Ladies and gentlemen, thank you for standing by, and I'd like to welcome you to Fibra UNO's first quarter 2026 results conference call on the 30th of April, 2026. At this time, all participant lines are in listen-only mode. The format of the call today will be a presentation by the management team, followed by a question and answer session. Without further ado, I'd like to pass the line to the CEO of Fibra UNO, Mr. André El-Mann. Please go ahead, sir.
Thank you, Luis. Thank you, everybody, for listening to our call. We want to discuss our first quarter of 2026 results we have posted yesterday, which we believe are very solid results for our company. We closed at 95.7% occupancy level overall. That being said, we have above 94% on the retail segment, close to 98% on the industrial segment, and close to 83% on the office segment. I think that these numbers can say a lot about our company or can say very little about our company, depending on the memory span that we have. We have a very large span of memory. We believe that these are very strong results. This quarter represents various milestones for our company in our history. It's our very first quarter, fully consolidated with Fibra NEXT, our carve-out of last quarter, last year, and in the first quarter, completely internalized in our management.
We believe that the numbers are only to improve in the next quarters to come. We have very strong renewals in all of our segments. 11.4% in Mexican pesos in the industrial segment, 14.7% in U.S. dollars in that very segment, 7.2% in the retail segment, and surprisingly, we had above 23% on the office segment. This is a very small hint of the recovery of that particular segment. We have been talking about the recovery of the segment for many quarters right now. We talked about that the recovery will come first in the occupancy and then in the pricing. I think the occupancy level is almost reached pre-pandemic level. Remember that the pandemic hit the most to the office segment, and we are almost as a market-wise, almost on the level of the pre-pandemic.
We expect that this continuously growing occupancy level that we have been struggling with for more than five years now, six years almost, we expect that it will be reflected in the increase on the rents per square meter. We will be seeing strong quarters in the level of the rents of the office segment. This quarter, Fibra NEXT, our sister company, made an offering for Macquarie. We support that decision, and we think it's the best for the company, and we think that we can add some value. Within the portfolio of Macquarie, there's a segment of retail. We think that we can be a lot of help for Fibra NEXT in the retail segment. Jorge will talk to you in more abundance later on. We are very pleased to welcome Ms. Marimar Torreblanca joining our board. This appointment of Marimar will strengthen our corporate governance.
Her knowledge of the industry and profound experience in our market will bring full benefits in our institutional practices. Welcome, Marimar, as an Independent Board Member. All in all, we began 2026 strong. We expect that we will continue to be strong throughout the year. We began with a record-setting in our main lines yet again, and we expect to bring on good news to our shareholders as quarters go by. We are very confident on the performance of the company for the remaining of the year, and we are positive that we will deliver to our investors with double-digits growth across our main lines through 2026. With no further ado, I would like to pass the mic to Jorge to talk in depth about the numbers. Jorge, please.
Thank you very much, André, and thanks everybody for joining our quarterly call. As usual, I'll start with the quarterly MD&A, and I do believe that we did have a very solid quarter indeed. On the revenue line, we had an increase of MXN 133.7 million, or 1.7%, compared to the previous quarter. I think this is particularly remarkable considering the fact that we sold or took out of the balance sheet to pay for the advisor, the properties of Samara, in Jalisco, and Montes Urales 620. In addition, during the quarter as well, we also sold a portion of the Memorial Portfolio, eight properties. Despite the fact that we sold those properties and obviously stopped receiving the revenues associated with these properties, we still managed to grow our revenues quarter-over-quarter by almost 2%.
Considering that inflation in the year is 4.5%, if below 5%, we do believe that this is an extremely remarkable feat. At the end of the day, the quarter revenues reached a little over MXN 8 billion, MXN 8 billion, MXN 7.2 million in total. The other drivers for the growth in revenues, obviously, are a 20 basis points increase in the overall portfolio occupancy, inflation-driven increases on active contracts, rent lease renewals. André mentioned the very exciting renewal we got, a very positive surprise in the office sector. The effect of the consolidation of Fibra NEXT, this is the first full quarter of operations of Fibra NEXT, where we actually have the total combined portfolio. That obviously reflected also on our numbers. Very pleased with the growth of the revenues, despite the fact that we took out some properties for the internalization.
In terms of occupancy, the portfolio closed at 95.7%. Again, it's a 20 basis points increase compared to the previous quarter. On the retail segment, we are at 94.1%, basically 40 basis points above the fourth quarter of 2025. The office portfolio, we are at 82.1%, which is 80 basis points below the fourth quarter 2025. However, we are very comfortable with this number because this happens despite the fact that we took out primarily, if you recall, the internalization over 60% of a property or the GLA that we were including internalization model was office, primarily Montes Urales 620, Samara, which has almost 100,000 sq m of office space, and in Jalisco. All of them are heavily weighted towards the office segment.
Despite the fact that we had these properties move out, we had only a drop of 80 basis points, which means if we would have left the properties inside the company, we would have had an increase of above 83% in the occupancy of this sector. We are very pleased with the performance of how the office segment is behaving. The Others portfolio, 99.2%, 10 basis points below the previous quarter. Again, part of the internalization process on the sale of the Memorial Portfolio. The industrial portfolio continues to have incredibly solid performance with a 97.8% occupancy rate, 10 basis points above the fourth quarter of 2025. The service portfolio recorded a 10.9% increase again compared to the previous quarter. In terms of operating expenses, property taxes, and insurance, total operating expenses increased by MXN 90 million, or 8.3%, compared to the previous quarter.
This is mainly due to reclassification of some expenses as part of the internalization process, as well as the effect of Fibra NEXT consolidation. Property taxes decreased by MXN 2.7 million, or 1.3%. Again, this variation is mainly due to the exit of properties from the internalization of the advisor. Insurance expenses decreased by MXN 11.7 million quarter-over-quarter, - 8.2%. Again, this is the effect of the internalization process. Obviously, these decreases were offset by expense increases from the NEXT consolidation, basically because we have had one full quarter of operations of Fibra NEXT under our belts for this quarter. Net operating income resulting from all the changes in the above decreased by MXN 153.9 million or 2.5% versus the fourth quarter of 2025. The NOI margin calculated over rental revenue was 85.1%, and 74% compared to the first quarter of 2025.
Net interest expense and net interest income, we had a decrease of MXN 243.1 million or - 8.2%. This was mainly due to the exit of the Samara loan for MXN 1.8 billion, and the interest payments associated with that loan. The effect of interest rate reduction in pesos, and its effect on our variable rate debt, the depreciation of the peso dollar exchange rate, which went from MXN 17.96 to MXN 18.07 quarter-over-quarter. A decrease in interest capitalization. The impact of pricing of our derivative financial instruments, and obviously offset by profit generated on the investment of Fibra NEXT cash resources raised in the market. FFO, as a result of all of the above, the FFO controlled by FUNO decreased by MXN 7.5 million quarter-over-quarter. Adjusted funds from operation increased by MXN 3.8 million, or 0.01%, compared to the fourth quarter of 2025.
Basically, the difference against FFO arises from the gain in the sale of the Memorial Portfolio, which yielded a 23% IRR or return on our investment. We are very pleased with the investment we had in the Memorial Portfolio. We still hold some of the Memorial Portfolio properties still on our balance sheet. We have not fully divested from those assets. We are very pleased with the performance of those. On a per CBFI basis, we did not issue or repurchase any CBFIs. The number of CBFIs at the closing of the quarter remains the same at 3.81 billion outstanding. FFO and AFFO per CBFI, average CBFI, were MXN 0.6504 and MXN 0.6720 respectively, with variations of -2.1% and +21% compared to the fourth quarter of 2025. Again, compared to a year ago, the average FFO and AFFO increased by 3.9% and 7.3% respectively.
In terms of the quarterly distribution on the first quarter of 2026, we reached MXN 2.362 billion , or MXN 0.62 per CBFI, with a quarterly AFFO payout of 92.3%. We are assigning this at 100% corresponding to fiscal results, and it is an increase of 11.7% compared to the same quarter a year ago. Moving to the balance sheet, account receivable for the quarter totaled MXN 2.7 billion , an increase of MXN 642 million, or 30.1%. This is primarily due to the consolidation of Fibra NEXT. Not only the consolidation of Fibra NEXT, but the fact that Fibra NEXT, in and of itself, is the combination of different portfolios. We were invoicing, for example, our tenants as Fideicomiso F/1401. Now Fibra NEXT is doing the invoicing, so there are some delays in payments associated with that mechanical process.
Nothing of concern, but just an explanation of that is what is basically behind this movement. Not just the consolidation, but the fact that there is a transfer of ownership from an invoicing perspective for our tenants, and they have to deposit in a different account, and that takes a little bit of time. This is something that will correct itself. It is something that we have seen normally in every one of our acquisitions, large acquisitions before. So, normal standard operating procedure. In terms of investment properties, the value of our investment properties, including financial assets and investment in associates, increased slightly MXN 352 million compared to the fourth quarter of 2025. This is a result of consolidation of Fibra NEXT.
The exit of the eight properties of the Memorial Portfolio, as well as the three properties that we used for the internalization of the advisor, CapEx invested in our portfolio, and the fair value adjustment of investment properties, financial assets, and investments in associates. In terms of debt, the first quarter of 2026, the debt stood at MXN 151.6 billion compared to MXN 152 billion the previous quarter. Variation is primarily explained by the following: The exit of the Samara mortgage loan for MXN 1.8 billion associated with the internalization of the advisor, a net increase of MXN 1 billion in bilateral credit lines, payment of credit amortizations of MXN 60.8 million , and the exchange rate effect as the peso appreciated from MXN 17.97 to MXN 18.06/07 per U.S. dollar.
As a result of all the above, total equity decreased by MXN 11.4 billion , which basically most of it is directly linked with the internalization process of the advisor, as well as net income generated from quarterly results, the revaluation, shareholder distribution, and the employee compensation plan. Moving to the operating results. In terms of leasing spreads, increases in renewed contracts in pesos went 23.7%, or 2,370 basis points in the office segment. Again, a very pleasant surprise to see that we were able to have that type of an increase in a segment that has been sluggish, but definitely on a recovery path. Clearly, on that recovery path that we have been describing, the closer we get to 85%, we started to have some pricing tension, and you are starting to see some of this transferring in the portfolio.
We had an 11.4% re-spread on the industrial segment, 720 basis points or 7.2% of retail segment, and 5.3% in the other segment. Very pleased with the performance of that. For dollar-denominated lease renewals, we had 14.7% lease spreads in industrial segment, 120 basis points for the retail segment, and we had a decrease of 1,050 basis points in the office segment. Again, as I mentioned, the office segment is still a little bit sluggish, but definitely, we are very pleased with the performance and on our recovery track as we have been mentioning. In terms of constant properties, the rental price per square meter for constant property decreased by 1.7%. However, if we take out the annual appreciation of the peso, which is 16.4%, the increase would have been 5.6%. Again, happy with the constant property performance.
At a sub-segment level, the portfolio's total annual rent per square foot went from $13.5 to $13 per square foot, which is a decrease of 4.1% compared to the previous quarter. This is primarily explained by the exit of office segment square meters, which are the highest rent per square foot, as well as the depreciation of the FX and the effect in U.S. dollar-denominated rents. But primarily, this is explained by the fact that we have less office square meters, which have the highest rent per square meter in our portfolio. At the property level, when we start looking at the NOI on a sub-segment level for the quarter, we had an increase of 6.7% compared to the previous quarter. Very pleased with that. Fashion mall sub-segment grew 3.5%. Regional segment came in very strong with 10.3%. Standalone increased 7.5%. The office segment NOI decreased 7.4%.
Again, no surprise there, given that most of the internalization came from that segment. The other segment decreased by 7.4%. Again, no surprise there, given that we sold the Memorial Portfolio. The industrial segment NOI increased 14.5%, primarily due to the consolidation of the Fibra NEXT portfolio. With that, I close the MD&A discussion. Luis, if we can please pause the floor for a Q&A session.
Perfect. No, thank you very much. We will now be moving to the Q&A part of the call. If you would like to ask a question, please press star two on your phone and wait to be prompted. That is star two if you are connected from the phone. If you are connected from the web, you can type your question in the box provided or request to ask a voice question. We will give it a few moments for the questions to come in. Okay. Our first question is from Carlos Peyrelongue from Bank of America. Your line is now open. Please go ahead.
Thank you. Thank you for taking my question. Two questions, if I may. First one, the EBITDA level or FFO level. Do you have an idea of what the growth would have been on a like-to-like basis without the properties that you sold that are not related to the internalization? That would be the first. The second question, can you comment, what do you see as the key drivers for growth at FUNO? We see multiple drivers, but just wanted to see, what are the key ones that you would highlight that should support your growth both this year and next? Thank you.
I don't have the number, Carlos, on the calculation, but it shouldn't be that large. However, I'll be happy to get back to you with the specific calculation on the impact of the sale of the Memorial Portfolio.
Thank you, Jorge.
Now, as for the growth drivers for FUNO, pass the mic to André.
André, hi Carlos. We expect that the savings on the overall through the years will be in the surroundings of MXN 400 million-MXN 500 million. That will make impact on the NOI and the FFO later on. Through the year, should be around tha.t number.
In terms of—
Understood.
—the expectations for the year, we should be shooting to have an FFO that is close to MXN 2.75-MXN 2.80 per CBFI for the year. Last year, we were closer to MXN 2.50.
FFO?
FFO.
No, I think the FFO will be larger than that. I think that the number that Jorge just gave you should be the dividend yield.
The dividend yield.
The FFO should be MXN 0.10 or MXN 0.15 above that. We expect to deliver MXN 2.75 as a dividend yield for the year. That will represent, in our view, maybe 95% of the fiscal flows.
Understood. That's, I guess, driven by higher GLA from Fibra NEXT. Also in offices, you mentioned that you expect higher occupancy that should also result in higher rents. Lastly, on the interest expense side, obviously, rates are coming down in Mexico, continue to come down sharply, plus slightly lower leverage. Should that also help in terms of the growth that you're mentioning? Is that included in your numbers?
I think everything keeps in order to achieve this. This represents last year, so everything is accounted for.
Okay. Thank you.
All right, Carlos. Thank you.
Thank you very much. Our next question is from Andre Mazini, from Citi. Your line is now open. Please go ahead.
Hi, team. Thanks for the call. Two questions as well. The first one on the office segment leasing spreads. The peso one were pretty high, 20%, but the USD one was actually low, -10%. A big difference there. Maybe what caused that difference? If the office segment breakdown with 60% USD, 40% MXN, give or take. This is the first one. The second one is around the very long-term trajectory of margins. Now that the company is internalized, I think there's more gains to scale. Probably more dilution of G&A, so if you can expect some upside risk to margins as the company grows, being internalized as it is right now. Thank you.
In terms of the office sector, Andre, obviously, we're pleased to be able to get such a solid leasing spread on the peso terms. This is not something standard or normal that happens. Neither is the drop in 10% in the dollar. That's one-offs that happen to coincide this quarter. The trajectory should be the one that we have been mentioning, which is the closer we are to 85% and above occupancy, the more pricing tension we are going to have, the more consistent ability to increase rents we are going to have. There are some segments, for example, we go to Reforma, you have higher occupancy compared to other markets in the city. We're starting to go definitely in that direction, but this quarter were a couple of one-offs that we had both in the peso side and on the dollar side for the office segment.
Obviously, to your other question, long-term margin trends, we are always seeking to control expenses. We're always seeking to make the company more efficient. We have been sort of stagnant for a while without the ability to really take advantage of a lot of opportunities that we see, for example, in the retail sector right now for additional investments and things of that nature. Those opportunities are there. Clearly, with the internalization of the advisor, there will be, as André mentioned, savings of in the neighborhood of MXN 400 million -MXN 500 million on a yearly basis. I think that in order to see the effect of the internalization, I would like to be able to be sitting in December of 2026, looking back to tell you what the final amount was. But the expectation is that it'll be somewhere in that neighborhood.
Sure, we're always shooting to have better margins than what we have right now. It's obviously not an easy task. Unfortunately, we have had the, let's say, spillover effect of the increase of the minimum wage hitting our margins because a lot of the—i t's not that we pay more or the people that we hire pay minimum wage, but it's affected by the increase of minimum wage, because we have sort of labor intensive services for the operation, primarily of the shopping malls. Hopefully that wave of specific inflation is behind us, and we can start seeing more stable expense line. It's something that we have been working very strongly in the last couple of years to contain.
Okay, thank you. Our next question is from Ernst Mortenkotter from GBM. Your line is now open. Please go ahead.
Hi, guys. Thank you for taking my question. Just a quick one. If you could provide some color on your disposition pipeline. I am wondering if you could share a little bit of detail on why those assets or what disposing from those specific regions or sectors that you are mentioning. And if you could share a range on possible disposition coverage. Thank you.
Yes. Actually, what we have published is around MXN 3.5 billion of potential sales. Probably almost half of it will be coming of other assets, not offices or retail in particular. The other half is a mix in between offices and retail. And the cap rates that we are seeing on those, especially on the ones of the other sectors, will be in between 8%-9%. And on the retail side, there is a mix. There are some that are close to 7%. Those are mainly anchored by AAA credit-rated companies, and the other ones are in between 8%-9% again.
Super. Thank you.
Thank you. Our next question is from Felipe Barragán from JP Morgan. Your line is now open. Please go ahead.
Great. Thank you, guys. Good afternoon. Thanks for the call and for my question. I just wanted to get an update on Mitikah Phase 2, if you could give us some color on what you guys are expecting in terms of an asset segment. Thank you.
I would love to be able to elaborate a lot more on that project because it's really a fantastic project, and we've been massively successful with it. But right now we have it on standby. It will remain so for a little bit longer. We'll be happy to share the news with you guys when we have more information.
Got it. Thank you, Jorge.
Thank you. Our next question is from Jorel Guilloty from Goldman Sachs. Your line is now open. Please go ahead.
Thank you for taking my questions. I have two. My first question is on the performance in your retail portfolio. Specifically, if I saw this correctly, your regional centers saw material NOI growth year-on-year. It is about 10%. I was just wondering what drove that. Is that due to some seasonality, some efficiency on operating expenses, revenue, what have you? The other question is more on the long-term expectations for your office portfolio. It obviously keeps on going up.
You are around 82%, 83% right now. But in the longer term, say you break 90% or so, go below 10% vacancy. Are we to expect your office portfolio to be of the same size within Fibra UNO? Or could you potentially reduce exposure, monetize these assets maybe for leverage, maybe to have more exposure to other portfolios? I just want to get a sense of what the long-term expectation, or rather, what the long-term objective is for the office portfolio.
On the office portfolio, obviously on the long term, we expect that probably in the next 18 months, we will be hitting the 90% occupancy. In the interim, we will be seeing also rent increases on the offices. In terms of selling and buying, we are on both moods. We are always open to hear some non-solicited offers from our offices and always open to see what's going on the market. If we get to see an opportunity to buy, we will be taking it. Probably as a normal cycle of the company, probably we will be seeing some sales of non-core assets, and probably we will be buying some core assets or great opportunities that we will be seeing on the market.
In terms of overall size, I don't think that there's significant variation. If you recall, we've always said that we've had this 40/40/20 concept for the company as a whole, 40% industrial, 40% retail, 20% in the office and others segment. That remains the case. We continue to have that 40/40/20 view, and we are pretty much in line with that. I believe we are around 37% in terms of the retail portfolio, 15% is the office segment, industrial represents around 40%, so we're almost smack on the 40/40/20 breakdown.
You shouldn't expect us to deviate much from that. That's where we would like to remain. As of the performance, specifically of the regional centers, let me get back to you to see if there was something specific with variable rents or something like that that gave that a little bit of a boost. I think we have to look at it on a yearly basis to see exactly what's going on, to see if it's a trend. Happy to get back to you on any specifics.
Thank you.
You are welcome.
Thank you. Our next question is from Elisa Gómez, from BTG. Your line is now open. Please go ahead.
Hi, thanks for taking my question. My question is related to André's one, and this is the first quarter reflecting the internalization. We saw a meaningful step up in the operating expenses driven by this, which impacted the NOI margin. How much of that increase is transitional or related to integration costs? Should we expect the same levels in the next quarters before reaching a steady state?
Hi, how are you? Thank you for the question. It is very important to consider that the fourth quarter corporation administrative expenses are influenced by a reverse on our provisions. Every year, at the end of the year, we reevaluate our expected loss model, and we had a reverse in that quarter that influenced the margins of the fourth quarter. Comparing our current margins with the margins of the fourth quarter are not, let's say, a fair comparison. However, as Jorge explained before, we are expecting our margins to improve gradually, not only because of the seasonality of our rents, as you know, rents are gradually increasing month by month. But also because of the efficiency that we are expecting from the internalization. So you have to consider that in your analysis.
Okay, perfect. Thank you.
You're welcome.
Thank you. Our next question is from Caroline Rudge from Bank of America. Thank you for taking my question. Do you have an updated guidance for the year-end 2026 key metrics factoring NEXT's full first year of contribution?
Sorry, what was that last part of the question? I couldn't hear.
Do you have any updated guidance for the year-end 2026 key metrics factoring NEXT's full first year of contribution? At least thinking of Fibra NEXT.
Not yet, Caroline, but we did have a chat today, and we are going to start providing more specific guidance on the different metrics of the company. We will get back to you and obviously the rest of the investors in public, with the specific guidance that we expect to have for the company. This change in policy that I am also announcing right now, we are going to start giving guidance as of this year.
Thank you very much. We will give it a few more moments for any further questions. It is star two if you are connected from the phone. If you are connected from the web, you can send a voice or text question. Okay, looks like we have no further questions. I will now hand it to the Fibra UNO team for the closing remarks.
Well, thank you everyone for your interest on these results. We expect to have solid results as well during this quarter. You will be informed through the media and the website of the future results of the negotiations of NEXT, backed up by UNO on the Macquarie acquisition. Thank you very much.
That concludes the call for today. Thank you and have a nice day.