Local pension funds took big stakes
MEXICO CITY, March 21 (Reuters) – Mexico‘s stock exchange listed the country’s first real estate investment trust last week, allowing investors to make big bets on the local property market.
The sale of shares in the first real estate investment trust (REIT) in Mexico came after years of frustration that saw the current deal stumble last month before finally reaching investors.
If Mexico’s REITs prove to be successful, the securities could give local property markets a big capital injection.
Fibra UNO (FUNO11.MX), the maiden REIT named for its acronym in Spanish, was rebuffed in February by investors unwilling to pay the asking price, but the deal was retooled and listed on the local exchange on Thursday.
“Mexico is taking on a new life, becoming more dynamic,” Luis Tellez, head of the Mexican Stock Exchange (BOLSAA.MX), told Reuters shortly after the security was listed.
Mexico financial markets are not as vibrant as those in Brazil where REITs have deep roots but Tellez said this week’s REIT listing was a sign of things to come.
“We are not at the level of Brazil but we are much more dynamic than we were,” he said.
The REIT sold roughly $300 million worth of shares with about a third bought by foreigners and the rest by domestic investors. The February book was roughly split between foreign and domestic investors.
Investors took hold of 43.7 percent of the trust – or 185,385,543 shares valued at 19.5 Mexican pesos each. The fund will hold a basket of 16 properties located in several states across the country.
REITs are seen as an efficient way to inject capital into property markets because they spread the risk and costs of long-term building projects across many tradeable shares.
Mexico’s 15 private pensions and their $115 billion in assets are likely to continue to be a source of funding for REIT investments. For an analysis on the Mexico pension funds and REIT
REIT AND RE-REIT
The local advisors behind the deal, Protego Asesores, went back to the drawing board after the first offer was rejected and eventually enticed investors with a 10 percent discount.
The property owners also agreed to swap some of their properties for equity in the REIT rather than get paid in cash, as another way to smooth the deal, Protego Asesores said.
Turmoil in North Africa and the earthquake in Japan made this a difficult time for the deal but the advisors wanted to conclude it quickly to put an end to 18-months of work.
“We’ve always said that the real estate market in Mexico cannot grow as it should without investment from the private market,” said Augusto Arellano, director of Protego Asesores.
“You cannot have healthy real estate growth if you simply rely on private funding, and we knew that was on our side.”
Source: Reuters 21.03.2011 by Patrick Rucker, additional reporting by Michael O’Boyle, Elinor Comlay
Filed under: BMV - Mexico, Exchanges, Latin America, Mexico, News, BMV Bolsa Mexicana de Valores, Capital Markets, Exchanges, Listing, Mexico, Real Estate, REIT