Editor’s note: All quotes in this story were derived from presentations at the Mexico Hotel & Tourism Investment Conference that were conducted in Spanish and translated by event staffers in real time.
MEXICO CITY—Investment activity is ever more plentiful and sophisticated, according to a panel of experts speaking at HVS’ 2020 Mexico Hotel & Tourism Investment Conference.
Talking during the “Capital markets overview—trends in the debt and equity markets” session, Vicente Naves, CEO of Artha Capital, said interest remains healthy.
“At Artha, we think it’s key to have diversification in funding,” he said. “So we’re seeking private equity both domestically and internationally.”
He noted those investors are looking for “shorter cycles with more certainty on the exit.”
Here are some more takeaways from that session:
International concerns need to be addressed
Patricio Desentis, managing partner of GBM Real Estate, said he believes the country needs to court greater diversity in terms of international investors.
Part of making that a reality is assuaging and addressing concerns about the country, including security issues, he said.
“GBM as a corporate group is given the chance to see many different faces of international organizations and institutional investors, and we need to repair the vision of our foreign friends,” he said. “The world of investment is ongoing and those opportunities are going to keep going.”
Growth in publicly traded ownership key
Fernando Rocha, chief of acquisitions and development for Fibra Inn, said the Mexican hotel industry benefits from the growth of FIBRAs, which are that country’s equivalent to real estate investment trusts. He noted it’s not just an important vehicle for people who choose to invest in those publicly traded vehicles, but owners as a whole, because selling to the FIBRAs is a vital exit strategy for some high quality assets.
He noted there’s still work to be done.
The industry “has transformed more and more, but it’s still fragmented in many senses,” he said.
He said the growth of FIBRAs, like his company, helps “professionalize the sector to the benefit of every key player.”
Increasingly sophisticated debt
Panelists noted debt markets in the country grow more and more sophisticated, which in turn invites more sophisticated investors to take part. A big part of that for the hotel industry is lenders increasingly having a favorable outlook on the hotel business and viewing it as a key part of the overall commercial real estate universe.
Manuel Muñoz, director of hotels and tourism for Banco Sabadell, said his company has a positive outlook on the hotel industry, particularly when it comes to resort and luxury properties.
“We see this sector as quite sophisticated,” he said. “It’s not just real estate or an operational business. It’s a financial business.”
That sophistication has allowed in different types of lending in the market, including increasing availability of mezzanine debt.
The international nature of tourism allows companies to diversify in currency as well, he said.
“We see investment appetites, especially in dollars for resorts,” he said.