MEXICO CITY-Macquarie Mexican REIT has reached an agreement to acquire a 50% interest in a portfolio of nine retail properties and additional land for around $113 million (Ps.1.47B) from Kimco Realty Corporation.
An additional payment may be made to Kimco if certain occupancy and rental growth thresholds are met eighteen months after closing. US dollar figures are based on an exchange rate of 12.99 Ps./USD.
Grupo Frisa, a leading Mexican developer and property owner, will own the remaining 50% of the portfolio. Frisa currently holds a blended 31% interest in the properties and will acquire an additional blended 19% stake from Kimco at the same price as Macquarie Mexican (MMREIT). Frisa will continue to be responsible for the administration of the properties.
“The properties we are acquiring are located in strong markets, including the Mexico City Metropolitan Area, Monterrey, and Guadalajara – areas where we see upside for growth in retail spending. We believe that the retail sector in Mexico is very attractive, and we expect the joint venture to drive improvements in occupancy and rental rates in this portfolio,” said Jaime Lara, CEO of MMREIT.
The nine-property portfolio comprises 191,488 square meters (approximately 2.1 million square feet) of gross leasable area. Anchor tenants include retailers such as Wal-Mart, Chedraui and H.E.B., as well as Cinemex and Cinepolis theaters. The properties were 88.5% occupied as of September 30, and have an average age of approximately six years.
“We are delighted to have Frisa as our partner in this portfolio. They bring with them a track record of success, both as a developer and property owner in Mexico,” added Lara.
MMREIT estimates its interest in the portfolio will generate around $9.5 million (Ps.122.8 million) of net operating income on a full-year basis.
Upon completion of the transaction, MMREIT's portfolio will include 259 industrial properties and 16 retail/office properties totaling 3,077,346 square meters (33.1 million square feet).
Assuming certain conditions are met the transaction is expected to close in early 2014.
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