale being earlier than initially expected? The second question, I would like to know if you see a better scenario for business now, and if you could tell us the evolution of it, or you still see some potential tenants on wait-and-see mode. Do you think they will wait for a definitive decision on tariffs? More color on this would be nice. Thank you.
Sure. Thank you for the question. In regards to the recycling or disposition process on the non-industrial portfolio, it's been moving really good. We closed on the first two. We are very close to closed on another one, and the outlook for the remaining of the year looks really good in terms of the offers that we already received for.
I would say half of the portfolio. I would not venture in saying that we could close on that and become a pure industrial vehicle sooner than expected. But most definitely is going to be within our scenario of 2026, 2027 to get done with that. In terms of the second question that you have on the demand, it's funny because it's good when tenants are comfortable being uncomfortable with the uncertainty. On that regard, what we have seen lately is that even though they are still in a wait-and-see mode, RFPs or request for proposals from most of the institutional brokerage houses seem to start moving a little bit faster, particularly for expansions and additional properties for existing companies in Mexico, not as much for new companies.
We believe that as we get closer to what Jorge said before in terms of the renegotiations or the review of USMCA, and the dust starts to settle, these existing plans for expansions and new facilities are going to continue to move faster. So we feel positive about that. We have seen a little bit of change from the second quarter in comparison to the first quarter.
Very clear. Thank you very much.
Thank you.
The next question is from the line of Antonio Hernández with Actinver. Please proceed with your questions.
Hi. Good morning. Thanks for taking my question. Just as a follow-up, you already provided some information on which markets you're looking for with that extra firepower that you still have. You also mentioned that going forward, you expect to switch that manufacturing versus logistics breakdown much towards being a little bit more diversified. Just trying to match these different comments, are you expecting that firepower to be more focused on logistics versus manufacturing or maybe not so much from a short-term priority and also while considering, of course, the recent trends in terms of the tariffs and so on? Thanks.
Not necessarily. Thank you for the question. Not necessarily. We're not being proactively looking for more logistics than manufacturing. As a matter of fact, on the pipeline that we're currently evaluating, I would say that the composition is pretty close to that 75%-80% manufacturing. At least on the short-term pipeline that we have more clarity on, composition would be probably about around the same.
Okay. Thanks for the call. Have a good day.
Thank you.
Our next question is from the line of Jorel Guilloty with Goldman Sachs. Please proceed with your questions.
Hello. Thanks for taking my questions. I have two. The first one is, you mentioned you have an acquisition pipeline of exceeding $850 million, but then you say that your total firepower right now is around $434 million. So I was wondering, how do you bridge that potential gap, if you were to execute? Is that gap due to the fact that $850 million, you're assuming that it comes with debt? And then the other part is on your conversations with your tenants. It's clear that you have pretty high retention rates for industrial properties. You mentioned it's north of 80% currently. But I was wondering if you can comment on your conversation with those tenants around potentially expanding capacity.
Just want to understand if any of your tenants at this point in time are looking forward and just thinking like, "Hey, we might need to expand capacity because we're here in Mexico and we're here for good." Just wanted to get a sense if there's any potential investment from current tenants within Mexico. That's it. Thanks.
Hello, Jorel. Thank you for the question. In regard to the pipeline, we have $850 million on the evaluation of potential transactions. We're getting more and more every day. I wouldn't be surprised that the pipeline exceeds $1 billion in the next few weeks. We're going to be far from closing on everything. We're being very selective, we're being very disciplined on pricing. As a matter of fact, we have lost a couple of deals in the past few weeks because of pricing. We're not going to overpay for no transaction. We feel confident that we can fulfill the dry power that we have with the appropriate transactions. If we exhaust that amount, we're going to think on the next strategy. In regard to your second question, Jorel, we are currently working on close to $70 million on additional expansions from existing tenants.
I can tell you that we are pretty busy on strengthening this type of relationship with our tenants. Not only through expansions, but some other added value services that we're going to explain in a few weeks on what are these. This has the positive collateral effect on not only extending the life of the lease and reinforcing the relationship with our tenants, but it allows us to have higher yields on costs of between 9.5%-10%. That helps us bolster the overall cap rates of all of our investments, including stabilized assets, expansion, and added value services. So, yeah, we've been very active with many of our tenants already in talks for new expansions, and we're going to have I'm sure more in the near future.
Thank you. The next question is from the line of Valentina Macgowan with GBM. Please proceed with your question.
Hi. First of all, I would like to congratulate you on the results of this quarter. My question is in regards to the 43,400 sq m land in Monterrey and Saltillo. Can you share the current status, and are the 36,000 sq m already binding? What is the plan for the remaining space? Thank you, and congratulations again.
Sure. Thank you for the question, Valentina. We are working on. You refer to the land lots, right?
Yes.
Yeah. The one that we closed last week in Nuevo León is for the construction of a new building that is going to be 60% an expansion for the adjacent property that we already own and we lease to a U.S. company. As a matter of fact, there is a good chance that this company ends up leasing the whole building. Right now, the signed commitment is for 60% of that. We have no development risk on that, and if the tenant should not occupy the whole building, we are going to have about 40% of that new building available for lease, and we are already working on the marketing on that. In regards to the one in Saltillo.
Just to point out, and going further on that question, we remain on a very prudent approach. We only proceed with speculative development locations and formats with proven demand and potential tenant interest. It is also very important to mention that we are going to be very active in expansions that are pre-leased, like the one that Carlos just mentioned.
Exactly. The one in Saltillo is a similar situation. We are working, nothing done yet, on an expansion for an existing tenant that we have there. It is moving along very well, and we might end up with some excess land that we are going to keep for marketing for a pre-lease of a new build-to-suit project. That is our activity right now on land.
Okay, perfect. Just as a follow-up question. If the tenant in Monterrey decides that they want to take up the other 40% of the building, would we see that impacting the results of the following quarter?
No, because it is a construction that is going to take somewhere around between 12 and 15 months. What you are going to see once we close or sign on the expansion is going to be the progress on that expansion, but the actual impact on the cash flow is once the rent commences, and that is going to happen between 12 and 15 months later.
Perfect. Thank you. Once again, congratulations with the results.
Thanks a lot.
The next questions are from the line of Enrique Cantu with GBM. Please proceed with your questions.
Yeah. Thank you first of all for attending. Thank you for my question. I just have a quick one. After selling Fortaleza, what is the status of the second office asset areas for sale, and how likely are the current offers to close in the second half of the year?
I am sorry, Enrique. Thank you for your question, but we cannot hear you very well. You were referring to the sale of the Fortaleza building. We did not get the rest.
Yes. Sorry. Can you hear me now?
Yeah, a little bit better. Yeah.
Okay. This is a quick one. After selling Fortaleza, what is the status of the second office share for sale, and how likely are the current offers to close in the second half of the year?
Yeah. We believe that the next closing that we are going to have on the disposition of the non-industrial assets is going to happen in Monterrey. We expect that to happen within probably to have a binding agreement by the end of the third quarter. That is going to happen relatively fast. The rest of the pipeline on the dispositions or the potential sales that we have might start happening before the end of the year.
We're moving really good on those. I believe it's 100 and something million dollars from the following sales that we might have, let's say, within the next two to three quarters.
Okay. Thank you very much.
Thank you, Enrique.
The next questions are from the line of Felipe Barragán with JP Morgan. Sir, proceed with your question.
Hey, good morning, guys. Thanks for the call for taking my questions. I have a couple. One is on including into indices. For example, you guys are included to the FTSE small index for Latin America, I believe. I was looking at the NWW index to the MSCI for Mexico. There are other companies such as Ferrovial or La Comer, who have good liquidity. I was just curious if you guys have any insight on if that could be a potential catalyst, if you guys could potentially join the index. My second question is on your $850 million pipeline, if that includes any of the potential asset sales from Fibra Prologis from the Terrafina [matches] that they don't want to keep. Thank you, guys.
Thank you, Felipe. This is Cesar. Thank you for the question. We've been increasing our participation in the FTSE index, which scales down to different passive investors funds that are more oriented to different sectors. For example, they have emerging markets excluding China, so on and so forth. As we continue to expand our participation in this index, we could be included in several sub-indices, right? We don't have any more visibility. We've been talking to both FTSE, S&P, and some other companies to have more visibility. Nonetheless, as you could expect, they want us to pay for their services in order to have more visibility. We're also working with the banks and the trading desks in order to have more preview. As of now, we don't expect any more changes going forward.
There's another thing. There are some international investors, especially Europeans, that they just invest in vehicles that are registered or included in such indexes. That may also help in liquidity. Maybe not as fast as the passive funds, but we have seen more activity of those guys.
Felipe, this is Javier in regards to your second question, the short answer is no. The Terrafina legacy portfolio is not included on the $850 million pipeline that you saw on the presentation. However, we're starting to look into the first portfolio that was just released last week. We just got the information, and we're looking into it, but it's not considered as part of the pipeline that you saw on the presentation.
Great. That was very clear. Thank you.
Thank you.
The next question is in the line of David Soto with Scotiabank. Please proceed with your question.
Hi. Good morning. Thanks for taking my question. Just a quick question related to your land bank. Should we expect further developments, or are you looking to execute opportunistic investment?
Our land bank, I guess you are referring to our land bank in Puebla, where the bulk of our land bank is. We have no plans for development right now on that piece of land. We will rather sell the land than develop it. We have been entertaining a couple of interest buyers, but nothing concretes so far. If we were to sell, I would say a considerable portion of that land, we might consider then developing the rest. But right now, we have no development plans for that land.
Perfect. Thanks.
Thank you.
Thank you. As final reminder, press star one if it is time for any questions.
We have some questions in your webcast. The first one comes from Bernardo Malpica from Santander. You mentioned your industry portfolio by cap rate. Could you give some color of where you see cap rates for the industry overall? Have you seen higher cap rates across the country given the current macroeconomic and political uncertainty?
Thank you, Bernardo. Our industrial portfolio stands at an in-place cap rate of 7.7%. What we have seen in the latest bids that we have participated on, it is kind of consistent to that. We might see higher cap rate, particularly in some areas of the country. Yeah, they have to do in part with the uncertainty, also from some distress from some private developers. We are expecting to see a little bit of increase on the cap rates.
Thank you. Our next question comes from Alejandro Contreras from [ASIC]. Does the current environment have created an opportunity to buy properties in Monterrey at lower prices versus 2024?
Thank you, Alejandro. Not necessarily. I would say that Monterrey is a very mature and expensive market. It is not as stressed as some other markets like Tijuana or Juárez. We haven't seen clear opportunities at a high discount. I guess that my short answer would be not necessarily.
Thank you. Our next question comes from Francisco Chavez from BBVA. Can we expect NOI and EBITDA margins to come back to the 93% and 85% marks?
I would say, I'm going to talk about the NOI margin. I'm going to leave the EBITDA margin to Jaime. Our current NOI margin of close to 91%, we really want to keep or maintain very stable in the next few quarters at around between 90% and 91%.
In terms of EBITDA, it might grow marginally because, as you know, we are not growing our assets, so the economies of scale in that sense are not going to appear that easy. Again, maybe marginally with some acquisitions or so, but not in a significant way. If you take out some distortions of this quarter, it might go a little bit up from what we have seen. I would say that in the short term, between 90% and 92% or 83% or 85%, is going to be basically the range in which the margin is going to move.
Thank you.
Thank you. We have a question from Edson Murguia with SummaCap. Please go ahead with your question.
Hi. Good afternoon. Thank you for taking my questions. My first one is a follow-up on the pipeline that you have. I know that probably you cannot give us the specifics, but how did you identify those opportunities? Are relating to a cap rate, a region, a tenant? Because if we analyze the past acquisitions, buyers from a specific target. That would be my first question. My second question is regarding on the hedging strategy that you are performing or performed during the second quarter. You mentioned that you extend the deadline of the expiration date of the forwards that you have, but you mentioned in the earnings release that you executed them. Could you give us a little bit more color in order to understand better? Thank you.
Hello, Edson. Thank you for your question. This is Javier. I am going to leave the second question to Jaime and Cesar. In regards to the first question on the pipeline, I could tell you that probably around half of the pipeline that we have has been originated by us. These are off-market deals on developers that we know, and this is that we have paid through some of their properties and talking to them in terms of partnering on potential acquisition of their stabilized assets. The other half would be formal processes, bidding processes from brokerage and institutional brokers. Some of them on closed funds, both CERPIs and some merchant developers and closed private equity funds. We have no specific aim and target.
What we do is that our main investment guidelines call for the location, the type of building, the type of tenant, and the type of lease. When we run into a portfolio, either originated by us or presented to us by somebody else that do not meet that criteria, most of the time we discard those from the beginning. We have no specific targeting process other than the relations that we have, the process that come along, and some market intel that we do on specific funds or developers that have a specific investment term on their plan.
To complement on Javier's answer, Edson, Mexico is still very small. There are only 90 developers in the whole country that account for all the industrial parks in Mexico, which are almost 470 industrial parks. This allows us to be very active or be very proactive as they see us as a financial partner, as we don't develop industrial parks. We buy buildings within those industrial parks. I would say that internally, we know those 90 developers, and as Javier mentioned, most of the process, some of the processes are managed by institutional companies like CBRE Group, Inc. or Jones Lang LaSalle. Those RFPs come up to our desks, and that's where we decide whether we like that market, that tenant, and the type of building that they're selling.
To complement on what Jorge said, and what I said before, something that is very rewarding is that the prestige that we have on the execution and the closing of the transactions has allowed us for a lot of, I would say some developers to reach out to us in order to try to do a direct deal with us, given the fact that they know that they can close very smooth and very quick with us. So that also helps a lot on building the pipeline.
In terms of the forward, if you remember, we did those forward because of different conditions. The first one, the interest rate in pesos were pretty high. We have these resources from the follow-on, and we have some committed acquisitions, like those of Battach that we just paid a few days ago. So those forwards, they already expired, and we have these acquisitions done. We have some other forwards which are related with the VAT or another particular function. But at this moment, we are not very active at this market because even when the exchange rate is a little bit lower, we don't have a lot of cash in our balance sheet. So, we are not that active at this time. I don't know, Cesar, if you want to complement.
Yes. No, just complement on, Jaime, the uses of those forwards. As he already mentioned is the VAT reimbursements from the acquisitions that we just made and the sale of the Fortaleza property, which both were denominated in pesos, and we intend to apply those resources in U.S. dollars.
Just because I am a little bit confused because there are two that already expired, which is with Scotiabank and Bank of America. There are also two that are on $32.2 million that are extending the maturity. One is from December 2025, if I remember correctly, and the other one is nearby, right?
Yes, correct. Just to be perfectly clear, Edson, we closed those forwards with the following proceeds, and we closed nearly $140 million, which has been unwind as we apply those resources in acquisitions. The two forwards that we just extended their maturity; one was just applied to the Battach property that we just bought last week. We have a remaining forward with roughly $70 million, which expires until late December this year, which could be unwind if we find an acquisition to be closed before that date. If not, we will continue to do the rollover of that forward.
Okay. Very clear. Thank you so much.
Thank you.
Thank you.
At this time, I will now turn the conference over to management for closing remarks.
Thank you, everyone, for attending this call, and we will speak to you next quarter. Have a great day.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.