Macquarie Mexican REIT today announced that it has completed the acquisition of City Shops del Valle, a 15,914 square meter (171,297 square foot) retail center located in the Mexico City Metropolitan Area, in Colonia del Valle.
MMREIT had previously announced in July 2013 its agreement to acquire City Shops del Valle as part of an acquisition of a portfolio of six properties. The acquisition of the City Shops del Valle property was conditioned upon completion of construction.
“We are pleased to add this new center to our portfolio of high-quality retail properties,” said Jaime Lara, Chief Executive Officer of MMREIT. “City Shops del Valle is an urban infill property strategically located in one of Mexico City’s most affluent neighborhoods where there is limited room for additional commercial development. The property includes strong anchor tenants serving the growing needs of the surrounding communities. We look forward to working closely with them to ensure that their property management needs are met and that their customers, in turn, have a rewarding shopping experience.”
Tenants of the City Shops del Valle retail center include Superama, Bed Bath & Beyond, Cinemex, and Sports World among others. The center is nearly fully leased with an occupancy rate of 99.6% as of March 2014.
MMREIT estimates that the six property portfolio will generate approximately Ps.246.8 million (US$19.0 million) of net operating income (NOI) and approximately Ps.157.5 million (US$12.1 million) of funds from operations (FFO) on an annualized basis. NOI includes forecast rental income plus maintenance recoveries and parking income, minus property operating expenses (including the estimated property administration fee) for the full year 2014. FFO is equal to NOI minus corporate general and administrative expenses, debt service and management fees. US dollar figures are based on an exchange rate of 13.00 Ps/USD.
MMREIT paid approximately Ps.2.8 billion (US$216.9 million) for the six properties, excluding transaction costs and taxes, with a potential earn-out of up to approximately Ps.84.4 million (US$6.5 million) payable to the sellers based on additional lease up. Property taxes and transaction costs totaled approximately Ps.200 million (US$15.4 million).
The transaction, including VAT, was funded with approximately Ps.257.4 million (US$19.8 million) of senior debt drawn on an existing facility with GE Capital Real Estate México (GECREM) and approximately Ps.364.3 million (US$28.0 million) of available cash. The GECREM facility bears interest at a rate of 90-day USD Libor + 3.85% per annum.
Following the closing of the acquisition, MMREIT’s portfolio consists of 259 industrial properties and 8 retail/office properties, totaling 2.7 million square meters (28.5 million square feet) and 253.1 thousand square meters (2.7 million square feet) of gross leasable area across Mexico, respectively.