Mexico Industry
07
Mar

This Week in Mexico – March 1st , 2020

This Week in Mexico

FIBRA Prologis Announces Results of the Subscription Offering

Summary

IBRA Prologis (BMV:FIBRAPL 14), a leading owner and operator of Class-A industrial real estate in Mexico, today announced that, in connection with the preferential right granted to qualified existing holders of its CBFIs, it received subscriptions in excess of the offering and has allocated all of the 200,000,000 CBFIs at a price of Ps. 41.50 per CBFI. Gross proceeds for the subscription are expected to be Ps. 8.3 billion. Settlement and delivery of the CBFIs will occur on March 17, 2020, subject to the receipt of payment. Trading of these CBFIs will begin upon their delivery on March 17, 2020. Citigroup is acting as lead advisor and BBVA Bancomer is acting as adviser. FIBRA Prologis is a leading owner and operator of Class-A industrial real estate in Mexico. As of December 31, 2019, FIBRA Prologis was comprised of 191 logistics and manufacturing facilities in six industrial markets in Mexico totaling 34.9 million square feet (3.2 million square meters) of gross leasable area. The statements in this release that are not historical facts are forward-looking statements. These forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which FIBRA Prologis operates, management’s beliefs and assumptions made by management. Such statements involve uncertainties that could significantly impact FIBRA Prologis financial results. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to rent and occupancy growth, acquisition activity, development activity, disposition activity, general conditions in the geographic areas where we operate, our debt and financial position, are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect outcomes and results include, but are not limited to: (i) national, international, regional and local economic climates, (ii) changes in financial markets, interest rates and foreign currency exchange rates, (iii) increased or unanticipated competition for our properties, (iv) risks associated with acquisitions, dispositions and development of properties, (v) maintenance of real estate investment trust (“FIBRA”) status and tax structuring, (vi) availability of financing and capital, the levels of debt that we maintain and our credit ratings, (vii) risks related to our investments (viii) environmental uncertainties, including risks of natural disasters, and (ix) those additional factors discussed in reports filed with the “Comisión Nacional Bancaria y de Valores” and the Mexican Stock Exchange by FIBRA Prologis under the heading “Risk Factors.” FIBRA Prologis undertakes no duty to update any forward-looking statements appearing in this release. The securities discussed herein have not been, nor will be, registered under the United States Securities Act of 1933 or the securities laws of any state of the United States and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the United States Securities Act of 1933 and any applicable state securities laws.

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Mexico to speed up spending, spur private investment to counter coronavirus shock

Summary

MEXICO CITY (Reuters) – Mexico’s government plans to speed up public spending and is urging the private sector to boost investment to help counter the economic pain caused by the global coronavirus outbreak, Finance Minister Arturo Herrera said on Tuesday. “What we have to do is take advantage of all the fiscal (tools) that we have, and all the investment opportunities at hand,” Herrera told a news conference alongside other officials. The government of President Andres Manuel Lopez Obrador said it is in close contact with the Bank of Mexico, the country’s central bank, to coordinate a suitable response to the impact of the fast-spreading virus on the economy. Herrera said he had already spoken to Bank of Mexico Governor Alejandro Diaz de Leon. The U.S. Federal Reserve cut interest rates earlier on Tuesday in a bid to shield the world’s largest economy from the impact of the coronavirus. “This is something that more or less had been expected,” Herrera said, referring to the U.S. rate cut. Herrera argued Mexico needed to be cautious about taking on new debt because of its higher real interest rates. “The Mexican government’s room for maneuver is quite different,” he said, pointing to the difference in borrowing costs between the United States and Mexico.The Fed cut rates on Tuesday by a half percentage point to a target range of 1.00% to 1.25%, while the Bank of Mexico’s benchmark interest rate stands at 7.0% after policymakers cut it by 25 basis points last month. “What (Herrera) is trying to say is that we can’t borrow because it’s very expensive given the situation,” said Jonathan Zuloaga, an analyst at financial consultancy Columbus de Mexico. “Mexico has long had the highest real interest rate of any emerging country with a significant financial market.”

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Mercado Libre To Invest $420 Million In Mexico Targeting Rival Amazon

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Latin American e-commerce giant Mercado Libre will invest $420 million in Mexico in 2020, as part of its continuing battle with Amazon.com, Inc. (NASDAQ: AMZN) to gain a larger slice of the country’s lucrative online retailing market. The online retailer, which is based in Buenos Aires, Argentina, has invested more than $1 billion in expansion efforts in Mexico since 2017 to compete with other online retailers. “The [$420 million] investment is going to be in three elements: expand the supply we have of more products and brands; expand the logistics network with new warehouses; and increase consumer awareness of the brand,” David Geisen, Mercado Libre’s Mexico chief executive, said. Geisen was speaking during a press conference at MELIXP, a technology and innovation event hosted recently by Mercado Libre in Mexico City. Mercado Libre operates in more than a dozen countries. Its three largest markets are Brazil, Argentina and Mexico, which accounted for 63%, 19% and 13% of its gross billings, respectively, last quarter. However, Mexico is the company’s fastest growing market, with e-commerce traffic up 35% in 2019, compared to the previous year, Geisen said. “Mexico keeps growing far above Latin America as a whole, and it’s a key market for Mercado Libre this year,” Geisen added. Geisen said the company intends to build more distribution centers throughout Mexico, which would benefit small- and medium-sized enterprises with storage and shipping In Mexico, Mercado Libre relies on transportation service providers DHL, UPS and FedEx. “[In 2019] we opened our second warehouse in Mexico,” Geisen said. “There will be more store openings in the coming years, because they add a lot of value to the companies that market their products through our platform. Ninety percent of the companies that sell on Mercado Libre are small and medium enterprises that do not have the infrastructure or technology to operate their own warehouses.” Online shopping in Mexico comprised just 3% of total sales last year, according to market research firm Euromonitor International. But it is projected to more than double by 2022, reaching $14 billion. Amazon launched in Mexico in 2015 at Amazon.com.mx, and is now one of Mexico’s largest online retailers.

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Mexican private sector pitches US$92 billion in energy investment document

Summary

MEXICO CITY ( Reuters) – Mexico’s private sector has drawn up a broad package of proposed energy investments for the government worth almost $92 billion US dollars, according to a document seen by Reuters on Wednesday March 4th, providing a potential lift to the country’s misfiring economy. With 275 projects from 2020 to 2024 encompassing everything from power generation, storage and transportation to exploration and production of natural gas, the 1.787 trillion peso ($91.5 billion USD) package could significantly influence the government’s national energy plan, which is due to be presented soon. The projects sketched out were the product of discussions between Mexico’s business coordinating council (CCE) and dozens of energy companies, including Royal Dutch Shell PLC , Mexico’s IEnova , a unit of U.S. firm Sempra Energy , France’s Engie SA and Italy’s Enel SpA , the document showed. Under President Andres Manuel Lopez Obrador, Mexico has pursued a more statist approach to the energy sector, but some members of his administration believe attracting more private capital is vital for lifting growth. The private sector energy pitch foresees the creation of well over 400,000 direct and indirect jobs. Under the proposals, the bulk of the work on the projects should be front-loaded into the early years of the 2020-2024 time frame. Three of the states with the biggest concentration of proposed energy projects were Veracruz, Oaxaca and Yucatan, poorer regions in the south and east of the country that the president has pledged to transform economically.

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