Terrafina: Fourth Quarter and Full Year 2023 Earnings Report

Mexico City, February 22^nd, 2024 – Terrafina® (“TERRA” or “the Company”) (BMV: TERRA13), a leading Mexican industrial real estate investment trust (“FIBRA”), externally advised by PGIM Real Estate and dedicated to the acquisition, development, leasing and management of industrial real estate properties in Mexico, announced today its fourth quarter 2023 (4Q23) and full year 2023 (FY2023) earnings results.

The figures in this report have been prepared in accordance with International Financial Report Standards (“IFRS”). Figures presented in this report are expressed in millions of Mexican pesos and millions of U.S. dollars, unless stated otherwise. Additionally, figures may vary due to rounding.

Operating and Financial Highlights as of December 31^st, 2023

OPERATING

• As of December 31^st, 2023, the occupancy rate was 98.1%, a 170-basis point increase compared to the fourth quarter of 2022 (4Q22).
• Renewal rate for 4Q23 was 95.7%, a 345 basis-point decrease compared to 4Q22.

• Average leasing rate per square foot for 4Q23 leasing activity was US$6.38, with a 12.2% leasing spread compared to the last twelve months.

• At the end of 2023, Terrafina reported a total of 42.8 million square feet (msf) of Gross Leasable Area (GLA) comprised of 291 properties and 307 tenants.

• 2023 leasing activity reached 7.4 msf, of which 21.7% corresponded to new leases, 68.9% to lease renewals and 9.4% to early renewals. 

FINANCIAL

• FY2023 net collections (rental revenues – uncollected revenues + collected revenues) reached US$214.0 million, of which US$54.4 million were generated during 4Q23. This implied an 8.3%, or US$16.5 million increase compared to FY2022, and an 8.0% or US$4.0 million increase compared to 4Q22.

• FY2023 rental revenues reached US$216.5 million, of which US$55.6 million were generated during 4Q23. This implied a 10.4% or US$20.4 million, and 9.8% or US$5.0 million increases, respectively, compared to FY2022 and 4Q22.

• FY2023 NOI was US$201.7 million, of which US$51.7 million were generated during 4Q23. This translated into increases of 6.9% or US$13.1 million compared to FY2022, and 7.7% or US$3.7 million compared to 4Q22.

• The NOI margin was 93.2% in FY2023 and 93.3% in 4Q23. This implied 39 and 21 basis-point decreases, respectively, compared to FY2022 and 4Q22.

• FY2023 EBITDA reached US$176.4 million, of which US$44.9 million were generated during 4Q23. This implied increases of 6.2% or US$10.2 million and 7.3% or US$3.0 million, respectively, compared to FY2022 and 4Q22.

• The EBITDA margin was 81.5% for FY2023 and 81.0% for 4Q23. This implied 94 and 47 basis-point decreases, respectively, compared to FY2022 and 4Q22.

• FY2023 funds for operations (FFO) reached US$127.2 million, of which US$32.2 million were generated in 4Q23. These were 3.0% or US$3.7 million and 6.0% or US$1.8 million increases, respectively, compared to FY2022 and 4Q22.

• The FFO margin was 58.8% for FY2023 and 58.1% in 4Q23, 249 and 104 basis points less than in FY2022 and 4Q22, respectively.

• FY2023 adjusted funds for operations (AFFO) reached US$107.4 million, of which US$26.8 million were generated in 4Q23. These experienced increases of 2.8% or US$2.9 million compared to FY2022, and 14.6% or US$3.4 million to 4Q22.

• The AFFO margin was 49.4% for FY2023 and 48.1% in 4Q23. This implied a 220 basis-point decrease and 269 basis-point increase, respectively, for FY2023 and 4Q22.

• Total distributions for FY2023 were US$77.2 million. Distributions per CBFI were US$0.1000. Considering the 2023 average share price of US$1.82 (Ps.32.29), Terrafina’s dividend yield for the year was 5.5%. Terrafina will pay an extraordinary cash distribution that will be subject to taxation as a result of currency translation adjustments caused by the peso appreciation in 2023 on our dollar-denominated debt. This extraordinary distribution will be of $69.4 million dollars or Ps. 1,221.3 million pesos.

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About Terrafina

Terrafina (BMV:TERRA13) is a Mexican real estate investment trust formed primarily to acquire, develop, lease and manage industrial real estate properties in Mexico. Terrafina’s portfolio consists of attractive, strategically located warehouses and other light manufacturing properties throughout the Central, Bajío and Northern regions of Mexico. It is internally managed by highly qualified industry specialists and externally advised by PGIM Real Estate.

Terrafina owns 291 real estate properties, including 287 developed industrial facilities with a collective GLA of approximately 42.8 million square feet and 4 land reserve parcels, designed to preserve the organic growth capability of the portfolio. Terrafina’s objective is to provide attractive risk-adjusted returns for the holders of its certificates through stable distributions and capital appreciations. Terrafina aims to achieve this objective through a successful performance of its industrial real estate and complementary properties, strategic acquisitions, access to a high level of institutional support, and an effective management and corporate governance structure. For more information, please visit www.terrafina.mx/en

About PGIM Real Estate

With $208 billion in gross assets under management and administration,¹ PGIM Real Estate provides investors and borrowers access to a range of real estate equity, real estate debt, agriculture, and impact solutions across the risk-return spectrum.

PGIM Real Estate is a business of PGIM, the global asset management business of Prudential Financial, Inc. (NYSE: PRU). PGIM Real Estate’s risk management approach, execution capabilities and industry insights are backed by a 50-year legacy of investing in commercial real estate, a 140-year history of real estate financing,²and the local experience of professionals in 35 cities globally. Through its investment, financing, asset management, and talent management approach, PGIM Real Estate engages in practices that strive to ignite positive environmental and social impact, while pursuing activities that seek to strengthen communities around the world. For more information visit pgim.com/real-estate/.

¹ As of Sept 30, 2023; AUA is $49 billion.

² Includes legacy lending through PGIM’s parent company, PFI.

About PGIM

PGIM is the global asset management business of Prudential Financial, Inc. (NYSE: PRU), a leading global investment manager with more than $1.4 trillion in assets under management as of December 31, 2023. With offices in 46 countries, PGIM’s businesses offer a range of investment solutions for retail and institutional investors around the world across a broad range of asset classes, including public fixed income, private fixed income, fundamental equity, quantitative equity, real estate, and alternatives.

Additional Prudential companies offer a variety of products and services, including life insurance, annuities, and retirement-related services. For more information, please visit news.prudential.com.

Prudential Financial, Inc. (PFI) of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom.

¹ Prudential Financial, Inc (PFI) is the 11th largest investment manager (out of 434 firms surveyed) in terms of global assets under management, according to Pensions & Investments’ Top Money Managers list released in June 2023. This ranking represents PFI’s global assets under management as of December 31, 2022.

Forward Looking Statements

This document may include forward-looking statements that may imply risks and uncertainties. Terms such as “estimate”, “project”, “plan”, “believe”, “expect”, “anticipate”, “intend”, and other similar expressions could be construed as previsions or estimates. Terrafina warns readers that declarations and estimates mentioned in this document, or realized by Terrafina’s management imply risks and uncertainties that could change in function of various factors that are out of Terrafina’s control. Future expectations reflect Terrafina’s judgment at the date of this document. Terrafina reserves the right or obligation to update the information contained in this document or derived from this document. Past or present performance is not an indicator to anticipate future performance.

Conference Call

Terrafina
(BMV: TERRA13)

Cordially invites you to participate in its Fourth Quarter 2023 Conference Call

Friday, February 23^rd, 2024

10:00 a.m. Central Time (CT)

11:00 a.m. Eastern Time (ET)

To access the call, please dial: