REPORT FROM MEXICO—Fibra Hotelera Mexicana, a Mexican-based real estate investment trust and one of the largest hotel owners in its country, has doubled its portfolio size over the past year and has nearly 5 billion Mexican pesos ($385.7 million) earmarked for additional growth moving forward.
General Director Simon Galante said on the company’s third-quarter earnings call with analysts Thursday that 130% property growth and 140% room-count growth in the past year has been “impressive.”
“We have done it in a disciplined way,” he said.“We will continue our strong discipline and will not change our (capitalization) rate target of 10% or higher.”
FibraHotel added five hotels to its portfolio in the third quarter, bringing its total to 42 hotels—39 in operation and three under development. During the quarter, the company closed the acquisition of: Hotel Plaza Genova Guadalajara, One Puebla FINSA, Fiesta Inn Oaxaca, Fiesta Inn Puebla FINSA and Real Inn Mexicali.
FibraHotel owns hotels under four brands: Fiesta Inn, One Hotels, Camino Real and Real Inn.
The REIT is in contract negotiations with sellers and developers for about 2.5 billion Mexican pesos ($192.6 million) worth of additional real estate. Further, it has another 2.5 billion Mexican pesos earmarked for investment and is in early stages of deployment.
The initial 2.5-billion-peso investment includes 18 hotels, nine of which will come by way of acquisition and another nine by way of new construction.
“We’re making progress and we will announce contracts in the next three to six months, subject to diligence and market issues,” Galante said.
An earlier-announced project in international beach resort Acapulco was tabled after a recent storm, considered the worst ever to hit Mexico, caused destructive flooding.
Operating performance
While the company’s portfolio occupancy slowed a bit in August and September because of the rains, overall rate growth translated into a 3.7% rise in year-over-year revenue-per-available-room growth for the quarter.
Average daily rate was 854 Mexican pesos ($65.80), an increase of 5.4%; occupancy rate was 67.8%, a decrease of 1.1% versus the third quarter of 2012; and RevPAR was 579 Mexican pesos ($44.61).
The dip in occupancy also can be tied to two hotels that were in the ramp-up stage throughout the quarter, Galante said. Year to date, RevPAR is up 6.2%
“August and September were very slow,” he said. “Twenty of the 22 states where we have hotels had strong flooding. A lot of people moved their travel. We believe that was a key player in September.”
Galante said he is confident FibraHotel will have “a good last quarter.”
“At this point, we cannot anticipate this general slowdown in occupancy to continue,” he said. “In many cases we’re 10 points higher than our peers.”
He projected FibraHotel’s full-year occupancy to be just higher than 66%. Regarding ADR, “we should be able to maintain the trend we have experienced in the first nine months,” Galante said.
FibraHotel went public on the Mexican stock exchange in December, becoming Mexico’s first hotel-focused real estate investment trust, or Fideicomiso de Inversión en Bienes Raíces de Mexico. The Mexican REIT sold 194.4 million shares at a price of 18.50 Mexican pesos ($1.39) per share for a total of 3.6 billion pesos (about $277.7 million).
Under Mexican laws, FIBRAS must invest at least 70% of its assets in real estate for lease, among other requisites. Fibras must distribute in cash at least once a year 95% of taxable income to its CBFI holders.