FIBRA Hotelera Mexicana,the nation’s first hotel-focused real estate investment trust (REIT),went public on the Mexican stock exchange in December of 2012,selling nearly 195 million shares at $1.39 per share,reaching more than $275 million in sales the first day.
The initial public offering (IPO) sales for the REIT represented just over 70 percent of its total number of outstanding shares,excluding the over-allotment. If the over-allotment is included,the IPO totaled nearly $320 million. On its first day of trading,the share price rose to $1.50.
FIBRA stands for Fideicomiso de Inversión en Bienes Raices de Mexico and is a relatively new concept on the Mexican exchange. It began with FIBRA Uno,which is a REIT that was formed to procure a wide variety of Mexican commercial real estate assets. Since its IPO,FIBRA Uno has grown by more than $700 million,following a second offering in March of 2012. In addition,the stock’s value has risen by close to 70 percent.
The success of FIBRA Uno indicates that the REIT’s model seems to be working. It also offers the benefits of affordability and liquidity in conjunction with access to the Mexico real estate market,including mortgages,for private-pension funds,small investors and large institutional investors from around the world.
The reality is that Mexico’s economy has been growing by leaps and bounds for the last decade or so. According to the International Monetary Fund (IMF),the nation’s gross domestic product (GDP) rose by at least 4 percent in 2011 and it is projected to grow by at least 3.6 percent in 2012. Part of this robust growth has been seen in Mexico’s thriving tourism sector,which includes hotels and other investment properties.
Although in the past private investment dollars have largely provided the funding for Mexico’s lodging real estate (hotel) sector,FIBRA’s seem likely to change the landscape of this industry,generating a whole new level of liquidity for the nation’s hospitality sector.