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PREI exits third-largest Mexican industrial portfolio via IPO

The New Jersey-based real estate investment manager has launched a Mexican real estate investment trust, into which it has rolled two of its prior industrial funds and 146 properties previously held by the two vehicles.

Prudential Real Estate Investors (PREI) has launched a new publicly-traded Mexican real estate investment, Terrafina, raising MXP8.3 billion (€516.78; $665 million) in its initial public offering last week.

Terrafina’s IPO included 295.7 million shares at 28 pesos per share, with the potential to sell up to 44.4 million in additional securities under an overallotment or “greenshoe” option.

The Mexican REIT, known locally as a fideicomiso de bienes raíces, or Fibra, holds the third largest industrial portfolio in Mexico. Terrafina’s portfolio initially will consist of 146 properties that have been transferred into the REIT following the combination of two of PREI Latin America’s closed-end real estate funds, PLA Industrial Fund I and PLA Industrial Fund II, into the new vehicle. The properties include 132 industrial facilities and 14 land reserve parcels, primarily located in Mexico’s north, central and Bajío regions, and spanning 25 cities in 16 states.

Investors in Terrafina include Mexican institutional and retail investors who acquired securities through the public offering; global institutional investors who invested through a private placement; and the original limited partners in the two PLA funds.

Terrafina will oversee the corporate governance of the Fibra, while PREI will manage the assets within the Fibra’s portfolio.  “The dual management structure leverages PREI’s real estate acquisition expertise and asset management capabilities while providing a corporate governance framework that absolutely aligns our interests with those of Terrafina’s shareholders,” said Alfonso Munk, head of PREI-Latin America, in a statement. Terrafina will be led by Alberto Chretin, who previously served as an executive advisor to the PLA Industrial Funds.

Terrafina is the second Fibra to be listed this year on the Mexican Stock Exchange, known locally as Bolsa Mexicana de Valores, and only the fifth to be launched to date. Fibra Uno Administration was the first Mexican REIT, launching a $300 million IPO in March 2011, followed by the country’s first hotel-focused REIT, Fibra Hotelera Mexicana, last November and Macquarie Group’s $1.2 billion IPO in December. Earlier this month, another hotel-focused Mexican REIT, Fibra Inn, began trading on the Mexican Stock Exchange with the issuance of a $300 million in stock.