INVESTMENT VEHICLES: THE INDUSTRY’S VIEW Mexico has embarked on a series of reforms to open markets and boost private sector involvement in the economy. Energy and infrastructure are among the targets and investment vehicles are available to allow national and international players to participate, especially in real estate projects. These include the new Fibra E, CKDs and CerPIs. Mexico Infrastructure Review asked leaders in infrastructure financing how these instruments will impact the country’s investing environment.
JORGE AVALOS CEO of Fibra Mty
FIBRA – INVESTMENT AND REAL ESTATE TRUST (first issued 2004) • At least 70 percent of investments must be in real estate assets with a portfolio of
One of the most popular vehicles in
investment is the master limited partnership (MLPs), which is very similar to the structure of CerPI and the Fibra E. The only difference between both vehicles is that CerPI will take on development risks associated with higher expected
offices, hospitals, commercial and industrial real estate located in Mexico • 95 percent of earnings must be distributed to the CBFI holders • Information must be transparent for tax purposes • Duration: Project Life
returns and the Fibras are more associated with stable infrastructure projects such as highway concessions. There will be a high capital allocation to infrastructure as part of 324
Mexico’s National Infrastructure Program and this will also benefit CKDs and Fibras. Other strategic industries such as tourism need airports, water plants, highways, health institutions and so on. There is almost US$23.7 billion in capital from the Mexican pension funds targeting those projects. The Fibra regulation has certain fiscal benefits whereby if a portfolio is paid out with Real Estate Stock Certificates (CBFIs), private investors can defer their tax gains until they sell their CBFIs.
JONATHAN DAVIS Chairman of Macquarie Infrastructure and Real Assets Mexico (MIRA)
FIBRA E – INVESTMENT AND REAL ESTATE TRUST FOR THE ENERGY AND INFRASTRUCTURE SECTORS (first issued 2016) • At least 95 percent of its taxable income
The rules for CKDs were much stricter years before, meaning Mexican pension funds had to prefund their full commitment. Today this prefunding commitment has been reduced to 20 percent with remaining capital calls more in line with international practices. In CKDs, a pension fund’s technical committee
must be distributed to holders of CBFIs • Can invest in new projects, only if it represents less than 25 percent of its total investments • 75 percent of investment must be destined to mature projects • Can be used in roads, airports, ports, rail and
reviews projects that represent more than 5 percent of
the fund’s commitments. In terms of Fibras, we saw an
• Duration: Project Life
opportunity to create a Mexican Real Estate Investment Trust (REIT). Previously, anybody who wanted to invest in real estate typically had to go and physically buy property and then lease this to a third party with all the management burdens that come with that. This new vehicle was designed to allow for a range of international and domestic institutional and retail investors to participate in the real estate market, delegating the management responsibilities to professional fund managers.
Published on Jan 24, 2017
Published on Jan 24, 2017
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