Ladies and gentlemen, thank you for standing by. I would like to welcome you to Fibra Uno's Internalization Conference Call on the 20th of June, 2025. At this time, all participants' 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 would like to pass the line to the management of Fibra Uno. Please go ahead.
Thank you very much, and thanks everybody for joining the call. We'd like to run through a very brief presentation and open the floor to Q&A to try to explain very clearly what the internalization transaction is about. For those of you that have access to the Chorus Call platform, we have the presentation on the screen. Page one. What is de-internalization? Basically, it's a transaction that's designed to further align the interest of minority shareholders with the founding members of Fibra Uno. How is this done normally in other transactions that have been present to this one in the global real estate world? Basically, the REIT or the Fibra, in this case, acquires the advisor in exchange for equity, and that's how these transactions normally have occurred in other markets.
Now, in the case of Fibra Uno, we went to a shareholder meeting to approve the internalization in October of 2023, with a price range of MXN 9.5 billion-MXN 10.5 billion. At that point, the majority of payment would be in real estate assets, taking a 1x NAV. We would exclude specifically industrial assets. As you can see in this transaction, we are not using equity since our CBFIs are trading at MXN 0.50 on the MXN, more or less. The NAV is about MXN 50, and the shares are trading around MXN 25. So it's about a 50% discount to net asset value, which means that the market is assigning a valuation for the assets of Fibra Uno on average of MXN 0.50 on the MXN.
Now, the other important thing is that there will be no cash as part of this transaction, since if we wanted to raise cash to pay for the acquisition, we have to borrow money. In addition to the higher potential leverage, interest costs remain high. It would be dilutive as well if we were to issue either equity or new debt to pay for this transaction. So what we decided to do or what we came up with as an idea was to use assets that the controlling family would take at 1x NAV. Meaning we would bridge the gap we have with the CBFI of those MXN 25 per CBFI that the market's trading at and the NAV of MXN 50.
I think another important factor that I would like to highlight is that 60% of the assets come from the office sector, which is the one that, as of right now, we have to take as, let's say, the least preferred from the market. 34% from the retail sector, and 6% from the hotel sector. Now, in terms of the payment and valuations for the different assets, as you can see, there is an average of 7.3% cap rate for all of the different assets. This is more or less the average valuation that we have had the assets on our balance sheet. You can see the breakdown of the GLA at the bottom of the three different properties, Montes Urales, Samara, and Midtown Jalisco. Then on the top, you have the gross asset value that arrives at MXN 12.3 billion.
There is debt included in Samara, which will travel with the asset, so that debt is going to go out of Fibra Uno. The net asset value of each of the different properties is the one you are seeing in the third column. That adds up to MXN 10.4 billion. In terms of NOI, this represents an NOI of MXN 900 million that will be going out of Fibra Uno. If you go to the next slide, please. Here, there are I think three important points to consider. The first one is that we took the first quarter fees that were paid to the advisor. As you know, 50 basis points net asset value. It is MXN 929 million. 2% of effectively collected rents is MXN 536. That equates to MXN 1.466 billion in annualized fees.
At the bottom, Samara's debt has a total of MXN 1.9 billion at a cost of TIIE+ E275, which is 11.5%. So the annual interest savings that we are going to have as a company when we stop paying this debt and this interest is going to be MXN 219 million. So the savings from the fees that we are going to stop paying are going to be MXN 1.4 billion plus interest savings of MXN 219. That is net savings of MXN 1.685 billion. Then, what we are doing is selling assets, let's say, at a 7.3% cap rate, which is the most effective cost of funding. The property NOI is 902+ the SG&A that we expect more or less to have at FUNO 360. It is a total cost of MXN 1.2 billion, so net accretion of MXN 422 million.
Lastly, in a nutshell, to explain the transaction, we start with 586 assets. There is an agreement with the advisor in which we get services, FUNO gets services, and we pay the advisor the fees that you saw in the previous pages. The internalization, what happens is we pay the advisor with assets and those fees cease to exist. Then, what happens is post-internalization, we have an internal management structure with 533 assets instead of 586. With this, I would like to finish the presentation and open the floor to Q&A.
Thank you. We will now move to the question and answer section. If you would like to ask a question, please press star two on your phone and wait to be prompted. If you are dialed in by the web, you can type your question in the box provided or request to ask a voice question. We will just wait a moment or two for the questions to come in. We have received a text question from Michael Bautista from Principal Financial Group. We can understand that FUNO debt is reduced by MXN 1.9 million, since the properties will be transferred with debt.
Yes, that is correct, Michael.
Okay. Just a quick reminder for other participants, if you want to ask a voice question, please press star two on your phone keypad and wait for your name to be prompted. If you are dialed in via the web, you may also ask a voice question or send your question as a text. We have a voice question follow-up from Michael. So, please.
Is there a follow-up question?
Yes. Michael, your line is open.
Can you hear me? Hello.
Yes, we can.
Thank you. Thank you so much for the call. Just in order to be clear about timing, when is this whole operation happening?
It's going to be a transition period, probably of about six months. It's not going to happen immediately. What we have is the agreement. We expect to close in 2025. These are the terms of the agreement that have been finalized. We have to go, for example, to COFECE. There's still some regulatory hurdles that we don't expect any issues, obviously, with that. There's still some regulatory hurdles that we have to gap and something that should happen this year. By the end of this year, let's say.
By the end of this year. Okay, great.
Yeah.
Thank you so much.
Okay. Thank you. We have another voice question from Armando Rodríguez from Signum Research. Please, Armando, your line is now open.
Thank you. Thank you for the call. Hello, Jorge. My main question is, what should be the impact on the LTV levels considering this transaction in the following months? Thank you.
It's going to be a marginal impact on the LTV. Really, it doesn't move the needle. Because we end up, as you can see, it's not only the LTV. We have an accretion of MXN 500 million, roughly, rounding numbers, a year. The LTV might be slightly higher, but the coverage ratio on the net EBITDA is going to improve because we have more cash flow. It's like a net neutral transaction. It doesn't even move beyond a percentage point. It's a couple of basis point movement.
Okay, cool. Thank you.
Okay. Thank you. Thank you very much. Our next question-
I saw Scott.
Yes. Our next question comes from William Piper from Itaú Asset Management. Please go ahead. Your line is now open.
Yeah. Hi, thanks very much for this call, and I appreciate the presentation. It is very clear. Just two questions, the first of which is I congratulate you on the funding for the internalization of just being office assets and retail assets and not industrial assets. But of the office assets that you are funding it with, are these the best office properties? What does the office property look like post the internalization once you sell these properties to the e-Group?
Well, I am glad to hear that you think that these are the best office assets, but no, we have a lot of great office assets. We have Mítikah, for example, Torre Reforma Latino, Torre Mayor, Torre Cuarzo, Torre Diana. The portfolio remains extremely solid in the office sector. We tried to please the market as best we could because we understand that office is the sector that the market likes the least. And obviously there is some fiscal benefits. I think we have communicated this to the market since we started, ideally, we would like to see properties that the family originally contributed to Fibra UNO, Midtown, and Samara fall in that category. So those obviously have some additional benefit on that side. But the office portfolio remains top-notch.
As a percentage, I think, we are going to continue to have a very high percentage of Class A office space, because most of what we have is brand new.
Yeah, I know. I was just trying to address some criticism that these were trophy assets per se, but it doesn't sound like they're the trophy assets of the office.
No, absolutely. I hear you, Scott. I think we have a lot of trophy assets.
Yeah. Okay. All right. Is it okay if I ask a question on the Fibra NEXT listing, or is that not appropriate at this time?
The idea is to have a call internalization, but if you want to ask about Fibra NEXT, I can answer, happy to do so.
Yeah. It looks as if the Fibra NEXT will be supplied by assets from the e-Group only.
And with the idea that FUNO will do it in the future. I am assuming that this has to do with the tax implications at the moment. But could you provide some clarity as to why FUNO won't be contributing assets now, and why it will be able to do so in the future?
The intention remains the same, Scott, to have the Fibra NEXT as a JV with Fibra UNO down the road. What we initially tried to do was to create the vehicle to de-risk the transaction, listing Fibra NEXT, let's say, with assets contributed only by the family to meet the set approval requirement. We found ourselves that when we were doing this transaction, we were supposed to just list that a lot of our friends here in Mexico asked us to give them a chance to invest, let's say, in this round and have an IPO. That's why Fibra NEXT is listing and starting with this. The idea is obviously to, let's say, complete the Fibra NEXT vehicle as soon as practicable. That's the intention.
But at this stage, to be perfectly clear, the only assets that you're getting in the IPO are the nine assets that come from Jupiter Portfolio. Proceeds from the IPO will be used to acquire and develop a portion stabilized, and develop about 500,000 sq m of GLA in that vehicle. We expect, obviously, to be able to do this fairly soon.
But are there any roadblocks that would prevent you?
No, not really. We still have to go through COFECE and things of that nature for these transactions. Since Fibra NEXT is going to be a public vehicle, if and when that transaction happens, it's going to have to go through its own corporate approvals, et cetera. So that may delay it a little bit.
No, I was meaning roadblocks for-
Zero.
Well, for Fibra UNO eventually to sell assets to Fibra NEXT.
No.
No? Okay. All right. All right. Thank you so much. I appreciate it.
No, to your last comment, Scott, we already have the approval from the shareholder meeting of 2023 to carry out the carve-out. So we have everything in place.
Okay. Thank you very much.
You are welcome.
Okay. Thank you. Thank you very much. Just a final reminder for the rest of participants, if you would like to ask a voice question, please press star two on your phone keypad. If you are connected via the web, you may also ask a voice question or send your question as a text.
If there are no additional questions, thank you everybody very much for participating in today's call. I know we would love to please everybody with everything, but sometimes it is difficult in the market. We did try to get something that was a good deal for everybody. So thank you.
Thank you very much. This concludes today's call. We will be now closing all of the lines.