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FIBRA Macquarie México Reports Fourth Quarter and Full Year 2018 Results
[February 21, 2019]

FIBRA Macquarie México Reports Fourth Quarter and Full Year 2018 Results


FIBRA Macquarie México (FIBRAMQ) (BMV: FIBRAMQ), owner of one of the largest portfolios of industrial and retail property in Mexico, announced its financial and operating results for the quarter and year ended December 31, 2018.

FOURTH QUARTER 2018 HIGHLIGHTS

  • Increase in AFFO per certificate of 11.3% YoY to Ps 0.5972
  • Signed a record 3.7 million square feet of industrial leases, which drove record consolidated occupancy of 94.4%, up 146 bps YoY
  • Average year end industrial and retail rental rates increased 3.9% and 3.7% YoY, respectively
  • Authorization of a quarterly cash distribution of Ps 0.41 per certificate
  • Repurchased 6.3 million certificates for cancellation

FULL YEAR 2018 HIGHLIGHTS

  • Increase in AFFO per certificate of 7.6% YoY to Ps 2.4317
  • Average occupancy for the year of 93.2%, up 57 bps from the prior year
  • Executed a record number of leases totaling 8.4 million square feet in industrial and 35.4 thousand square meters in retail
  • Sold 37 non-strategic assets, including two that remain under contract, for US$87.7 million of cash proceeds in 2018 as part of asset recycling program; in total has sold 44 assets for US$117.5 million in proceeds, 2.2% above book value
  • Continued to execute on expansion initiative, with US$9.9 million deployed or committed, generating a projected yield of approximately 15.4%
  • Repurchased 30.0 million certificates for cancellation, with a cumulative repurchase of 5.1% of certificates outstanding
  • Completed 2018 with a record LTM industrial retention rate of 87%
  • Paid distributions of Ps 1.60 per certificate in 2018, an increase of 6.7% from the prior year
  • Further strengthened balance sheet by lowering LTV by 210 bps to 35.5% and increased liquidity by US$47.4 million to US$288 million, positioning FIBRAMQ for long-term growth

"2018 was a productive year for FIBRAMQ as we delivered solid AFFO growth, enhanced our portfolio composition through active asset management and recycled capital into accretive expansions, certificate buybacks and debt reduction," said Juan Monroy, FIBRA Macquarie's chief executive officer. "It was also an extremely active leasing year, where we increased occupancy in strong market conditions that allowed us to continue to accelerate renewals into the fourth quarter."

"As we move through 2019 we remain focused on value-enhancing initiatives. Despite some lingering macroeconomic uncertainty, we are encouraged by a number of positive indicators related to trade and consumer confidence. We remain confident in our portfolio and strategy, the attractive supply-demand dynamics in our key markets, and the proficiency of our internal property management platform. With a conservative and strong balance sheet, we continue to take a disciplined approach to growth. Drawing on our well-established relationships, we maintain a growth pipeline and anticipate continuing to pursue expansions along with selective development opportunities, with a managed risk profile."

FINANCIAL AND OPERATING RESULTS

Consolidated Portfolio

FIBRAMQ's total results were as follows:





                       
TOTAL PORTFOLIO 4Q18 4Q17 Variance FY18 FY17 Variance
Net Operating Income (NOI) Ps 823.4m Ps 794.9m 3.6% Ps 3,307.2m Ps 3,221.7m 2.7%
EBITDA Ps 770.4m Ps 735.7m 4.7% Ps 3,087.5m Ps 2,993.2m 3.2%
Funds From Operations (FFO) Ps 531.6m Ps 504.2m 5.4% Ps 2,179.9m Ps 2,110.4m 3.3%
FFO per Certificate Ps 0.6887 Ps 0.6268 9.9% Ps 2.7790 Ps 2.6089 6.5%
Adjusted Funds From Operations (AFFO) Ps 461.0m Ps 431.5m 6.8% Ps 1,907.5m Ps 1,828.2m 4.3%
AFFO per Certificate Ps 0.5972 Ps 0.5363 11.3% Ps 2.4317 Ps 2.2600 7.6%
NOI Margin 86.5% 85.2% 131 bps 87.5% 87.0% 54 bps
AFFO Margin 48.4% 46.2% 219 bps 50.5% 49.4% 112 bps
GLA ('000s sqm) EOP 3,216 3,423 -6.1% 3,216 3,423 -6.1%
Occupancy EOP 94.4% 92.9% 146 bps 94.4% 92.9% 146 bps
Average Occupancy 94.1% 92.8% 125 bps 93.2% 92.6% 57 bps
US$ denominated NOI EOP (%)     79%     77%     200 bps     79%     77%     200 bps

FIBRAMQ's same store portfolio results were as follows:

                       
TOTAL PORTFOLIO - SAME STORE 4Q18 4Q17 Variance FY18 FY17 Variance
Net Operating Income Ps 821.0m Ps 762.9m 7.6% Ps 3,238.0m Ps 3,083.7m 5.0%
Net Operating Income Margin 86.4% 85.4% 98 87.7% 87.2% 47
Number of Properties 253 253 0 252 252 0
GLA ('000s sqf) EOP 34,614 34,486 0.4% 34,468 34,340 0.4%
GLA ('000s sqm) EOP 3,216 3,204 0.4% 3,202 3,190 0.4%
Occupancy EOP 94.4% 94.1% 31 bps 94.6% 94.3% 31 bps
Average Monthly Rent (US$/sqm) EOP 5.24 5.11 2.5% 5.23 5.11 2.5%
Industrial Customer Retention LTM EOP 87.4% 85.3% 209 bps 87.4% 85.3% 209 bps

Weighted Avg Lease Term Remaining (years) EOP

    3.8     3.6     3.4%     3.8     3.6     3.5%

Industrial Portfolio

The following table summarizes the results for FIBRAMQ's industrial portfolio:

                       
INDUSTRIAL PORTFOLIO 4Q18 4Q17 Variance FY18 FY17 Variance
Net Operating Income (NOI) Ps 681.8m Ps 655.0m 4.1% Ps 2,731.4m Ps 2,670.6m 2.3%
NOI Margin 89.9% 88.3% 164 bps 91.0% 90.2% 82 bps
GLA ('000s sqft) EOP 29,696 31,940 -7.0% 29,696 31,940 -7.0%
GLA ('000s sqm) EOP 2,759 2,967 -7.0% 2,759 2,967 -7.0%
Occupancy EOP 94.5% 92.6% 187 bps 94.5% 92.6% 187 bps
Average Occupancy 94.1% 92.5% 164 bps 93.0% 92.2% 80 bps
Average Monthly Rent (US$/sqm) EOP $4.79 $4.61 3.9% $4.79 $4.61 3.9%
Customer Retention LTM 87% 86% 44 bps 87% 86% 44 bps
Weighted Avg Lease Term Remaining (years) EOP     3.6     3.3     9.6%     3.6     3.3     9.6%

For detail on FIBRAMQ's same store industrial portfolio results, please refer to the Fourth Quarter 2018 Supplementary Information materials located at www.fibramacquarie.com/investors/bolsa-mexicana-de-valores-filings.

For the three months ended December 31, 2018, FIBRAMQ's industrial portfolio delivered net operating income (NOI) of Ps 681.8 million, an increase of 4.1% compared to Ps 655.0 million in the prior comparable period. NOI margin expanded by 164 basis points to 89.9% compared to 88.3% in the prior year, driven by higher occupancy and rental rates. For the year ended December 31, 2018, industrial portfolio NOI was Ps 2,731.4 million, a 2.3% increase from the prior year.

The industrial portfolio occupancy rate as of December 31, 2018 was 94.5%, up 187 basis points from the same quarter last year. The increase in occupancy was driven by leasing activity along with the third quarter sale of 35 non-strategic industrial assets, which had an occupancy lower than the portfolio average.

Rental rates at the end of the period improved compared to the same quarter last year, with a weighted average of US$4.79 per leased square meter per month, a 3.9% increase. This rate increase was driven primarily by contractual increases, positive renewal spreads, and the positive impact of the sale of 35 non-strategic industrial assets which had rental rates lower than the portfolio average.

FIBRAMQ signed 35 new and renewal leases in the fourth quarter of 2018, comprising 3.7 million square feet. Signed leases included four new leases totaling 248 thousand square feet and 31 renewal leases totaling 3.5 million square feet. Notable new leases in the quarter include a shelter operator in Ciudad Juárez, a hardware distributor, a scrap metal and plastic recycling center in Mexicali, and an industrial tool and equipment manufacturer in Puebla.

Renewal activity was robust with diversified representation across geographies and customer types. Renewals included the retention of a global home appliance manufacturer in Monterrey for a 1.0 million square foot property used as a key logistics hub.

For the twelve-month period ending December 31, 2018, FIBRAMQ achieved a record retention rate of 87% due to strong underlying market conditions and the proactive approach to pursuing early renewals.

Retail Portfolio

The following table summarizes the proportionally combined results of operations for FIBRAMQ's retail portfolio:

                       
RETAIL PORTFOLIO 4Q18 4Q17 Variance FY18 FY17 Variance
Net Operating Income (NOI) Ps 141.6m Ps 139.9m 1.2% Ps 575.8m Ps 551.2m 4.5%
NOI Margin 73.0% 73.1% -8 bps 74.1% 74.2% -13 bps
GLA ('000s sqm) EOP 457 456 0.3% 457 456 0.3%
Occupancy EOP 94.0% 95.1% -119 bps 94.0% 95.1% -119 bps
Average Occupancy 93.7% 95.1% -134 bps 94.2% 95.2% -92 bps
Average Monthly Rent (Ps/sqm) EOP Ps 156.65 Ps 151.00 3.7% Ps 156.65 Ps 151.00 3.7%
Customer Retention LTM 73% 76% -364 bps 73% 76% -364 bps
Weighted Avg Lease Term Remaining (years) EOP     4.3     4.8     -10.0%     4.3     4.8     -10.0%

For the quarter ended December 31, 2018, FIBRAMQ's retail portfolio delivered NOI of Ps 141.6 million, a 1.2% increase from the prior year period. For the twelve months ended December 31, 2018, the retail portfolio NOI was Ps 575.8 million, an increase of 4.5% from the prior year period. Year-over-year growth was driven by a 3.7% increase in average monthly rent, partially offset by a reduction in occupancy.

During the fourth quarter, FIBRAMQ signed 40 leases, representing 4.8 thousand square meters. This activity included 23 new leases and 17 renewals resulting in a sequential increase in occupancy of 32 bps to 94.0%.

PORTFOLIO ACTIVITY

FIBRAMQ continues to maintain a disciplined approach to portfolio growth as it executes its strategy to deploy available capital into accretive investments including expansions and selective developments.

Expansions

A key element of this strategy is the targeted expansion of existing properties on a pre-leased basis. In addition to generating attractive yields, these expansions allow FIBRAMQ to improve customer retention, satisfaction and lease term. For the full year of 2018, FIBRAMQ deployed or committed US$9.9 million to expansions generating a projected 15.4% NOI yield.

In the fourth quarter, FIBRAMQ continued a 47 thousand square foot expansion for a manufacturer of lighting products in Reynosa. FIBRAMQ also obtained permits to build a new approximately 2,200 square meter expansion at Multiplaza del Valle in Guadalajara, including 1,400 square meters for a leading cinema operator. It is expected to be completed in the second half of 2019.

Development

In January 2019, FIBRAMQ began construction of an industrial development project in Ciudad Juárez, Chihuahua. Given its strong economic and demographic trends, Ciudad Juárez is a strategic location to pursue FIBRAMQ's long-term objective of developing class A buildings in core markets. Over the medium term, FIBRAMQ intends to increase its investment in development projects to be not more than 5% of GLA, which will be the maximum volume of development at any point in time.

The project involves the construction of up to two buildings, totaling approximately 445,000 square feet. Development will be completed in two stages with an expected total investment, including land, of approximately US$20.4 million. The first-class A industrial building is expected to be completed in 2019 with an approximate investment of US$9 million.

Retail center remodeling

During 2019, as part of its proactive approach to asset management, FIBRAMQ will remodel three shopping centers in order to improve their image and vibrancy to maintain current tenants and attract new, high-quality tenants.

FIBRAMQ expects to commence these projects during the first quarter of 2019, with completion in the second half of 2019. These projects include shopping centers in the Mexico City metropolitan area with a total GLA of 179 thousand square meters. The expected total capital to be deployed for these remodels is approximately US$9.3 million. The centers will remain fully open with no major disruptions during renovation.

BALANCE SHEET

As of December 31, 2018, FIBRAMQ had approximately Ps 16.5 billion of debt outstanding, Ps 5.1 billion available on its undrawn revolving credit facility and Ps 588.0 million of unrestricted cash on hand. FIBRAMQ's indebtedness was 95% at a fixed rate with a weighted-average debt tenor remaining of 5.2 years.

FIBRAMQ's CNBV regulatory debt to total asset ratio was 35.5% and the debt service coverage ratio was 5.3x.

Subsequent to year end, on January 31st, FIBRAMQ repaid a Peso-denominated secured loan of approximately Ps 284 million, further improving the capital structure and flexibility of the balance sheet.

CAPITAL MANAGEMENT

The following table provides an overview of how FIBRA Macquarie has funded and deployed its cash to execute on its initiatives to maximize value to its certificate holders. FIBRA Macquarie remains committed to its disciplined approach of deploying capital across property expansions and developments, certificate repurchases for cancellation, and repayment of debt.

SOURCES AND USES OF CAPITAL (FY17-FY18)     Ps equivalent     US$ equivalent
Sources
Retained AFFO Ps 1,281.0m US$ 67.1m
Asset Sales Ps 1,698.9m US$ 89.3m
Utilization of Surplus Cash     Ps 112.9m     US$ 5.3m
Total Sources     Ps 3,092.8m     US$ 161.7m
 
Uses
Expansions & Developments Ps 487.6m US$ 25.7m
Certificates Re-purchased for Cancellation Ps 871.9m US$ 45.1m
Debt Repayment Ps 1,599.1m US$ 84.0m
Other     Ps 134.2m     US$ 6.9m
Total Uses     Ps 3,092.8m     US$ 161.7m

Note: Other includes US$2.2m of income-generating Above-Standard Tenant Improvements. Uses average FX of Ps 19.13 for 2017 and 2018.

CERTIFICATE BUYBACK FOR CANCELLATION PROGRAM

FIBRAMQ continued executing on its certificate buyback program, generating highly accretive returns as the certificates continue to trade at a discount to NAV.

In November, the Technical Committee and the Board of the Manager approved an increased buyback program of Ps 1.2 billion. Certificates will be repurchased on an opportunistic basis, taking into account other accretive opportunities, including expansions and development.

       
CERTIFICATE REPURCHASES Number of certificates Repurchase amount
Fourth Quarter 2018 6.3m Ps 130.6
Since Program Commencement1 41.4m Ps 871.9m
Maximum Remaining Through June 25, 2019     NA     Ps 845.5m

1. Includes the certificates repurchased from June 30, 2017 to February 21, 2019.

DISTRIBUTION

On February 21, 2019, FIBRAMQ declared a cash distribution for the quarter ended December 31, 2018 of Ps 0.41 per certificate. The distribution is expected to be paid on March 13, 2019 to holders of record on March 12, 2019. FIBRAMQ's certificates will commence trading ex-distribution on March 11, 2019.

From FY19 onwards, two of FIBRAMQ's four scheduled quarterly distributions will be paid in the first quarter of the subsequent fiscal year. As FIBRAMQ's historic retained tax losses may be exhausted in 2019, FIBRAMQ is proactively modifying its distribution schedule to ensure ongoing compliance with applicable FIBRA regulations pursuant to which FIBRAs must, on an annual basis, distribute at least 95% of their taxable income to investors by March 15 of the following year. As FIBRAMQ's taxable position is highly dependent on year-end FX, the new distribution schedule provides two distributions following year end when our taxable position will be known, allowing us to designate such distributions as return of capital, which are not subject to withholding tax, or distribution of taxable income, which may be subject to withholding tax, as may be required to comply with the distribution requirement. This flexibility reduces the risk of making unnecessary tax withholdings or unscheduled distribution payments. The new distribution phasing has the added benefit of reducing the maximum interval between any two quarterly distributions.

The new distribution schedule is below:

       
Distribution Quarter Prior distribution schedule New distribution schedule (indicative only)
1Q19 May 2019 June 2019
2Q19 August 2019 September 2019
3Q19 November 2019 January 2020
4Q19     March 2020     By March 15, 2020

All distributions paid in respect of FY2018, including the current quarter distribution, are designated as a return of capital and no withholding tax will be deducted. Further detail of FIBRA Macquarie's taxable position for FY2018 and its FY2019 taxable position outlook are provided in the Fourth Quarter 2018 Supplementary Information materials, located at www.fibramacquarie.com/investors/bolsa-mexicana-de-valores-filings.

2019 GUIDANCE

FIBRA Macquarie is introducing its guidance for 2019. FIBRAMQ estimates total AFFO of between Ps 2.45 and Ps 2.50 per certificate for the year. This guidance is driven by the following assumptions:

  • The cash-generating capacity of its existing portfolio and an average exchange rate of Ps 19.25 per US dollar
  • No new acquisitions or divestments, other than completion of the sale of the two remaining properties from the portfolio sale announced last summer
  • Assumes no certificate repurchases
  • The continued stable performance of the properties in the portfolio, and stable market conditions.

For full year 2019, FIBRAMQ expects to make cash distributions of approximately Ps 1.70 per certificate, to be paid in equal quarterly payments of Ps 0.425. This represents an expected increase of 6.3% from the prior year, while maintaining a prudent and stable AFFO payout ratio. The payment of cash distributions is subject to the approval of the board of directors of the Manager.

FINANCIAL REPORTING IMPROVEMENTS - ANNOUNCING AFFO METHODOLOGY UPDATE FOR FY2019

FIBRAMQ recognizes the important contribution that financial reporting and transparency provides in enhancing corporate governance. As part of this endeavor, and following a review of global REIT industry best practice measures, FIBRAMQ is updating its AFFO reporting methodology with effect from 1 January, 2019.

The updated methodology continues to reflect the guiding principal of FIBRAMQ fully including within AFFO all actual incurred expenditures in connection with sustaining and maintaining our existing portfolio. Backward-looking actual maintenance expenditure and related items will now be reported in AFFO, rather than the current FY18 methodology which used a mainly forecast-based approach. In addition, actual maintenance capex expenditure and related items will be reported on a rolling three-year average, allowing for continued stability of results.

Given that the FY18 AFFO methodology was already substantially representative of long-term maintenance capex requirements, the updated methodology impact to AFFO is relatively small. FIBRAMQ estimates that, had this methodology been implemented at the beginning of 2018, the pro forma AFFO result for 2018 would have been negatively impacted by Ps 0.03 per certificate.

A comprehensive overview of the FY19 AFFO reporting updates, along with the pro forma FY18 AFFO results, has been provided in the Fourth Quarter 2018 Supplementary Information materials, located at www.fibramacquarie.com/investors/bolsa-mexicana-de-valores-filings.

WEBCAST AND CONFERENCE CALL

FIBRAMQ will host an earnings conference call and webcast presentation on Friday, February 22, 2019 at 7:30 a.m. CT / 8:30 a.m. ET. The conference call, which will also be audio webcast, can be accessed online atwww.fibramacquarie.com or by dialing toll free +1 (877) 304 8957. Callers from outside the United States may dial +1 (973) 638 3235. Please ask for the FIBRA Macquarie Fourth Quarter 2018 Earnings Call with conference number 5574545.

An audio replay will be available by dialing +1-855-859-2056 or +1-404-537-3406 for callers from outside the United States. The passcode for the replay is 5574545. A webcast archive of the conference call and a copy of FIBRA Macquarie's financial information for the fourth quarter 2018 will also be available on FIBRA Macquarie's website, www.fibramacquarie.com.

ADDITIONAL INFORMATION

For detailed charts, tables and definitions, please refer to the Fourth Quarter 2018 Supplementary Information materials located at www.fibramacquarie.com/investors/bolsa-mexicana-de-valores-filings.

About FIBRA Macquarie

FIBRA Macquarie México (FIBRA Macquarie) (BMV:FIBRAMQ) is a real estate investment trust (fideicomiso de inversión en bienes raíces), or FIBRA, listed on the Mexican Stock Exchange (Bolsa Mexicana de Valores) targeting industrial, retail and office real estate opportunities in Mexico, with a primary focus on stabilized income-producing properties. FIBRA Macquarie's portfolio consists of 236 industrial properties and 17 retail/office properties, located in 20 cities across 16 Mexican states as of December 31, 2018. Nine of the retail/office properties are held through a 50/50 joint venture. For additional information about FIBRA Macquarie, please visit www.fibramacquarie.com.

Cautionary Note Regarding Forward-looking Statements

This release may contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ significantly from these forward-looking statements and we undertake no obligation to update any forward-looking statements.

None of the entities noted in this document is an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities.

THIS RELEASE IS NOT AN OFFER FOR SALE OF SECURITIES IN THE UNITED STATES, AND SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED.

THIS ANNOUNCEMENT IS NOT FOR RELEASE IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA.

FIBRA MACQUARIE MÉXICO AND ITS CONTROLLED ENTITIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT DECEMBER 31, 2018 AND 2017
CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)

    Dec 31, 2018     Dec 31, 2017*
      $'000     $'000
Current assets
Cash and cash equivalents 555,591 417,529
Trade and other receivables, net 102,078 74,539
Other assets 72,597 73,938
Investment properties held for sale 147,622 -
Total current assets 877,888 566,006
 
Non-current assets
Restricted cash - 50,289
Other receivables 424,411 -
Other assets 187,849 196,673
Equity-accounted investees 1,152,560 1,137,652
Goodwill 841,614 882,758
Investment properties 40,132,961 41,722,712
Derivative financial instruments 124,011 111,573
Total non-current assets     42,863,406     44,101,657
Total assets     43,741,294     44,667,663
 
Current liabilities
Trade and other payables 398,314 630,784
Tenant deposits 33,182 39,295
Total current liabilities 431,496 670,079
 
Non-current liabilities
Tenant deposits 304,610 313,719
Interest-bearing liabilities 15,537,190 16,318,550
Deferred income tax 19,178 6,277
Total non-current liabilities     15,860,978     16,638,546
Total liabilities     16,292,474     17,308,625
             
Net assets     27,448,820     27,359,038
 
Equity
Contributed equity 17,497,483 18,118,973
Retained earnings     9,951,337     9,240,065
Total equity     27,448,820     27,359,038

* The Group has initially applied IFRS 9 and IFRS 15 at January 1, 2018. Under the transition methods chosen, comparative information has not been restated.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2018 AND 2017
CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)

    3 months ended     Year ended
Dec 31, 2018     Dec 31, 2017* Dec 31, 2018     Dec 31, 2017*
      $'000     $'000     $'000     $'000
Property related income 900,791 880,794 3,566,487 3,500,152
Property related expenses     (135,760)     (149,129)     (500,044)     (510,511)
Net property income     765,031     731,665     3,066,443     2,989,641
Management fees (41,007) (46,732) (168,155) (179,753)
Transaction related expenses (602) (346) (1,626) (4,962)
Professional, legal and other expenses     (11,895)     (12,379)     (50,756)     (48,526)
Total expenses     (53,504)     (59,457)     (220,537)     (233,241)
Finance costs (224,090) (224,796) (893,803) (884,789)
Financial income 7,669 4,963 21,123 13,820
Other income, net - 9,785 - 9,785
Share of profits from equity-accounted investees 45,938 45,552 64,579 115,752
Foreign exchange (loss)/gain (665,739) (1,258,489) 24,658 840,147

Net unrealized foreign exchange gain/(loss) on foreign currency
denominated investment property

1,512,744 2,538,635 (83,711) (1,566,232)
Unrealized revaluation (loss)/gain on investment property
measured at fair value
(155,186) 559,305 6,967 549,165
Gain/(loss) on disposal of investment property - 45,110 (3,453) 45,789
Goodwill written off in respect of properties disposed - (48,847) (41,144) (48,847)
Net unrealized (loss)/gain on interest rate swaps (17,847) 37,300 12,438 13,811
Profit before tax for the period/year     1,215,016     2,380,726     1,953,560     1,844,801
Current income tax (71) 980 (381) 107
Deferred income tax (12,901) (4,610) (12,901) (4,610)
Profit for the period/year     1,202,044     2,377,096     1,940,278     1,840,298
Other comprehensive income
Other comprehensive income for the period/year     -     -     -     -
Total comprehensive income for the period/year     1,202,044     2,377,096     1,940,278     1,840,298
Profit per CBFI**
Basic profit per CBFI (pesos)     1.56     2.96     2.47     2.27

* The Group has initially applied IFRS 9 and IFRS 15 at January 1, 2018. Under the transition methods chosen, comparative information has not been restated.

**Real Estate Trust Certificates (Certificados Bursátiles Fiduciarios Inmobiliarios)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)

    Contributed equity     Retained earnings     Total
      $'000     $'000     $'000
 
Total equity at January 1, 2017 18,369,994 8,666,697 27,036,691
Total comprehensive income for the year - 1,840,298 1,840,298
Total comprehensive income for the year - 1,840,298 1,840,298
 
Transactions with equity holders in their capacity as equity holders:
- Distributions to CBFI holders - (1,266,930) (1,266,930)
- Repurchase of CBFIs, including associated costs (251,021) - (251,021)
Total transactions with equity holders in their capacity as equity holders (251,021) (1,266,930) (1,517,951)
                   
Total equity at December 31, 2017     18,118,973     9,240,065     27,359,038
 
Total equity at January 1, 2018 18,118,973 9,240,065 27,359,038
Total comprehensive income for the year - 1,940,278 1,940,278
Total comprehensive income for the year - 1,940,278 1,940,278
 
Transactions with equity holders in their capacity as equity holders:
- Distributions to CBFI holders - (1,229,006) (1,229,006)
- Repurchase of CBFIs, including associated costs (621,490) - (621,490)
Total transactions with equity holders in their capacity as equity holders (621,490) (1,229,006) (1,850,496)
                   
Total equity at December 31, 2018     17,497,483     9,951,337     27,448,820

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
CURRENCY AMOUNTS EXPRESSED IN THOUSANDS OF MEXICAN PESOS (UNLESS OTHERWISE STATED)

    Year ended
Dec 31, 2018     Dec 31, 2017*
      $'000     $'000
Inflows / (Outflows) Inflows / (Outflows)
Operating activities:
Profit before tax for the year 1,953,560 1,844,801
Adjustments for:

Net unrealized foreign exchange loss on foreign currency denominated investment
property measured at fair value

83,711 1,566,232
Unrealized revaluation gain on investment property measured at fair value (6,967) (549,165)
Goodwill written off in respect of properties disposed 41,144 48,847
Straight line rental income adjustment 2,928 (10,055)
Loss/(gain) on disposal of investment property 3,453 (45,789)
Tenant improvement amortization 34,317 28,927
Leasing expense amortization 63,990 48,561
Financial income (21,123) (13,820)
Impairment loss on trade receivables 30,179 17,802
Net foreign exchange gain (44,935) (868,110)
Finance costs recognized in profit for the year 893,803 884,789
Share of profits from equity-accounted investees (64,579) (115,752)
Net unrealized gain on interest rates swaps (12,438) (13,811)
Movements in working capital:
(Increase)/decrease in receivables (95,698) 6,914
(Decrease)/increase in payables (57,214) 3,202
Net cash flows from operating activities 2,804,131 2,833,573
Investing activities:
Investment property acquired (29,595) -
Proceeds from investment properties disposed 1,189,353 525,087
Maintenance capital expenditure and other capitalized cost (499,633) (385,091)
Distributions received from equity-accounted investees 49,671 62,975
Net cash flows from investing activities 709,796 202,971
Financing activities:
Financial income 21,123 13,820
Repayment of interest-bearing liabilities (770,052) (4,601,532)
Interest paid (847,006) (826,820)
Proceeds from interest-bearing liabilities, net of facility charges - 3,672,621
Repurchase of CBFIs, including associated costs (621,490) (251,021)
Distribution to CBFI holders (1,229,006) (1,266,930)
Net cash flows from financing activities (3,446,431) (3,259,862)
Net increase/(decrease) in cash and cash equivalents 67,496 (223,318)
Cash and cash equivalents at the beginning of the year 467,818 663,173
Foreign exchange loss on cash and cash equivalents     20,277     27,963
Cash and cash equivalents at the end of the year**     555,591     467,818

* The Group has initially applied IFRS 9 and IFRS 15 at January 1, 2018. Under the transition methods chosen, comparative information has not been restated.

**Includes restricted cash balance of $nil (2017: $50.3 million) as at December 31, 2018.


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