Since 2011, the Real Estate Investment Trusts (fibras) have been operating in Mexico, which enhance the returns delivered to their investors through a key process: the choice of properties to acquire.

According to an analysis prepared by César Ruvalcaba and Abigail Pastelin, responsible for Corporate Finance and Investor Relations, respectively, for Fibra Mty, when choosing a property to add to the portfolio, the cape rate or capitalization rate is one of the factors that determines the decision.

“This indicator allows us to estimate and compare the profitability or potential annual yield of a property and is obtained by dividing the ION (Net Operating Income of the property or NOI for its acronym in English) of 12 months between the Cost of the Property”, it was explained in the report presented in a blog of the Mexican Stock Exchange.

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One of the ways to grow property portfolios is the acquisition of already built real estate, which implies taking into consideration elements that allow a purchase to be made that favors returns for investors.

For the directors of Fibra Mty, the business of the property, its location, the occupancy rate, the current rental contracts, the age of the building and even the possibilities of its reconversion or future commercialization must be considered.

“Location plays a vital role in decision-making due to its ability to consistently generate flow and its long-term growth potential,” the report stated. Likewise, the occupancy rate is very useful for projecting sales and calculating the value of a property.

Regarding the existing lease contracts when acquiring a property, the suggestion is to review elements that allow the cash flow to be projected over time, for this the following must be analyzed: rent payment currency, price per square meter, quality credit of the tenants, term of expiration of contracts and stipulated rights and obligations.

"The factors explained above are decisive in choosing an investment property, and most of these are reflected in the Capitalization Rate or Cap Rate," according to the document.

"In order for the purchase of a property to increase cash flows to investors, the Cap Rate has to exceed its cost of financing."

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The Fibras are a scheme that allows you to invest in a business focused on the acquisition, administration, operation and leasing of real estate in large volumes and, for the most part, high-end.

According to data from the Mexican Association of Real Estate Fibers (Amefibra), as a whole, with data as of 2021, these instruments included 1,878 properties with a gross leasable area of 25.9 million square meters, of properties either developed or acquired.

“A Fibra can grow its property portfolio through two alternatives, 1) development or construction, or 2) through a purchase-sale transaction in the market. Both alternatives aim to increase the value of the Company and, consequently, the cash flow for investors”, reads the analysis presented.

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