Operator: Ladies and gentlemen, thank you for standing by, and I would like to welcome you to Fibra Next's Q3 2026 results conference call on 27 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 Alex Oechler, Head of Capital Markets and IR for Fibra Next. Please go ahead, sir.
Alex Oechler: Good morning, all, and thank you for joining Fibra Next Q3 2026 results call. With me are Raúl Gallegos, our CEO, and Carlos Pantoja, our CFO. Our quarterly supplement and financial statements in English and Spanish are on our website. Just a reminder, today's remarks include forward-looking statements, and actual results may differ. Figures that we report are in pesos under IFRS, and because Next began operations after Q2 2025, we are comparing against the prior quarter. Raúl, over to you.
Raúl Gallegos: Thank you, Alex. Good morning, everybody, and we are very pleased to present to you our results from Q3. We have finally completed our first year of life as Next. So we consider this first phase done. We have finished the complete structuring of Next as a public entity. We have also integrated Fibra Uno's or FUNO's industrial portfolio. We have consolidated all operations related to the industrial portfolio now combined. We have actually also started executing on our growth plan through four main acquisitions. Our last acquisition, Saturno, which closed on 30 September, brings us to a total of 8.2 million square meters of GLA, 222 properties now in our portfolio. Now we have 500,000 square meters under development from also the two acquisitions that we have done.
Raúl Gallegos: From now on, we will continue to focus on growth with very strict operating discipline that we have already established, and a clear goal of distributing to our shareholders and increasing our AFFO and our distributions per CBFI. We see demand continuing to favor our portfolio. We see consumption, e-commerce, and particularly 3PLs that continue to grow, and the warehousing space that serves them not necessarily growing at the same pace. This is very reflected in Greater Mexico City, where over 60% of our assets are located. Just in this market, CBRE just reported for Q3 an 82% increase in demand for the first nine months of 2026. Vacancy continues to be under 5%, and the highest rents in the country are seen in Greater Mexico City area. Logistics and e-commerce contribute to over 90% of the activity in this area as well.
Raúl Gallegos: Again, our main area of focus. In manufacturing or light assembly in our northern markets, we see some signs of recovery, led mainly by Monterrey, and with a slight shift on some of the industries that we serve, with more activity related to AI supply in the US, from servers, electronic equipment, and also some cooling equipment related to this industry. Again, 80% of our assets are focused on logistics and domestic consumption. So the tariff uncertainty that we continue to see does not affect our portfolio as much as other portfolios in the market. Again, the positioning of our portfolio continues to be benefiting from the current dynamics. Occupancy is very, very strong at close to 98%. Our retention for the quarter was 91%. So again, very strong metrics. Our lease spreads continue to show very healthy numbers at 18% from last quarter and 14% above inflation.
Raúl Gallegos: Our rents continue to be significantly below market, over 25% below market. We continue to see income growing, so we should continue to see income growing in the next 12 to 18 months. Again, with these numbers, we show the highest occupancy amongst our peers, the most diversified tenant base. Our top 10 tenants represent only 60% of our GLA, where other portfolios have 20% to 30% concentrated in their top tenants. Our NOI for the quarter grew 8%, where some of our peers had significantly lower numbers of flat or just a very minor growth. We continue to focus on our three levers to grow the company. First, organic. I already mentioned the lease spreads, and we expect to continue that for the next 12 to 18 months.
Raúl Gallegos: Development, now that we have an active development pipeline of, as I mentioned, 500,000 square meters, and that we expect to generate above a 10% yield on cost for our shareholders. This is done very importantly in land that is contributed by our sponsor group, where we do not have the carry costs associated to that, and we can build on that land immediately after it is contributed to Next.
Raúl Gallegos: Again, we will continue to manage our overall development so that it is between 5% and 10% of our GLA, and we do not affect the distributions of our portfolio with this development undergoing. Since our IPO, we have committed about $1.3 billion of investment at a blended 9.2% cap rate, so extremely accretive to our portfolio. All of this done with very disciplined underwriting, particularly on our acquisitions, related party deals. Have done this or shown this.
Raúl Gallegos: We have been able to do these acquisitions with a combination of contribution of CBFIs that will be deployed in time so that we do not create dilution for our existing shareholders. A part of it is also from debt assumptions, and part of it is paid in cash. This combination, we think it is a winning formula going forward so that we are able to capture the most amount of value for our investment. We have been very focused on our balance sheet as well.
Raúl Gallegos: Alex will talk more, and Carlos, on our debt structure and what we have been able to do so far. But we are very committed to our rating and maintaining a very healthy balance sheet in general. Now I would like to pass it on to Carlos to go into details into the numbers.
Carlos Pantoja: Thank you, Raúl. Turning to our operating performance, we continue to deliver strong results, supported by a high-quality industrial portfolio and disciplined execution. Occupancy remained very strong at 97.8%, while lease renewals delivered an average increase of almost 14% above inflation. This demonstrates the resilience of our tenant base and the embedded growth potential of our portfolio. Controlled FFO per certificate increased to MXN 1.99, up from MXN 1.75 in the previous quarter. Controlled AFFO per certificate reached MXN 1.7, an increase of 10.5% quarter over quarter.
Carlos Pantoja: On this basis, we are announcing a distribution of MXN 1.65 per certificate, representing 97% of controlled AFFO. This reflects our commitment to delivering attractive cash distributions while maintaining financial discipline. We also completed acquisition of the Saturno portfolio, as Raúl was mentioning, in the end of September, adding an important platform for future growth.
Carlos Pantoja: In addition, in October, we exchanged $1.1 billion from international bonds for new sustainability-linked senior notes, extending our average debt maturity by approximately two years and enhancing liquidity for bondholders. Alex will talk a little bit more on this topic later on this call. Moving to the financial results, total revenues reached MXN 3.1 billion in the third quarter, an increase of 8.2% quarter over quarter. Net operating income rose 8% to approximately MXN 2.8 billion with an NOI margin of 89.4%. EBITDA increased 7.8% to MXN 2.7 billion. Our EBITDA margin was 85.6%, reflecting continuing operating efficiency across the portfolio. Consolidated FFO reached MXN 1.7 billion, up 4.3% quarter over quarter, while consolidated AFFO increased 2.5% to MXN 1.6 billion. On a control basis, AFFO reached MXN 681 million, up 12.3% from the second quarter.
Carlos Pantoja: The quarter closed with 406 million certificates outstanding and an average of approximately 400 million during the period. From a balance sheet perspective, our net debt to an annualized EBITDA stood at 5.5 times, compared with 5.0 times in the previous quarter, reflecting the evolving capital structure and portfolio expansion. Overall, this result highlights consistent growth in revenues and operating cash flow with a continued focus on disciplined capital allocation. Finally, looking at our balance sheet, total assets reached MXN 183 billion at the end of September, compared with MXN 170 billion in June. Investment properties increased to MXN 175 billion, reflecting the expansion of our asset base. Total liabilities were MXN 53 billion, including approximately MXN 61 billion of short and long-term debt. Total equity increased to MXN 120 billion from MXN 114 billion at the end of June.
Carlos Pantoja: Our book net asset value, NAV, per certificate increased to almost MXN 115, up 3.6% quarter over quarter, compared with MXN 111 in the second quarter. This calculation was made considering the certificate that will be released after the distribution of the Q3 2026 related to the Saturno acquisition. It doesn't include the certificates that will be released in the second stage for Saturno in the following six and 12 months. Taken together, our operating performance, AFFO generation, and growing asset base support our long-term objective, delivering sustainable distribution and creating value for our investors. I will pass on to Alex to talk about the financial side of our operations.
Alex Oechler: Thank you, Carlos. In terms of our balance sheet, our loan to value was 33.6% with an annualized debt to net EBITDA of 5.5 times. The increase in this period is mainly because of timing. We booked Saturno's assumed debt and VAT financing, while our Saturno's rents and development projects have not entered EBITDA.
Alex Oechler: We expect Saturno to start delivering EBITDA during the fourth quarter, as Triple Home Run and Saturno's development start being delivered and stabilized in 2027 and until early 2028, and we recover MXN 4 billion of VAT. Our liquidity today is around MXN 15 billion, including MXN 12 billion of undrawn lines. We are rated today Triple B minus by Fitch and Baa3 by Moody's, both with stable outlook. At this point in time, our dollar rents cover our US dollar interest, mainly derived from the bonds, by 1.2 times.
Alex Oechler: As Carlos mentioned, we exchanged most of our international 144A Reg S bonds for $1.1 billion in new 2036 and 2056 sustainability-linked notes. The main objective is for our bondholders to hold two liquid securities. As a result, for Fibra Next, our average maturity of 7.6 years will be extended by around 2 years with a neutral impact to our P&L and a debt reduction of about $20 million. In terms of recent developments, Saturno closed on 30 September, as mentioned, a stabilized cap rate of 9%, with Tultipark V being developed at a 10.35 yield on cost during the next year, with 3 deliveries expected until the first quarter of 2028. We also expect the developments of Triple Home Run to be on schedule, Querétaro Park, Toluca Park III, and Cancún Park II to be ready during 2027.
Alex Oechler: We have launched our new quarter supplement, including new information, and we are broadening our research coverage and investor outreach as part of this. We have certified SLB 37.2% of our GLA above our 33% targets in sustainability-linked bonds. We look forward to seeing many of you at our Investor Day in New York on 12 November. Our next scheduled results are for late February 2027. Operator, please open the line for questions.
Operator: Thank you. We will now move to the question and answer section. If you would like to ask a question, please press star 2 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 Andre Mazini from Citi. Your line is open. Please go ahead.
André Mazini: Yes. Hi, team. Thanks for the call. Two questions. Question number 1 on the net debt to annualized EBITDA, that increased a bit to 5.5x following the capital deployment on the Saturno portfolio. What leverage level do you consider appropriate on a normalized basis? How quickly EBITDA growth and asset stabilization should bring this number down? This is question number 1. Question number 2 is on the mark to market upside that probably remains embedded in the lease portfolio. If we could quantify that and in how many quarters or years could we expect that upside to go through your rents? Thank you so much.
Alex Oechler: Yeah, on your first question, Andre, the debt to EBITDA target that we have for the long run is at or below 5x, and that's what we would expect in terms of deleveraging from the Saturno rents, the development, re-leasing spreads, and recovering the VAT.
Raúl Gallegos: Yeah. On the mark to market, we estimate that, Andre, at 26%. That's average. In the Greater Mexico City area, in central Mexico, we're in the mid-30s below market. In some of our northern markets, we're flat or just below market rents. On average, 26%. We expect to catch up, given that we renew 15% to 20% of our leases per year, we think we should be able to capture most of this upside in the next 2, 3 years.
André Mazini: Very clear. Thanks, guys.
Operator: Thank you so much. Our next question comes from Igor Machado from Goldman Sachs. Your line is open. Please go ahead.
Igor Machado: Hi, team. Thanks for taking my question. Two points here, too. The first one on lease spreads. Re-up new spreads were 14%, but only 1% of GLA was renewed, and this was mostly in center with no renewals in north.
Igor Machado: My first question here, is this level of spread sustainable going forward, and how should we think on these spreads between the regions? That's it. Thank you.
Raúl Gallegos: Thank you, Igor. We should continue to see double-digit lease spreads in the next 12 to 18 months. That's our expectation, and that's consistent with what we've seen in the last 2 years. On average, it's been 12% to 14%. We should be able to continue to show that. On our dollar-denominated leases, we should be in the high single digits, and on our peso leases, as we showed today, in the mid to high double digits. That should give us a blended of 12% to 14% on the portfolio.
Igor Machado: Very clear. Thank you.
Operator: Thank you so much. Our next question comes from Mario Simplicio from Morgan Stanley. Your line is open. Please go ahead.
Mario Simplicio: Hi, Fibra Next team, thanks for taking my question. My question is also on the balance sheet. Fibra Next loan-to-value reached close to 35%. We would like to understand how much room or dry powder Fibra Next still have in the balance sheet in terms of leverage to fund new growth opportunities. In other words, if you could help us better understand what is the amount of leverage that you will be willing to undertake, and if there is an absolute leverage ceiling and a metric that you need to maintain to keep your credit rating with the agencies. Thank you.
Raúl Gallegos: Sure. Thank you, Mario. Our long-term objective is below 35% loan-to-value and below 5x net debt to EBITDA, as Alex was mentioning. We do have the flexibility of temporarily going above those numbers for a specific investment, if that were the case, but always with the long-term objective of staying below that 35% threshold. That is what we have discussed with our rating agencies, and will ensure us maintaining those ratings. We are looking at different options to continue to fund our growth plans, but very sensitive of maintaining that leverage.
Alex Oechler: Yeah. At the end, Mario, we are committed to our investment-grade rating. That should be our guidelines going forward.
Mario Simplicio: Great. That is clear. Thank you.
Operator: Thank you so much. Our next question comes from David Soto from Scotiabank. Your line is open. Please go ahead.
David Soto: Hi. Good morning. Thanks for taking my question. Just a follow-up on the balance sheet question. You already have your balance a little bit stretched. Should we expect a potential equity follow-on to fund further acquisitions?
Raúl Gallegos: Yes, David. We are looking at different options to fund our growth. We are certainly looking at raising additional equity for future acquisitions and future development. We are constantly monitoring the markets to figure out the right timing for this. Of course, we are committed to doing this at accretive levels, both our acquisitions and our development, but also the timing of any particular follow-on to make sure that it is not diluted for our investors.
David Soto: Okay. Perfect. Thanks.
Operator: Thank you so much. Our next question comes from Elisa Gomez from BTG Pactual. Your line is open. Please go ahead.
Elisa Gómez: Hi. Good morning. Thanks for taking my question. I just wanted to understand what drove the change in the delivery date of Cancún Park II from Q2 to Q4 2027. Thank you.
Raúl Gallegos: Yes. Hi, Melissa. Actually, that was a correction that we had on our last quarter report. It should have been Q4 2027, but we incorrectly had Q2. So there is no delay on the actual development. It was a mistake in our report.
Elisa Gómez: Okay. Thank you. Just a follow-up, I saw that also the total investment amounts changed. Were those also a correction?
Raúl Gallegos: That is correct. That was a correction.
Elisa Gómez: Okay.
Raúl Gallegos: Yes, in that graph there.
Elisa Gómez: Okay.
Raúl Gallegos: But no particular delays or anything on the development. It was just a correction on the amounts.
Elisa Gómez: Perfect. Thank you.
Raúl Gallegos: Thank you, Elisa.
Operator: Thank you so much. Our next question comes from Felipe Barragán from J.P. Morgan. Your line is open. Please go ahead.
Felipe Barragán: Hey. Thank you, guys. Good morning. Thanks for taking my questions. One is just an update on the acquisition pipeline. Last quarter, you had given a breakdown of 180,000 square meters for Q4. Just want to get an update on that, if that is still the target for this quarter. Maybe it has been pushed over for next year. Any color on that would be appreciated. Also just want to get a bit more color on the legacy developments you guys had disclosed last quarter as well on Ensanto Two and Three and Chiquihuite. I am guessing those entered the in-service portfolio. I could not really find much on that on the supplemental info this quarter. Thank you.
Raúl Gallegos: Thank you, Felipe. I will start with the last question. We are looking at different opportunities on the acquisition front. There is a number of portfolios that are out in the market, and we are certainly analyzing those. We hope to acquire our fair share of those portfolios and the best quality and at the best price possible. Then on updates on development, I did not quite hear your comment on what specifically you were looking for. Can you repeat that first part of the question?
Felipe Barragán: Yes, of course. On the legacy developments unrelated to Triple Home Run and Saturno. Ensanto Two, Ensanto Three and Chiquihuite. Those developments had been disclosed formerly, and just want to get the status. Those have been delivered, those are in the in-service portfolio or are those being developed still? Thank you.
Raúl Gallegos: Yes. They have been completed. Olimpo is completed and is currently in stabilization mode. Same as Chiquihuite.
Felipe Barragán: Thank you.
Raúl Gallegos: Yes.
Operator: Thank you so much. Our next question comes from Armando Rodríguez from Signum Research. Your line is open. Please go ahead.
Armando Rodríguez: Thank you everyone, Raúl, Carlos, Alexander. Just a quick question, if I may. Concerning the environment construction materials that you are foreseeing that maybe reflect maybe higher prices compared to previous quarters. What are you seeing, for example, in cap rates in the following quarters considering this environment? Thank you.
Raúl Gallegos: Thank you for the question, Armando. We fix our cost with our contracts on our development projects, and we usually pay a large 30% to 40% anticipo or down payment, advanced payment for our construction to make sure that we buy upfront most of or the majority of our steel and concrete, which are our main costs associated with our development. So right now, we do not anticipate any issues on being able to deliver at the cost that we are saying and getting to the 10% plus yield on cost on our current development.
Armando Rodríguez: Perfect. Thank you very much.
Raúl Gallegos: Thank you, Armando.
Operator: Thank you so much. Just a reminder, 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 either type your question in the box provided or request to ask a voice question. Our next question comes from Francisco Suárez from Scotiabank. Your line is open. Please go ahead.
Francisco Suárez: Hi. Thank you for the conference call and the insights. If I may, we have seen a little bit of consolidation among 3PLs. Can you share with us if that has actually benefited on your end or if that might be an issue for potential move-outs going forward? The second question on your balance sheet, we already saw a little bit of price discovery on the recent bond exchange compared to the yields at which Fibra Uno's bonds are trading. Perhaps the question is, if you see further potential differentiation between the price of your bonds compared to Fibra Uno, and if in your conversations with rating agencies, do you think that you may be able to decouple a bit from the potential downgrade for Mexico sovereign debt just like some of your peers have done? Thank you.
Raúl Gallegos: Thank you, Francisco. On the consolidation of 3PLs, yes, I think that has actually benefited our portfolio to date. We have cleaned, let's say, some of the smaller logistic local companies that we used to have been replaced by some of the larger 3PL operators today, and I think that's going to continue, and it's actually going to benefit our portfolio. We do not see it as a threat. We actually see it as an opportunity. On the balance sheet, I will let Alex address that question on the bonds.
Alex Oechler: Sure. Francisco, thank you for the question. On the bond exchange, the main objective was to give liquidity to our bond holders. With that liquidity, do price discovery of where Next credits should lie. From our conversations with the rating agencies, they have a stable view on our balance sheet. They had recent reports issued. So we expect this bond exchange to give us liquid proper 10 and 30-year levels for debt going forward, and whenever we decide to access the market in this fashion.
Francisco Suárez: Perfect. Thank you so much.
Operator: Thank you so much. Just a final reminder, if you would like to ask a question, please press star 2 on your phone and wait to be prompted. We will just wait a moment or two for more questions to come in. I am not seeing any more questions, so I will now pass the line to the Fibra Next team for the closing remarks.
Raúl Gallegos: Okay. Thank you. Well, thank you again for participating in the call. Again, as I mentioned at the beginning, very excited about this Q3 for us and completing this first year of operation and consolidating our operations. Again, very focused on future growth, particularly creating value for our shareholders and increasing our FFO and distribution going forward. Thank you again for your participation.
Alex Oechler: We look forward to seeing many of you at our Investor Day on 12 November.
Operator: That concludes the call for today. Thank you, and have a nice day.
