CI Banco SA Institucion de Banca Multiple FF/00939

BMV:TERRA13

Earnings Call Transcript 2021-Q3

[Operator]

Good morning. My name is Catherine, I will be your conference operator today. At this time, I would like to welcome everyone to Terrafina's Third Quarter Earnings Conference Call. [Operator Instructions]

Thank you for your attention. I will now turn the call over to Francisco Martinez, Terrafina's Investor Relations Officer. Please go ahead.

[Francisco Martinez, executive]

Thank you, Catherine, and good morning, everyone. Welcome to our third quarter 2021 conference call, and we're pleased to have with us today from Terrafina, Mr. Alberto Chretin, Chief Executive Officer; and Mr. Carlos Gomez, Chief Financial Officer. Mr. Chretin will take us through the company's overview and operations and Mr. Gomez will discuss the financials.

Before we begin, we would like to refer you to the note of forward-looking statements in the quarterly report. Any information expressed or implied during the call may include forward-looking statements, which could involve certain risks or uncertainties. Terms such as estimate, project, plan, believe, expect, anticipate, intend and similar expressions identify such statements. Listeners are cautioned that forward-looking statements made during the call or by the company's management may change based on various important factors out of the company's control. These comments represent the company's judgment at the time of this call, and the company has no intent or obligation to update these forward-looking statements. Thank you again for your attention.

And at this point, I will turn the call over to Mr. Alberto Chretin for his remarks.

[Alberto Castillo, executive]

Thank you very much, Paco. Good morning, everyone, and thank you for joining us today. I am glad to say that Terrafina has continuously delivered positive results year-to-date as we made progress on our 3 year strategic business spend, which I will elaborate further during the call.

In this, along with a solid leasing activity and the stabilization of collections of outstanding pandemic deferrals is evidence that the industrial real estate sector continues to be defensive and is supported by growing demand. As the renewal activity remains stable, we expect to achieve our guidance and execute our growth strategy as the year ends, staying on track with our plans for 2022.

Before discussing our key operating trends, I would like to touch on 2 macro issues which could be very relevant for our sector in the future. The first one is electricity reform proposed by the ruling party in Mexico. We still don't know how these proposals will evolve as it moved to the legislative chambers, but we're following the developments very closely and are maintaining conversations with tenants who believe could be negatively impacted in some scenarios if this reform were to pass.

We are also maintaining constant communication with our peers through the different industry associations we're part of, making sure the total potential impact of these changes is well understood by regulators before anything is decided. As usual, our focus here will be to remain close to our tenants, and if necessary work with them to adapt to changing conditions.

The second topic is the supply chain crisis seen across the globe and across industries. As owners of real estate, we should not be directly impacted by decrease of prices, except for the impact it has on our development process, where the cost of construction materials has gone up substantially and we have had to underwrite our pipeline on their tougher assumptions. But we can see how our clients are starting in some cases to get key components for the manufacturing processes, and we're making sure we remain available to them in case there is anything we can help them with to facilitate their operations.

We have also seen what we believe is a temporary bump on demand for space in manufacturing corridors as some tenants are moving away from just-in-time models as supply chain disruptions have lasted longer than anyone anticipated. Having said that, it seems more likely than not that by the second half of next year, supply chains will normalize and manufacturing will therefore, decrease their raw material inventories and storage spaces, optimizing their returns.

Moving on to our results. Let me start by sharing our leasing trends and highlights for the quarter. Terrafina closed a total of 3 million square feet in lease contracts with a weighted average lease term of 5.4 years. Most of the leasing activity was concentrated in the Queretaro, Chihuahua and Coahuila markets, which represented 50% of the total leasing activity for the third quarter.

These markets account for a total inventory of 200 million square feet or 24% of Mexico's industrial real estate space. As we see manufacturing activities being benefited by new demand, the overall rental rate remains in the higher range. And in the case of Terrafina properties, rental rates continue to be in line with those seen in the market. The higher leasing activity was registered in Queretaro, which has a diversified tenant base and show improvements during the year, although we have not seen a high absorption rate, a gradual increase in demand, mainly coming from tenants with data centers and logistic activities is starting to become visible.

Additionally, Terrafina renewed 460,000 square feet from 3 automotive tenants with a weighted average rental rate of $4.96 per square feet per year, and this compares to the $5 per square foot per year on the city's average market rental rate. Then we had Chihuahua, where we closed 426,000 square feet of early renewals for tenants in the automotive out of space, consumer goods and electronic sectors. These with a weighted average maturity of 5.8 years in an average rate of $4.82 per square foot per year compared to a market rental rate of $4.40.

We see a positive absorption trend in Chihuahua for the Class A segment as vacancy levels remain very low and construction activities is starting to pick up. One of the most relevant strengths of this market is its strategic location currently favored by multinational companies.

And finally, for the Coahuila market, we closed an early renewal of 312,000 square feet or an automotive tenant with a 10 year maturity and a rental rate of $4.50 per square foot per year, in line with the market rental rate of $4.53. These market demonstrated significant absorption levels, reaching a record high for this year compared to what we have seen over the last 5 years or so.

With Coahuila, automotive tenants continue to grow as evidenced by the harness manufacturing activity being one of the main automotive activities led by Asian manufacturers. Let me share with you 2 interesting examples of the strength we see in the industrial listing markets in Mexico. We have a long-established automotive tenant in the Bahia market that leases a 157,000 square feet manufacturing facility. It just renew its lease with a 7 year commitment. To us, this renewal confirms that the automotive companies remain committed to their operations in the country and that the sector should continue to be one of the main driving forces in Mexico despite growing challenges related to the semiconductor shortage.

Another example was the early renewal we recently signed with an automotive tenant in Ramos Arizpe in Coahuila. This tenant decided to renew its lease early by signing a new lease with a 10-year duration. Moreover, this tenant requested an expansion, which will be part of our development plans in the future. We see example like this every month with tenants from different industries and in different locations, both for manufacturing and logistics. This is partly why we remain convinced in the service development strategy is the right strategy for Terrafina right now.

And on that note, I would like now to discuss our growth strategy and more specifically our development activity, where we have made important progress with our ongoing projects. We had completed and delivered 70% of the 354,000 square foot property we announced in Tijuana. This packaging supplier already signed a lease contract with us, and we expect to deliver the remaining 30% of this important e-commerce tenant by the fourth quarter.

And although this property has already contributed to our NOI generation during this period, the first rent in overall revenue generation for the full project will start to materialize in the first quarter of 2022. Moreover, there are some additional development projects we will start construction in the fourth quarter of this year for approximately 450,000 square feet of GLA. These properties will be in the northern region, specifically in the Ciudad Juarez and Monterrey markets, which have low vacancies and high demand for new space. As you can see, with this, we will have launched development projects for 1 million square feet of GLA through 2021 as we intended.

That said, we expect to continue this positive development trend in 2022, and will be sharing more details on this very soon. As for the dispositions activity, we are also working on a couple of assets that could be sold by the end of the fourth quarter. As we have said in the past, we will use sale proceeds to support our growth strategy going forward. This will allow us to consolidate our presence in core markets and generate better operational and financial results with better properties.

For 2022, we expect a couple of properties will be sold in the first quarter of 2022. Furthermore, we are also putting together a portfolio that will be marketed as soon as we fine-tune some of its characteristics.

Moving on to our operational highlights for the quarter. Our retention rate was 85.7%. This implies that we were able to renew 16 out of the 20 lease agreements that expired during the quarter. Having said that, we already leased one property and have LOIs for 2 more and are in the process of analyzing additional investments needed to reposition the remaining one, as it is a very well-located property in the Ciudad Juarez market.

Thanks to our strong leasing activity and our retention rate, occupancy rate remained stable at 93.9%. We expect it to increase by the end of the year in line with our guidance of 94% to 95%. As for our quarterly distribution, Terrafina will pay a total of $16.9 million in dividends to our selective holders or USD 2.13 per [ selective ]. This implies a 5.5 dividend yield. This distribution already considers the new AFFO payout ratio of 70%.

Finally, before I pass the call to Carlos, I would like to highlight, as I mentioned in our previous conference call, we improved the terms of our revolving credit facility and term loan with a new sustainability lease loans for a total amount of $485 million due in July of 2026. This achievement was the result of our coordinated effort with PGIM Real Estate to continue improving the cost of financing, while strengthening Terrafina's roster of lenders in its ESG position in the industrial real estate sector. The new facility is tied to one of our ESG KPIs which record the square feet certified has been building in our portfolio.

As a reminder, Terrafina recently announced as one of our ESG goals to certify 15% of its portfolio's GLA by 2030. As an added benefit, the new credit facility offers an up to 45 basis points lower cost of debt as well as an extension in Terrafina's weighted average debt maturity.

Thank you very much for your attention. Carlos, please go ahead with the financial highlights for the quarter.

[Carlos Espinosa, executive]

Thank you, Alberto. And thanks to all the participants for joining us on today's conference call. Please note that all figures discussed in this call are in U.S. dollars, but Mexican peso figures can be found in the earnings report. Additionally, NOI, EBITDA and FFO figures exclude noncash items as well as nonrecurring and transaction-related expenses, the latter of which are only included in the AFFO.

As we have mentioned in previous calls, in November 2020, we closed an asset sale for 3 million square feet, and this is why we will focus on same-store properties comparison for the main financial metrics. Therefore, my comments from the third quarter of 2021 represent adjusted financial figures for the exclusion of the assets sold by the end of 2020. To start same-store net collections reached $47.2 million with a 0.6% decrease compared to the third quarter of 2020. Our rental revenue reached $46.7 million, which implies a 1.4% year-on-year decrease, basically explained by higher lease terminations in the quarter.

NOI was $45.3 million, a 0.4% year-on-year decrease versus the third quarter of 2020's NOI. This implies a 93.8% NOI margin. EBITDA totaled $40.1 million, a 0.9% decrease on an 83.1% margin. Finally, AFFO reached a total of $24.1 million, a 4.2% year-on-year increase. Considering a 70% payout ratio, our distribution this quarter was $16.9 million. Distribution per certificate was MSN 0.426 per certificate or USD 0.0213 per certificate.

Moving on to our balance sheet. We closed the quarter with $42 million in cash. Total debt at a historical cost reached $931.9 million, and our loan-to-value ratio at the end of the quarter was 36.4%. I would like to note that despite the FX depreciation Mexico had during the quarter and our U.S. dollar-denominated debt, our natural hedges or dollarized rental contracts have allowed us to deliver strong results once again.

Finally, as of quarter end, our average cost of debt was 4.5%, and our average weighted maturity of debt was 6.2 years.

Thank you for your time and attention. I will now ask the operator to open the line for questions.

[Operator]

[Operator Instructions] Your first question is coming from Pablo Monsivais.

[Pablo Monsivais, analyst]

Alberto, I have a question for you. You have developed, and I think you're making a very good progress on your growth plans. However, my question is, do you think that there is room for Terrafina to grow and to have a more ambitious target, perhaps developing more than 1 million square feet to or for your -- in that level since the fundamentals of the industry seems quite healthy.

In addition, other industry players are laying out also very ambitious plan. So why don't you have a more ambitious agenda perhaps for the next 5 years or what do you think is like the main balancing act here on perhaps developing properties at a faster pace?

[Alberto Castillo, executive]

Thank you, Pablo, for your question. I think it's a very good question. Yes. As you -- as I mentioned, we are going to develop about 1 million square feet of properties during 2021. And our plan is to develop another 1.5 million to 2 million in the next 3 years. Yes, we are more bullish on the fact that we're going to be doing more development. We think it's the right thing for Terrafina to do, and that was one of the reasons why we reduced the payout ratio.

And also, we see an opportunity to capture the demand on e-commerce. We have proven that we have very good contacts, and we have very good marketing opportunity with e-commerce companies like Amazon, like Mercado Libre, et cetera. And that is going to be the main focus in our development in certain markets like Tijuana and Juarez. But in addition to that, we see also opportunities to develop. You know that we have land to develop another 5.5 million square feet within demand that we already own.

And we are exploring those opportunities and that's why we think that these midcourse correction that we did on a growth strategy by means of development is going to mean that we're going to add new GLA to our portfolio. We're well-positioned to capture the opportunities because of our external property managers are out in all the markets, are looking for opportunities to work with the industrial real estate developers that are promoting the attraction of investment to the regions. And so that's why we, in our 3-year plan, we said that we're going to develop about over 3 million square feet in the next 3 years. So with this building that we are developing in one -- into 2021, we're confident that we're going to be able to develop the -- we're going to be able to develop another 1.5 million easily in the next couple of years.

[Operator]

Your next question is coming from Alejandro Chavelas.

[Alejandro Chavelas, analyst]

I was checking the occupancy by market and I noticed that your occupancy in quality plant fell a little bit. I was wondering, given that this is a low supply market, do you expect to fill back the property there pretty quickly? And about the high level of leasing volume and consequently TIs that you have and leasing commissions that you had this quarter, should we expect something similar for 2022 considering that you have a significant volume of renewals upcoming?

[Alberto Castillo, executive]

Yes. Thank you, Alejandro. Yes. Well, in terms of the 2 properties that be renewing quality plant. To answer your question, a quick answer is yes. We do have prospects for both facilities that appear renewing quality plants. Remember that this is market with almost 100% occupancy and this -- in most of our tenants, there are in logistic and distribution. One of them it's for about a 58,000 square feet building.

They use the lease contract to synchronize their lease contracts with the demand from the third-party customer. And that's why they -- we have several facilities with them, and they do review one. We already have 2 prospects that we expect them to -- we expect that facility to be leased before the end of the year. The other prospect, the other tenant that did renew, he was more demanding on saving pesos lease. So they left that facility, and we already have a tenant which has enabled the current facility to lease out.

So the short answer is that, yes, we expect the occupancy on those -- on that market to go back to 100% prior to the end of the year. So that's in terms of your first question. The same on the TIs, we expect to fulfill our budget for TIs for this year between the $0.30 and $0.32 per square foot for the complete portfolio. And in 2022, it's going to be similar. I think that we -- these we proven to stabilize the leasing activity, we had anticipate also what the TIs are going to be as well as the leasing commissions for the tenants. So we expect the TIs leasing commissions to be in line on 2022 as they were on 2021.

[Alejandro Chavelas, analyst]

Perhaps just a follow-up or a question related to revenue in the quarter. I think average revenue per square meter was a little bit low in the quarter. I was wondering if this was related to the timing of leasing activity, like, if you perhaps closed some leasing at the end of the quarter and lost some of the tenants earlier in the quarter, if that is an accurate description?

[Alberto Castillo, executive]

Well, yes, and I think that the leasing activity, it was -- as I mentioned, it was strong. And sometimes the renewal implies also a couple of free rent. And that's how sometimes that affects at the start of the renewal, the income, but it's going to be normalized as -- for the next quarter.

[Operator]

Your next question is coming from [ Ramata Cavral ].

[Unknown Analyst]

This is [ Ramata ] from Citi. My question is on the fulfillment centers. We saw that Amazon has opened a fulfillment center in Tijuana to provide products to the U.S. My question is, do you think these type of initiatives can spread out with, for instance, Tijuana being a hub for products to be delivered in California or other cities, Mexico, to [indiscernible] to Texas for instance? Do you believe this would make sense or can happen?

[Alberto Castillo, executive]

I'm sorry, I couldn't hear the question very well. Can you get closer to the microphone or -- I apologize, I couldn't hear the question very well.

[Unknown Analyst]

Sure. Sure. No problem. My question is about the fulfillment centers. We saw that Amazon has [ opened ] a fulfillment center in Tijuana to provide a product to U.S., my question is if you see that the big cycle of initiative can be spread out with, for instance, Tijuana being a hub for products to be delivered in California or other cities in Mexico to sell products to sectors and I'd like to see your view about it.

[Alberto Castillo, executive]

Yes. So thank you very much. Thank you very much. I think that's a very good question. I see the facility that we developed in Tijuana for Amazon is geared to the U.S. market. I think that that was a milestone because Amazon historically had held operations in Mexico to service the e-commerce business in Mexico, whereas this facility, the border is here to take advantage of the facility in the border to service the U.S. market.

And to answer your question, I think that this trend is going to continue as the e-commerce operations are somewhat labor-intensive. And the cost of the real estate, either on rent or to build facility in Mexico is substantially lower than in the U.S. So e-commerce companies are taking advantage of the fact -- of this fact and that's why this facility in Tijuana is going to represent, as I mentioned a milestone perhaps, we may see a repeat of that.

Amazon, for example, they do have other large facilities on the U.S. side of the border. And one example of them is what they have in El Paso, for example, across the border from Juarez. And there is a huge facility with a tremendous amount of people working there. So they see this issue, and that may be an opportunity. There is absolutely an opportunity for Mexico, especially in the border.

[Operator]

Your next question is coming from [ Juan Mesta ].

[Unknown Analyst]

I was wondering if you could give us some more detail on how the development process is currently doing.

[Alberto Castillo, executive]

Certainly. The development process -- well, first of all, the one that we just talk about the one in Tijuana. As I mentioned, we already delivered 70% of the 354,000 square feet. We're going to deliver the 30% before the end of the year. In addition to that, we already signed a lease contract with a packaging company that is a supplier to Amazon, and we expect that to finish in the first quarter of 2022. So that project is going very well.

In addition to that, prior to the end of the year, we are going to start 2 developments, 1 in Juarez, which is a very active market. And we have -- this is going to be what we call spec to suit because although we still do not have a tenant, it's in [indiscernible] market that is the best served market in Juarez. And that we have a very robust pipeline of our prospects in that area.

So we expect to use that before the end of construction. The other one is in the Santa Rosa market, so market of Monterrey, where we already have 2 facilities that are fully leased. And that start -- that is going to start before -- also before the end of the year. In addition to that, we have for 2022, we have plans to develop a couple of our sites within our land reserve. And additional expansions that I mentioned during the call also for a couple of automotive companies that already expressed interest in expansion for those facilities.

In addition to that, we have the market officers of our property managers working on the markets which we operate with a very clear directive to capture opportunities with new tenants and to capture the opportunities based on known prospects that are kicking the tires in different markets to start operations, both in the manufacturing and logistics sector. So at this point, to answer your question, the developing activities of Terrafina are mainly intensified and with very clear objectives in taking advantage of the experience that we have in development. We have done this in the past very successfully as well as the -- put into play the developing resources and the promotion resources of our similar property managers.

[Unknown Analyst]

Great. As a quick follow-up, do you expect to maintain the 70% payout ratio during the 3 years of expansion or is that -- is there a space to change that dividend policy?

[Alberto Castillo, executive]

Thank you for the question. No, we expect to maintain the 70%. We made a very careful analysis of what the needs were for the next few months or a couple of years. And we made the decision to lower the payout ratio to 70%. We made it with a very -- a clear information about what the need was going to be and the conviction that it's going to stable. Now to answer your question, we are not going to change the 30% payout ratio.

[Operator]

Our next question is coming from Francisco Suarez.

[Francisco Suarez, analyst]

Francisco from Scotiabank. Thank you so much, Alberto, for your initial remarks related with the supply chain and what you see on the ground and how that is affecting your tenants. That's very helpful. The 2 questions that I have on -- it seems that plant is going to be crucial to -- and a major competitive advantage going forward. So the question that I have for you is, what amount of your land bank has enough access to electricity and water and the like? And if you can give us any color on the regions where you think that your land bank would be much more valuable for property development? And secondly, on your asset sales coming for the fourth quarter, does -- are those asset sales going to be tax free?

[Alberto Castillo, executive]

Thank you, Franco. Thank you for your questions. First of all, in the land, and that's a very good question. We do have about 5.5 billion square feet worth of GLA land in different markets. And this land is totally titled, and we had the feasibilities for water and for electricity. In the -- the KVAs in the electricity is, in some cases, I won't say all of them, but in some cases, it's already been assured, but it is an issue because as you know, right now, there is a shortage of electricity supply through -- by means of KVAs or the electricity rights, let me put it like that. And we do have a bank of KVAs and electricity rights that we can use in different parts of the country and fortunately those can be moved around.

And -- so for early development, for the first developments, we do have a churn that we have access to some of those KVAs. However, is not also -- is not also -- and we do have a participation of our external property managers, which they by themselves also they do have some electricity rights and they contact with the local CFE officials, and we're working to make sure that we have access to those. So the answer is that for some lines, we do, not for all of them. It is a struggle. I have to tell you also that this has been a hindrance of the ability of those real estate developers to display more aggressive developing plans for so-so land. And that is still an issue.

Fortunately for us, for the expansions, for all the expansions that we have, we do have the additional rights and for some of the important lots, we have also -- we do that. Now in terms of where? We do have land in Juarez. We do have land in Tijuana. We have land also in the state of Mexico and in [indiscernible]. So we feel that we do have opportunities to develop in the stretch of land.

Now, I said in the past we are not land buyers. But in the event that we see like the last mile opportunity or something that we feel that is something that we want to pursue, we will do that. And in terms of the asset sales, yes, it depends -- we are -- the portfolios that we are looking to sell as well as the properties, our properties that are either in markets that are secondary or tertiary markets or properties that are empty. And some of these properties were acquired on -- when we purchased portfolios from the new consignors and some of them have already made the 4-year rule.

So to answer your question, Franco, some of them are going to be tax free because they already made the 4-year rule and you may be some that are not, but at the end of the day, these sale and the proceeds are going to be enough that we are going to cover the acquisition cost, indeed the market value of the properties.

[Operator]

Your next question is coming from Adrian Huerta.

[Adrian Huerta, analyst]

Just wanted to go for a little bit further on the land bank as well. You did mention that some of these land is in Juarez and Tijuana. So is that pretty much what you have in the north? And can you just tell us a little bit more about what are we talking about when we think about this land bank? Are these concentrated land banks? Are we talking about many multiple properties within the ones are in the north?

And you did mention, you made a couple of comments on the electricity, the titles, et cetera. But is infrastructure also going to be needed on most of this land or the infrastructure is there? Can you just tell us a little bit more to kind of understand what type of land bank this is?

[Alberto Castillo, executive]

Of course, Adrian. Thank you very much for your question. Well, first of all, let me talk about some market. In Juarez, the land that we have in Juarez is totally titled and it has all the infrastructure. And this is on the prime location of the best market of Juarez. So that is a land that is ready to be developed, and that is the one that we're going to be developing even we would [indiscernible] start prior to the end of the year.

The one in Tijuana also has a solid title. There is an issue in Tijuana with electricity. And we are addressing that, as the rest of the suppliers in that region. That is not impossible, it is challenging, but it's doable. And we're working also with the potential tenants because sometimes the tenant has more and more clout with the CFE. Sometimes they have a very important project. So in terms of the infrastructure in Tijuana, for example, is there. And then we have the channels to make sure that it's going to be available. Is not totally done deal, but it certainly it can be available.

In Juarez, it's basically the same situation. What we have in Monterrey, the infrastructure is there. Also, we -- this is an industrial part that we developed several years ago. And now it came it's time to really fully develop and all the infrastructure is there. We have also some line in Central Mexico that is not thoroughly resolved. But again, we have the means to bring the electricity rights. The water facilities are already there and it's really titled.

So I guess, the overall answer, Adrian, is that is -- the electricity continues to be a challenge. It's not a done deal, but there are ways to get that in conjunction with our same property managers and the assistance from PGIM Real Estate to achieve that in -- go ahead.

[Adrian Huerta, analyst]

No, I was just going to ask Alberto. For example, the one on the -- that you have in the central region, the $2.74 million square feet, is that all in the state of Mexico? And is that in the north part of Mexico City and it's just one big plot or…

[Alberto Castillo, executive]

It's 2 plots and they're north of Mexico City. So they're north of the 2 of the [indiscernible]. But still, it's in the overall area of Central Mexico. One of them still has a challenge about an access to that land, and we're working on that. But again, this is land that it may not be immediately available, but we are working with the local developer to make sure that we prepare that land to capture some of those opportunities. So...

[Adrian Huerta, analyst]

And then we -- that was very detailed information. What roughly could be the size of that asset sale that you plan? And once that is executed, can we expect the company to start acquiring land as well at some point within the next 2 years?

[Alberto Castillo, executive]

No, we're going to sell. We said that we're going to sell about $50 million this year, between $30 million and $45 million for the following year. And then -- so that's the extent of the plans for -- in terms of asset sales. However, we see there's a lot of -- we've been very successful on the last 2 events of recycle of capital gains by means of selling some buildings. So we're also putting together another portfolio that we're going to sell, which is going to be properties that are in the secondary or tertiary markets or bills that are empty. So that's very much the stand of what we intend to do. And what was the second question, Adrian?

[Adrian Huerta, analyst]

No, I mean if we can expect the company now that you raised this capital through these asset sales, should we expect the company also to start making land investments at some point within the next year or 2?

[Alberto Castillo, executive]

Well, that's a [ good question ]. We will only buy land if it's for a specific project. For example, we think that the land that we already have in Juarez and Tijuana and Monterrey, we can use that land for industrial, for logistics or manufacturing for export property -- projects. But in the event that the last mile or something that is very specific, then we will go ahead and buy land. We will not buy land just to -- on a speculative basis or to develop and to put infrastructure in that land for future years. We're not land buyers for that effect, but with the exception that I just mentioned.

[Operator]

There are no further questions from the lines at this time. I would now like to turn the floor back to Alberto for closing remarks.

[Alberto Castillo, executive]

Thank you. Well, thank you all for joining us today. I would like to reiterate that we are excited about what lies ahead for our properties in the coming quarters. The fundamentals in the industrial sector remains strong. Demand trends to remain very healthy, and our developing projects have opened the door for more value than the ratio for all of our stakeholders, which we intend to maintain in coming years. We thank you for your interest in Terrafina and look forward to speaking to you soon. Have a very great day.

[Operator]

Thank you, ladies and gentlemen. This concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.