Major deals are underway in Mexico’s real estate sector despite financial ills afflicting Mexico as a whole, such as the decline of the peso. On August 17, Fibra Inn, a Monterrey-based real estate investment trust (REIT), announced its $17.2 million acquisition of Staybridge Suites Guadalajara Expo and Arriva Express Guadalajara Plaza del Sol Expo hotels. The properties are located in Jalisco and their proximity to Expo Guadalajara, a significant venue for conventions in Mexico, was a major reason Fibra Inn wanted to acquire the properties.
In a separate deal, global law firm Holland & Knight advised another REIT, Fibra Uno, based in Santa Fe, Mexico, in obtaining an $850 million loan for future acquisitions of properties, partially in pesos and partially in dollars, from a syndicate of banks, in a transaction completed July 30. Partner Guillermo Uribe Lara said that, given the fact that the loan was granted in two currencies, this is the “first time a deal like this [was] granted to a Mexican Fibra.” Uribe and associate Adrian Gay Lasa, both based in Mexico City, advised Fibra Uno on the deal. The syndicate included HSBC Holdings PLC, Bank of America Merrill Lynch, Goldman Sachs, Banco Santander, Banco Bilbao Vizcaya Argentaria, Banco Itau BBA, and Credit Suisse.
The loan has an accordion feature which could allow it to expand to $1.2 billion, Uribe said. Normally, according to Uribe, the accordion feature is closer to 20% in the best of cases, so the fact that it is 50% is somewhat unusual. This loan did not involve warranties, which is also somewhat rare.
Out of 359 cities worldwide, Mexico City had the most direct commercial real estate investment within the past three years, according a Jones Lang LaSallle study cited in a July 22 Latinvex article. Chicago-based Jones Lang LaSalle is an investment and professional services company specializing in real estate. The article noted that Mexico City ranked second for “overall attractiveness for commercial real estate” behind São Paulo.