Operator: Ladies and gentlemen, thank you for standing by. I would like to welcome you to Fibra Uno's Q3 2026 Results Conference Call on 29 October 2026. At this time, all participant lines are in listen-only mode. The format of the call today will be a presentation by the management team, followed by a question-and-answer session. Without further ado, I would like to pass the line to the CEO of Fibra Uno, Mr. André El-Mann. Please go ahead, sir.
André El-Mann: Thank you, Danielle. Thank you, everybody. Welcome. Thank you for your interest in our results call of Q3 2026. While we have reported repeatedly good results during the last 62 quarters, today's result makes a turning point in the history of our company. Bear with us and look closely at the numbers that Jorge and our team will go through following this speech. Healthy increases on all the basic lines across the board on our P&L. Strict control and check on our expenses line. We finally were able to evidence the benefits not only from the carve-out of our industrial portfolio, but equally important, from the internalization that took place this very year.
André El-Mann: Our results not only show our strength and, with all humility, our vast superiority in comparison with all our peers that our company have the best ratio of dividends, the best growth of dividends, the best locations, the best occupancy percentage, and humbly, the very best management team of the market. These extraordinary results are only the reflection of two things. A, the great design of our company, and B, the extraordinary performance of our management team making it possible. Before I hand off the mic to Jorge, I want to stress out how proud I am to lead a team like this, which allows me to be the bearer of extraordinary results quarter in and quarter out. I want also to make it clear that our company represents two of the most important things from a real estate public company, predictability and sustainability.
André El-Mann: We finally reach a turning point, and we expect to continue delivering on all of our projections and hand out to our shareholders the best value proposal in all of the marketplace. Thank you very much for your trust as we look forward to continue on the growth and value creation road further on. Finally, we want to remind you that FUNO Day will take place next Thursday, 12 November. Your attendance will certainly be very much appreciated. Without further ado, Jorge, please.
Jorge Pigeon: Thank you very much, André. Thanks, everybody, for joining our quarterly call. As usual, I will go briefly through the MD&A, highlighting some of the key aspects of our results, and then open the floor for Q&A. Comparing our results with Q3 2026 and Q2 2026, our revenues increased by MXN 475 million or 6% quarter-over-quarter, reaching MXN 8,397 million. Total revenues increased by MXN 871.7 million compared to a year ago, or an increase of 11.6%. This growth was mainly driven by the effect of Fibra NEXT consolidation and the investment of Fibra NEXT capital raise at the IPO and follow-on equity offerings last year, the effect of the portfolio's variable rent contribution, the effect of inflation-driven increases in active contracts, and the rent increases on lease renewals or leasing spreads in particularly retail and industrial, obviously. Occupancy.
Jorge Pigeon: We had an occupancy rate that closed at 95.6%, 10 basis points decrease compared to the previous quarter. In this case, the retail portfolio reached an occupancy of 94.1%, which is 20 basis points above Q2 2026. The office portfolio reported a 79.7% occupancy rate, which is 240 basis points compared to Q2 2026. This is mainly due to a bank that left an office building. We were expecting this to happen, and it is a building that is extremely well located, so we already have LOIs for the space and are not concerned at all by this departure. Quite the opposite. We think it is an opportunity to re-lease that very attractive building. The other portfolio as well recorded a 99.3% occupancy rate, 10 basis points above the second quarter.
Jorge Pigeon: The industrial portfolio stood at 97.8%, stable against the second quarter, and the in-service portfolio reached 60.8%, or 44.4% above the previous quarter. So very healthy occupancy for all of our different segments as well as on a consolidated basis. In terms of operating expenses, property taxes, and insurance, we saw an increase of MXN 78.2 million or 7% compared to the previous quarter, mainly due to the expansion of the portfolio's consolidated GLA, the increase of the GLA that we had at the NEXT JV. Compared to Q3 2025, we saw an operating increase of MXN 198.8 million or 20%, attributable to consolidation of Fibra NEXT, primarily. Property taxes increased by MXN 5 million compared to the third quarter and an increase of MXN 0.4 million year-over-year.
Jorge Pigeon: This variation reflects the exit of property use as form of payment internalization, partially offset by the consolidation of Fibra NEXT. Insurance expenses increased by MXN 5.9 million or 4.5% quarter-over-quarter. Compared to Q3 2025, insurance expenses increased by MXN 4.9 million or 3.1%. This variation is primarily affected by the sale of properties in our portfolio as well as the consolidation of Fibra NEXT. In terms of net operating income, the above is reflected on an increase of MXN 471.6 million or 8% on a quarter-over-quarter basis and reaching MXN 6,374 million. The NOI margin calculated over rental revenue stood at 84.5% and 70.9% compared to total revenue. Compared to Q3 2025, we saw an NOI increase of MXN 792.8 million or 14.2% year-over-year. We are incredibly proud to be able to deliver this level of NOI growth.
Jorge Pigeon: This is mainly due to the elimination of fees following the internalization of the advisor. When we compare, obviously, we do not report this and do not have this MD&A calculation. When you look at the EBITDA line, we see an increase of almost 500 basis points, which is the expected level of savings that we had for the internalization of the advisor. In terms of interest expense and interest income, we saw an increase of MXN 176.9 million or 6.6%, and a decrease of MXN 78 million compared to Q3 2025 on a year-over-year basis. This is mainly due to the cost of newly issued local bonds, the 26, the green bond, and the 26-2, overlap with the prepayment of the two bonds that we had been issued in 2023.
Jorge Pigeon: As well as the bonus of the 16 new bonds that we have consolidation of interest payment from Fibra NEXT, and the variation of the FX of the Mexican peso against the dollar, which appreciated from 17.47 to 17.84, and the appreciation to 18.38 and 17.34 compared on a year-over-year basis. We had also an extra day of interest expense accrual. This is reflected on a result of the above, the funds for operation controlled by FUNO increased by MXN 229 million, or 8.9% on a quarter-over-quarter basis, reaching MXN 2,688,000,000 compared to Q3 2025. FFO increased by MXN 397 million or 16.6% on a year-over-year basis. Adjusted FFO increased by MXN 195.65 million, or almost 8% compared to Q2 2026, reaching a total of MXN 2.6 billion, including FFO adjustments associated with Fibra NEXT.
Jorge Pigeon: Compared to Q3 2025, FFO increased by almost 10% on a year-over-year basis. On a per CBFI basis, we did not release or repurchase CBFI, so we closed the quarter with 3.8 billion CBFIs outstanding. The FFO and average FFO per CBFI were MXN 0.72 and MXN 0.6966 respectively. Quarterly valuations of 8.3% and 7.3% compared to Q3 2025, and an increase of 15.6% and 9% respectively on a year-over-year basis. In terms of our quarterly distribution, we reached MXN 2.6 billion or MXN 0.68 per CBFI, with a quarterly FFO payout of 97.6%, attributable 70% to fiscal results and 30% as a return of capital. Compared to Q3 2025, distribution increased by 12.4%, and this distribution will be paid on 9 November 2026.
Jorge Pigeon: Moving on to the balance sheet, we had accounts receivable in Q3 2026 that totaled MXN 2.8 billion, an increase of MXN 142 million or 5.3%. Compared to Q3 2025, an increase of 17.5%, mainly driven by the consolidation of Fibra NEXT. Our investment properties, including financial assets and investments in associates, increased by MXN 19 billion, 5% compared to Q2 2026. Compared to Q3 2025, an increase of MXN 57.2 billion or 16.7%, which is primarily driven by the consolidation of Fibra NEXT that we had as of December 2025, CapEx of investments in our portfolio, and the fair value adjustment of investment properties and financial assets. In terms of debt, total debt stood at MXN 156.3 billion compared to MXN 148.8 billion in the previous quarter.
Jorge Pigeon: The valuation is primarily due to the consolidation of MXN 5.8 billion of incremental debt from the Fibra NEXT JV, the issuance of the local bonds I mentioned above for MXN 7.5 billion, and we also re-tapped those bonds for another MXN 1.5 billion additional. For those of you looking at the call, the actual amount issued in new bonds in the peso market totaled MXN 9 billion in two transactions at the original offering for MXN 7.5 billion, and then a re-tap a couple of weeks after the initial offering of another MXN 1.5 billion. All of this money was used to repay debt that we had. So we had the repayment of some peso bonds as well as a Mítikah mortgage loan. Also affecting the debt was the effect of the peso depreciation against the dollar from 17.47 to 17.84 per US dollar.
Jorge Pigeon: All of the above end up resulting in an increase of MXN 7.88 billion compared to Q3 2026 in our equity line, including controlling and non-controlling interest, and a net increase of MXN 54.9 billion or 28% compared to on a year-over-year basis. It is primarily driven by the consolidation of Fibra NEXT, as well as a net income generated quarter, the revaluation, distributions, and the employee compensation plan. Moving to the operating results, we had again, very solid leasing spreads, and we are very happy with the growth that we are showing in industrial renewals of contracts increased 17.7% in the industrial segment, 1,000% in the office segment, and 960 basis points in the retail segment, against the weighted peso average inflation of 3.8%. So very solid leasing spreads. In terms of total renewals, we saw rent increases of 650 basis points in the retail segment.
Jorge Pigeon: Against a weighted average of 3% or 250 basis points in the retail segment. Constant properties increased by 9.4%, again compared with an annual weighted average inflation of 3.7%, so very solid results on the constant property performance. At the sub-segment level, we saw an annual rent per square foot increase of 12.5 to 12.9 or 3.4% compared to the previous quarter, primarily due to the contract renewals and leasing spreads I mentioned above, as well as the active inflation component on the contracts that we had. On the sub-segment basis, the retail segment fashion malls increased by 0.5%, regional segment increased by 3.4%, and the standalone segment increased by 1.9%. The office segment NOI decreased 0.03%, mainly due to decreases in occupied GLA. As I mentioned, we had a tenant leave one of our buildings, and we already were expecting this to happen.
Jorge Pigeon: The other segment NOI increased by 31.3%, primarily due to the increase of variable rent, and the industrial segment increased by 8.3%, primarily driven by the inclusion of the Triple Crown portfolio, as well as the contribution of the during the quarter. With this, I conclude the MD&A of the financial and operating results, and we will be happy to open the floor for Q&A. Daniel, if you could please open the floor for questions.
Operator: Thank you so much. We will now move to the question and answer section. If you would like to ask a question, please press star two on your phone and wait to be prompted. If you are dialed in by the web, you can type your question in the box provided or request to ask a voice question. We will just wait a moment or two for the questions to come in. Our first question comes from Juan Ponce from Bradesco BBI. Your line is open. Please go ahead.
Juan Ponce: Hi, FUNO team. Thanks for taking the questions and congrats on the results. Given the scale of the group's land bank around AIFA, this quarter could become a significant growth driver for FUNO through the NEXT platform. What are you seeing in tenant demand specifically in this quarter? What will determine how quickly that opportunity translates into income-producing assets? Thank you.
Jorge Pigeon: Thank you. Thanks for the question. Obviously, we are very happy to be able to have the kind of problem that we have in the industrial sector, which is pent-up demand for new space, solid rental growth, solid occupancy in the office sector. We do see continued, because I do not want to say it is increased, but continued demand for space in the Mexico City, let us say the whole area of Mexico City, particularly the AIFA Airport is doing extremely well. It is overall the Mexico City logistics market is very solid. Part of that you see in the Saturno acquisition. The location of that asset is super prime real estate. It is the kind of thing that is very difficult to acquire. We are very pleased that we have the access to capital to be able to deploy that.
Jorge Pigeon: The opportunity in the AIFA Airport is something that obviously, we continue to see that as well as additional growth. As you know, we have in total about 30 million square meters or a little over 30 million square meters of potential GLA available for Fibra NEXT. The way I would phrase it is that today we have a very solid market with pent-up demand on one hand, and on the other, we need to have the funding to be able to access that demand. How quickly we can access the funding is going to dictate how quickly we can move with those things. The good thing is that nobody else can acquire those opportunities. Those are sitting, let us say they are sitting there for us to be able to take advantage of that.
Jorge Pigeon: It's a unique competitive advantage that both Fibra NEXT and Fibra Uno have to be able to have access to E-Group's properties. We can expect to have it as soon as we are able to access capital for those opportunities.
Juan Ponce: Got it. Thank you so much.
Operator: Thank you so much. Our next question comes from Piero Trotta from Citi. Your line is open. Please go ahead.
Piero Trotta: Hi, André, Jorge. Thank you for the call. I have two questions. The first one is regarding retail. We saw that occupancy improved quarter-over-quarter, but it remains below historical levels. Which properties or regions do you see lagging, and what level of retail occupancy do you consider achievable over the next 12 months? That's the first, and the second one is related to the office segment. We saw the occupancy decline related to Polanco. I would like to understand what is the current leasing interest for that space, and what incentives may be required by a new tenant, and how quickly do you expect the building to be re-leased? That's it. Thank you.
Gonzalo Robina: First, on the retail sector, we have a 94.1% occupancy, which I think is reasonable and healthy. If you ask me which will be the target, I don't foresee in a stable market more than 95%. That's the usual
Jorge Pigeon: Threshold
Gonzalo Robina: threshold that we will consider in retail. Anything above that will be responsible on our side to create an expectation above that. On the office sector, as you mentioned, it's correct. We are talking about the Mariano Escobedo building, which was occupied by CIBanco. Obviously, this was expected to be empty someday or another. At the end, we were able to collect the rent up to the last day. Considering that we were expecting that they will be leaving the space, we have already two or three tenants in line to get into the building. We are working with those two or three prospectors. We expect that definitely during this quarter, we will be signing something. Probably this quarter, we won't be receiving any rent, but we will start seeing the income from that building starting Q1 of next year.
Jorge Pigeon: The other question is
Piero Trotta: Thank you very much.
Jorge Pigeon: any regions that we see in the country lagging in the retail sector? I would say no. We are seeing a pretty homogeneous, as usual, operations. You have some vacancy here and there in a quarter, but nothing that would warrant a trend that would say that we are not anywhere other than stable, in a stable operating environment.
Piero Trotta: Okay, great. Thank you, team.
Jorge Pigeon: Thank you.
Operator: Thank you very much. Our next question comes from Alejandra Obregón from Morgan Stanley. Your line is open. Please go ahead.
Alejandra Obregón: Hi, Fibra Uno team. Thank you for the call and for taking my question. Mine is on the revenue front, and perhaps I will split the question into two. First, on the mixed use, variable income was a very positive contributor again. I was just hoping you can help us better understand what fits within it and tell us how much of that would you consider recurring. That is the first part. The second is on the office space. Vacancy is coming down a little bit, but revenue is not. I was just wondering if there is a meaningful contribution, perhaps from any non-recurring or any termination penalties from tenants, and if so, can you help us quantify it? Thank you.
Jorge Pigeon: No, there is no penalty income. For example, what Gonzalo was mentioning, we did manage to collect rent till the last day, but we do not have penalty income collected or non-recurring revenues in that particular case.
Gonzalo Robina: No. Actually, according to the lease, we were able to collect that. Obviously, at the end, once CIBanco left the market, we were dealing with the interventor. It was not easy to collect a penalty out of that. We feel proud that we were able to collect up to the last day of occupancy, the rent. But obviously, there was no penalty or extraordinary income out of that vacancy.
Jorge Pigeon: Can you repeat the question regarding mixed use, please, Alejandra?
Alejandra Obregón: Yes, of course. The question was, the variable income on mixed use or in, I am going to say other, that is performing really well, I guess, for the second time. I was just trying to understand what is driving that revenue uplift. Thank you.
Jorge Pigeon: Well, we had additional contribution for variable rent. As you know, we operate the hotels, and there is a chance that if you have a very good performance of the hotels, we have additional income coming from that segment, which is what happened this quarter. It is not an extraordinary item. It is just part of the normal operation of that segment in particular, which had a solid contribution, and hopefully we can expect to continue to see solid contributions from that sector.
Alejandra Obregón: Okay. Thank you very much. That was very helpful.
Jorge Pigeon: You are welcome.
Operator: I would like to say our next question comes from Igor Machado from Goldman Sachs. Your line is open. Please go ahead.
Igor Machado: Hi, Fibra team. Congrats on the results and thanks for taking my questions. I have two from my side. The first one is on leverage. Looking ahead, how should we think about the outlook for deleveraging over the coming quarters? Is there a net debt level or range you are targeting? The second point would be on lease spreads. All portfolios saw solid leasing spreads, with all three portfolios showing 10% or above this level. Should we expect this level going forward? That's it. Thank you.
Jorge Pigeon: I'll take the leverage question, and I'll ask Gonzalo to talk about the expected leasing spreads on the different segments. Regarding leverage, we feel comfortable with the current level of debt that we have at the Fibra Uno consolidated level. Having said that, obviously, we can expect to see debt increases in the future associated with additional capital deployments on the Fibra NEXT side of the equation. I don't want to say that we expect to have additional debt, because that's going to be accompanied with additional equity raises on the NEXT side of the equation. Looking at the overall amount of debt, that can increase on the leverage side of the equation. We expect to remain at the NEXT level at or around that 35% benchmark, I guess, is the expectation on our side.
Jorge Pigeon: You're right, you can expect to see continued deleveraging on the LTV/net debt EBITDA Metrics based on the growth of the NOI of the portfolio and more or less stable contribution on the debt side of the equation. This is obviously assuming a stable FX. If you have the FX moving, that's going to, let's say, impact these ratios, although not the leverage of the company the way we are looking at it. So the expectation is to have more or less the same amount of debt at the fund level. I don't know, Gonzalo, if you can address the expectation.
Gonzalo Robina: Yeah. In terms of the lease spread, I would say that what we have been seeing during this year is something that we can expect to be for the future 4 quarters at least. I would consider the retail sector as the black swan. Everyone is paying attention to the industrial sector, but what we have been seeing in the retail in terms of nice occupancy, stable occupancy, above 94%, and the lease spread that we are seeing, I would say that it is our revenge after the COVID discounts that we had to give our tenants. At the end, we are seeing our revenues growing the way we expected. On the office sector, taking out the consideration of the Polanco building, we have a stable 84% occupancy. I am taking out the Polanco building.
Gonzalo Robina: If you consider that we are in between 83% and 84% occupancy on the office sector, we have started seeing some lease spreads on the office market as well. Obviously, that is way lower than the retail, but finally, we are seeing also leasing spreads on the office sector.
[Company Representative] (Fibra Uno): I would like to add something regarding the leverage. If you consider that for the year to date, EBITDA growth is 13.8% compared to the 9 months of last year. As the net debt to EBITDA is calculated by the last 12 months, the next 3 months will complete these 12 months, and that efficiency that came out of the internalization and obviously of our rent growth and all that is also going to play out in improving these metrics.
Jorge Pigeon: To accelerate the deleveraging, I guess, is another way of putting it.
[Company Representative] (Fibra Uno): Exactly.
Igor Machado: Perfect. Thank you.
Operator: Thank you very much. Our next question comes from David Soto from Scotiabank. Your line is open. Please go ahead.
David Soto: Hi, Fibra team. Thanks for taking my question. I have two questions. The first one is related to retail. Your occupancy is now back at pre-COVID levels, so how should we think about leasing spreads and variable rents over the next 12 to 18 months? The second question is, what should we consider as a sustainable EBITDA and FFO margin range over the next 12 to 18 months?
Jorge Pigeon: Thank you. Regarding leasing spreads, I think Gonzalo was mentioning a couple of things. We see a stable environment, so 94% to 95% occupancy. Going above 95% would be, as Gonzalo mentioned, irresponsible on our side, because then you don't have flexibility to manage the needs of the tenants once you start moving them in a shopping mall. Because it may not look like that from the outside, but whenever we're leasing and we have to accommodate the needs of tenants, you have to move people around in the shopping malls, et cetera. So we need to have that vacant space in order to be able to do that. So on the one hand, I would say that we are very comfortable with 94% to 95%. Another percentage point would be fine, but not much beyond that on the occupancy side.
Jorge Pigeon: On the leasing spreads, we have been reporting leasing spreads, let's say in the 7% to 9% area for retail. We would expect to see that continued over the next 12 months on a stable basis. In that range is something that we feel very comfortable and it's very attractive and very solid for the retail segment. We can expect to see that level of leasing spreads in the retail sector for the months to come. Obviously, the variable component of income has a couple of drivers. One of them is on the retail side of the equation. That can be affected in the very short term by consumption patterns in Mexico. Although we are seeing, let's say, contribution of the variable rent component on rent space on the initial base level rent that we have in our contracts.
Jorge Pigeon: We are seeing some contribution of that variable rent component, and we can expect to see that going forward. We don't see an environment today that would be conducive to a reduction of variable rent contribution in the retail segment, quite the opposite. Maintaining what we have, I guess, is the best way to put it. The stable level of margins would be something similar to what we have right now, because we are now seeing the impact of the internalization. We expect to see something similar to what we have.
Gonzalo Robina: Going back a little bit on the retail, having that 94% to 95% occupancy has been the driver that allowed us to move. If you recall, when we bought the Apollo portfolio 12 years ago, the occupancy on F&B and entertainment was probably below 10%, the percentage of occupancy in a shopping mall. As of today, we already have some shopping malls that already have above 30% of F&B and entertainment. If we don't have that flexibility that Jorge was mentioning, we couldn't be able to turn this into the consumption
André El-Mann: Trends
Gonzalo Robina: trends that we are seeing. That's what the consumption is asking us for.
David Soto: Perfect. Thanks.
Operator: Thank you very much. Our next question comes from Gordon Lee from BTG Pactual. Your line is open. Please go ahead.
Gordon Lee: Hi, everybody. Thank you. Thank you very much for the call, and congratulations on the results. I actually had two follow-up questions on the retail side. The first, it is interesting how well your portfolio has performed. I think you can reach similar conclusions when you look at other portfolios that are in the market as well. Yet, this has happened in an environment that most people would describe as one of a weak consumer. So I was wondering why that discrepancy, why you think that the sort of upper-end segment has held up so well. The second question is, given how well this has performed, and I think the last major property that you put into the market in the retail side was Mítikah, which is almost 5 years old.
Gordon Lee: I am wondering if you are starting to become enthusiastic enough with the retail that you are starting to think maybe about some development. Thank you.
André El-Mann: Thank you, Gordon. You are right on the bullseye, as always. Yes, I think now it is a time to look at the retail segment of the company closely. As you said, Mítikah. Mítikah has been a very nice surprise for all of us. Today, it is performing very well. Remember that we have the possibility to expand Mítikah. I think we are getting closer to that expansion point in that particular site. Answering the broad market, we are looking at the ANTAD, which is the association of the department and supermarket stores, and they are growing very low, 1% or 2% per year in the last quarter and the previous one. That is in same-store growth. In overall growth, they are growing 5% or 6%. There is a differentiation related to the location of every center.
André El-Mann: I think we are very fortunate to have in what, in our view, is the best location possible. That is why our centers are performing so well. We expect that in the near future, we will continue to perform. They will continue to perform, and we will continue to enjoy the variable rent that we are collecting right now. If you take into account same stores only, same store is lagging. I think that too, we will overcome. Overall sales are above inflation by 2 or 3 percentage points. I think it is a no-brainer to continue. Mexico is still underserved in terms of square meters per capita, so we intend to be there to serve all the consumers and serve all of our tenants to please and serve their consumers. I think it is time for the retail to thrive.
André El-Mann: It will be, I am sure of it, because the average consumer in Mexico is receiving different income, different sources of income. It is receiving more remittances, historically high. It is receiving more social plans, historically high. It is receiving also a very huge increase on the minimum wage, historically high. All of these sources of more money for the average consumer will eventually reflect on the sales of the average retailer. We are enjoying being on the best locations of the country, and this is showing on the results. It is the reflection of what is happening at ground level.
Gonzalo Robina: Gordon, just a quick precision. We inaugurated Samara Satélite 18 months ago. That is our newest development. It is already occupied above 90%. It has offices, retail.
André El-Mann: Hotel.
Gonzalo Robina: Sorry, a hospital, not a hotel. I just wanted to make that quick precision.
Gordon Lee: Perfect. That is true. Thanks. I had forgotten about that. Thank you very much, though. Great answer. Thank you.
André El-Mann: Thank you, Gordon.
Operator: Thank you very much. Our next question comes from Luis Octavio Arias from Punto Research. Your line is open. Please go ahead.
Luis Octavio Arias: Thank you for taking my question. Given the strong margin improvements following the internalization process, where do you see the next major opportunities to drive FFO per CBFI growth in 2027, particularly outside the industrial segment?
André El-Mann: Thank you for the question. We are sitting on all-time high. We expect to continue the growth. We expect to reach again double digits next year. This year, I think we are going to be reaching double digits and above growth. Everything chips in. Of course, internalization chips in, but also the management of the properties and also the retail environment. Sorry for the repeated. For the environment on the retail segment. But everything chips in. So we hope to get to double-digit growth next year for all of the above, all of the reasons we already said, not only the internalization. Everything chips in.
Jorge Pigeon: Yeah, obviously, we are very pleased with the performance of the portfolio. Another way of putting it is we are happy to be able to focus right now on the fact that we delivered 15% plus FFO growth year over year, which is sort of the highlight of the results for this quarter. We expect to be able to continue with that trend looking at the year-ago metrics, again, with double-digit growth. When we look at 2027, we expect to be able to also deliver double-digit growth at the bottom line level.
Luis Octavio Arias: Perfect. Thank you very much.
Operator: Thank you so much. Our next question comes from Pablo Ricalde from Itaú BBA. Your line is open. Please go ahead.
Pablo Ricalde: Hi. Good morning, FUNO. Maybe a follow-up on the leasing spread we saw on the industrial sector. I do not know if you can remind us which percentage of your revenues are in USD, but only on the industrial segment, and how much are in Mexican pesos?
Jorge Pigeon: 65/35. 65% in pesos, 35% in dollars is the overall.
André El-Mann: Industrial.
Jorge Pigeon: Industrial, yeah.
Pablo Ricalde: Perfect. Thanks.
Jorge Pigeon: FUNO is 30/20.
Operator: Thank you so much. Our next question comes from Alan Macías from Bank of America. Your line is open. Please go ahead.
Alan Macías: Hi. Thank you for the call. I think my question has been answered, but just a follow-up on the EBITDA margin. Great to see the margin expansion and just any other potential measures that you might implement in order to prop it up more or keep it stable. That would be great. Thank you.
Jorge Pigeon: Yeah, we'd love to be able to maintain stable, especially the expense line area, but it's difficult since a lot of those expenses have a very high correlation, let's say, with the minimum wage. So that had a strong effect pushing our expenses higher. We're happy to have been working on strategies to contain those expenses. We'd love to be able to have continuous and forever growing economies of scale and things of that nature that can increase your margins. But at the end of the day, the industry is where it is, and it's difficult to spend a lot less than what we are currently, but we have the objective of maintaining expenses as controlled and as low as possible. I guess a way of putting it, there was a question before regarding expected margins.
Jorge Pigeon: I think we're at a level where the stable margin from where we are today would be a very good result.
Alan Macías: Thank you.
Operator: Thank you very much. Our next question comes from Felipe Barragán from JPMorgan. Your line is open. Please go ahead.
Felipe Barragán: Thank you. Good afternoon, FUNO team. Thanks for taking my question. I would like to get an update on Mítikah Phase 2. It seems like it has been a very upbeat and optimistic outlook for the retail space. I just want to get a sense if you guys might be digging off on sort of the project. Thank you.
Jorge Pigeon: Thank you. Yeah, we do have the license, let's say, for an additional about 100,000 square meters of additional, let's say, GLA potential at the Mítikah site from a construction point of view. So that is already taken care of. We have decided not to pull the trigger yet on additional investment on that site. At this stage, I don't think we have something to convey to the market in the short term. It is something that we will continue to monitor, let's say, going forward. There is obviously that potential for phase 2 in Mítikah, and at some point, we will execute on that. We don't think that we are just there yet, especially since there is a potential for that site to have some additional office space.
Jorge Pigeon: This is a live project. I have seen it have a hotel, and they take out a hotel, and then have additional condos, and then take out the condos. So we have to look at how the market behaves and look at the different opportunities that we have. At this stage, we don't have anything in the short term that we can convey to the market regarding additional investment in Mítikah. Potential, yes, but I don't see it in the next 12 months.
Felipe Barragán: Thank you very much.
Operator: Thank you very much. Just a reminder, if you would like to ask a question, please press star 2 on your phone and wait to be prompted. Our next question comes from Francisco Chávez from BBVA. Your line is open. Please go ahead.
Francisco Chávez: Hello. Thanks for the call and also congrats on the results. My question is a follow-up on the retail segment and on Gonzalo's last remark. When do you expect to start seeing a compression in cap rates in the retail segment? Thank you.
Gonzalo Robina: Thank you, Paco. I think that that is something that we are already seeing. Probably 12 months ago, you could not be seeing a transaction below 10%. As of now, you are starting seeing something between 8% to 9% on the private transactions, obviously. And probably, let us say that in the next 12 months, we will be seeing at least 100, 150 basis points cap compression on the retail sector. Actually, probably you are aware there are a couple of portfolios out there on the private sector trying to trade. We will see which will be the final cap rate of those transactions, but the market is moving.
Francisco Chávez: Great. Thanks, Gonzalo.
Operator: Thank you so much. Our next question comes from Francisco Suarez from Scotiabank. Your line is open. Please go ahead.
Francisco Suárez: Thanks for the call and congrats on the great results, gents. The questions I have relate with your overall balance sheet. You have made lots of progress on your balance sheet. If you can share, what are your kind of conversations with the credit rating agencies in ways that you can actually decouple from the fate of a potential downgrade of Mexico's country risk credit rating? Any chances that you might actually be able to decouple from a potential downgrade from Mexico sovereign credit rating?
Jorge Pigeon: Thanks, Paco. We have discussed the sovereign ceiling, sort of put it that way, in rating discussions. There is a possibility to be able to have up to two notches above the sovereign in Mexico. So long as we maintain leverage at the healthy levels that we have, we could have up to two notches above the sovereign. The outlook for FUNO and for NEXT, both, has been stable on both cases, and it is basically maintaining leverage where we are. If the sovereign gets downgraded, there is the chance to have up to two notches above the sovereign.
Francisco Suárez: Great. So chances are that not only cap rates are going to compress, but also your yield spreads, isn't it?
Jorge Pigeon: It has been compressing, actually.
Francisco Suárez: Thank you.
Jorge Pigeon: If you look at the most recent
Francisco Suárez: Yeah
Jorge Pigeon: issuance of peso bonds for FUNO, we issued the M Bonos at plus 170 over M Bonos, the fixed rate, which was the lowest spread for the issuance of FUNO. The next bonds on the exchange that we had was the lowest spread both on the 10-year and the 30-year of any bonds that we have issued in the past. Pretty happy with both entities' spread levels in the market.
Francisco Suárez: Great news. Thank you. Congrats again.
Jorge Pigeon: Thank you.
Gonzalo Robina: Thank you.
Operator: Thank you very much. I am not seeing any more questions, so I will now hand it back to the Fibra Uno team for the closing remarks.
Gonzalo Robina: Thank you very much. Thank you for your attention and your interest on our results call, and we look forward to see you in our FUNO Day next 12 November. Thank you very much. Have a good day.
Operator: This concludes the call for today. We are now closing all the lines. Thank you and have a nice day.
