In March 2022, Real Estate Investment Trusts (Fibras) celebrated 11 years in the country and their evolution, in terms of gross profitable area, has been accelerated.

However, the Fibras face important challenges to face in order to be a deeper market and one of greater interest to investors.

The issue of administration of the Fibras stands out, as outsourcing prevails over internal administration, and at the same time, the attraction of more investors and the securitization of securities due to the fact that very few have good liquidity and the tax issue.

Reviewing the history of Real Estate Investment Trusts (REITS) in the United States, since their birth, in the 1960s and 1990s, practically all of them were founded and maintained in an outsourced administration, which later evolved and became internalized. The challenge is that some specialized international funds do not invest in externally managed vehicles.

Another challenge is to increase the attractiveness for investors in general and not only for institutional ones, one of the main ones being the elimination of fiscal distortions, according to the director of Global Equity Research Latam at Scotiabank, Francisco Suárez.

He also added that another point that could make the market more attractive is that the Fibras can be part of the main index of the local stock market and provide them with more liquidity.

Both factors are not controlled by the Fibras, but they can spend more time approaching the small investor.

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Regarding the liquidity of the Fibras, the Scotiabank specialist expressed that international capital trends are to invest in companies that trade at least 5 million dollars a day, and in Mexico, only Fibra Uno, which meets this requirement.

For its part, Fibra Prologis expressed that this is one of its great internal challenges, recognizing that even the local market has good marketability, but for institutional investors and local and foreign pension funds, its liquidity is low.

To reach their maximum return potential, the Fibras must become internally managed and must attract new investors, but to do so, the value of the share must be at its fair market value, with a valuation above currently has, said Jorge Girault, Director of Finance of Fibra Prologis,

At Fibra Nova, they agree that it will be through subsequent placements of capital that they will increase their investor base and make their certificates more marketable.

On the subject of liquidity, Gonzalo Robina believes that they have to be attractive to all their investors, large, medium or small, and micro investors.

The subject of investment and valuation is another relevant element when comparing the performance of these instruments with 10-year Treasury Bonds that are currently on the rise, for example.

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"I can say that this is one of the serious appreciations that the market has had with the Fibras, bringing us punished to those valuation levels and there may be many others, but I would say that this is the main defect that we have had," said Gonzalo Robina , deputy general director of Fibra Uno.

For those who want to invest in Real Estate, it makes more sense to invest in a Fibra than to acquire an apartment. Francisco Suárez from ScotiaBank commented that with historical data, in the last 12 months, companies such as Fibra Prologis, Terra, Fibra Monterrey, for example, have been outperforming the IPC and even the North American REITs index, when we are already adjusting for foreign exchange objects.

Return expectations were unevenly affected after the pandemic depending on the predominant investment sector of the Fibra, where the industrial sector maintained a higher return than the office, commercial and hotel sectors, to name a few.

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Original note