FIBRA Macquarie México's Q2 2025 Performance and Strategic Positioning: A Case for Capital Allocation Discipline and High-Yield Industrial Growth

FIBRA Macquarie México (FIBRAMQ) has emerged as a standout player in Mexico's industrial real estate sector, delivering record financial performance in Q2 2025 while strategically positioning itself to capitalize on nearshoring-driven demand. The company's second-quarter results underscore its disciplined capital allocation, high-yield development pipeline, and resilient occupancy metrics, making it a compelling case study for investors seeking exposure to Mexico's logistics boom.

Record AFFO and Operational Strength

FIBRAMQ reported US$30.3 million in Adjusted Funds From Operations (AFFO) for Q2 2025, an 8.6% year-over-year increase in U.S. dollar terms. This performance was driven by its industrial portfolio, which achieved a 27.7% lease renewal spread—a record for the company—on negotiated leases. Monthly average rental rates in the industrial segment rose to US$6.45 per square meter, up 6.8% YoY, reflecting robust demand from tenants seeking high-quality logistics infrastructure.

The industrial portfolio's 94.8% occupancy rate as of June 30, 2025, and a 93.2% quarterly retention rate highlight the company's ability to secure long-term contracts in a competitive market. Over the past 12 months, FIBRAMQ has maintained an 80.1% customer retention rate, demonstrating its value proposition through modern facilities, strategic locations, and operational efficiency.

Capital Allocation Discipline: 9–11% Yield on Cost

FIBRAMQ's development strategy is anchored in a 9–11% net operating income (NOI) yield on cost, a metric that balances aggressive growth with risk management. This range accounts for inflationary pressures and infrastructure costs, which have risen over the past 18 months. However, the company offsets these challenges through high rental rates and sustainability-linked financing, which now cover 68.3% of its drawn debt.

The Tijuana logistics park, a 50-50 joint venture with Grupa Friese, exemplifies this discipline. The project, targeting 750,000 square feet of gross leasable area (GLA) across four Class A buildings, is in the predevelopment phase with infrastructure works underway. Located in a Tier 1 submarket, the park benefits from proximity to U.S. border crossings, walk-to-work labor access, and highway connectivity, positioning it to capture nearshoring demand in manufacturing and logistics.

Nearshoring Tailwinds and Tijuana's Strategic Edge

Mexico's logistics sector is being reshaped by nearshoring trends, with Tijuana emerging as a critical hub. The U.S.-Mexico-Canada Agreement (USMCA) has incentivized companies to shift production to Mexico to avoid U.S. tariffs and reduce supply chain lead times. Tijuana's 48 road and five rail crossings enable same-day or next-day delivery to U.S. markets, a key differentiator in industries like automotive, electronics, and medical devices.

FIBRAMQ's Tijuana project is particularly well-timed. The CEO noted that increased activity in Tijuana compared to other nearshoring corridors—despite softness in some markets—suggests the city will remain a focal point. The project's predevelopment phase also benefits from FIBRAMQ's internal platform, NPA, which manages construction and earns market-based fees, enhancing returns.

Balance Sheet Resilience and Expansion Outlook

FIBRAMQ's US$421 million liquidity and 32.8% Real Estate Net Loan-to-Value (LTV) provide ample flexibility for its development pipeline. With 85% of debt at fixed rates and a 3.0-year weighted average tenor, the company is insulated from short-term interest rate volatility. Additionally, its 33.7% CNBV debt-to-asset ratio and 6.3x debt service coverage ratio underscore its financial stability.

The company's 2025 industrial development budget of US$50–100 million is focused on core markets with strong fundamentals, including Tijuana. This disciplined approach contrasts with speculative expansions in secondary markets, reducing exposure to occupancy risks. FIBRAMQ also plans to explore opportunistic land acquisitions in H2 2025, leveraging its strong liquidity position to secure prime assets.

Investment Implications: A High-Yield, Low-Volatility Play

For investors, FIBRAMQ represents a high-yield, low-volatility opportunity in a sector poised for long-term growth. The company's 16.7% annualized cash distribution increase in Peso terms and 10.8% in U.S. dollar terms align with its focus on shareholder returns. Its 9–11% yield on cost for new developments, combined with a 94.8% occupancy rate and 27.7% lease spreads, suggests robust cash flow generation.

However, challenges remain. Tijuana's infrastructure bottlenecks—including border wait times and rising electricity costs—could strain margins. FIBRAMQ's green building certifications (41.8% of GLA) and sustainability-linked debt mitigate some of these risks by reducing energy costs and aligning with ESG trends.

Conclusion: A Model of Strategic Execution

FIBRA Macquarie México's Q2 2025 results and Tijuana expansion highlight its capital allocation discipline, operational excellence, and strategic foresight. By targeting high-yield developments in nearshoring hotspots and maintaining a conservative balance sheet, the company is well-positioned to outperform in a sector facing both macroeconomic and infrastructural headwinds.

For long-term investors, FIBRAMQ offers a rare combination of attractive yields, tangible asset growth, and resilience to global trade shifts. As nearshoring accelerates and Mexico's logistics sector matures, FIBRAMQ's disciplined approach and geographic advantages make it a compelling addition to a diversified real estate portfolio.