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Fibra Inn Announces Results for the Second Quarter of 2018

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MONTERREY, Mexico, July 25, 2018 (GLOBE NEWSWIRE) -- Deutsche Bank Mexico, S.A., Institución de Banca Múltiple, Trust Division F/1616 or Fibra Inn (BMV:FINN13) ("Fibra Inn" or "the Company"), the Mexican real estate investment trust internally managed and specialized in the hotel industry serving the business traveler with global brands, today announced its non-audited second quarter results for the period ended June 30, 2018 (2Q18). These results were prepared in accordance with International Financial Reporting Standards (IFRS) and are stated in nominal Mexican pesos (Ps.).     

2Q18 Financial Highlights:

  • Fibra Inn concluded the quarter with 42 hotels in operation plus one property in an expansion process. This represents a total of 6,944 rooms, 142 of which are undergoing brand conversions and 54 are under expansion. Fibra Inn is invested in 3 properties, under the Hotel Factory model, that will add 633 rooms.
  • Total Revenue: Ps. 521.7 million, of which 94.9% were from room revenues and 5.1%, were from other rental revenues, for a total increase of 5.7% compared to 2Q17.
  • Hotel NOI1: Ps. 186.0 million, a 3.7% increase compared with the Ps. 179.3 million reported in 2Q17; NOI margin was 35.6%.
  • Adjusted EBITDA2: reached Ps. 159.8 million, a 1.8% increase compared to the Ps. 157.0 million in 2Q17.
  • FFO3: Ps. 101.2 million, a 12.9% decrease compared with the Ps. 116.2 million reported in 2Q17; the FFO margin was 19.4%.
  • Distributions to Holders4: Ps. 110.0 million for the 429,705,974 CBFIs outstanding at the close of 2Q18. Excluding the CBFIs that were issued as part of the subscription, distribution per CBFI was Ps. 0.2560, representing an annualized dividend yield of 8.4% for the quarter.

Same-Store Sales for 2Q18 for the 41 comparable hotels:

  • Room revenue: Ps. 483.6 million; an increase of 4.1% vs 2Q17.
  • Occupancy: 65.6%, an increase of 1.6 percentage points (pp) and an Average Daily Rate (ADR) of Ps. 1,233.1, an increase of 1.6%.
  • Revenue per Available Room ("RevPAR"): was Ps. 809.2, a 4.1% increase.

Total Revenues for 2Q18 for the 42 hotels in operation:

  • Room revenues: Ps. 494.9 million; an increase of 4.8% compared to 2Q17.
  • Occupancy: 65.5%; an increase of 1.4 pp versus 2Q17.
  • Average Daily Rate: Ps. 1,231.3; a 2.1% increase.
  • Revenue per Available Room (RevPAR): Ps. 806.1, a 4.3% increase vs 2Q17.
1   Hotel NOI and NOI from other businesses are broken down separately. The first is the calculation of the Fibra's revenue (hotel revenues and other revenues) minus operating expenses for administration, maintenance, lodging, utilities, fees, royalties, marketing and promotion, as well as property tax and insurance. The second (NOI) corresponds only to revenues and expenses from the Hotel Factory. Additionally, Total NOI will be reported.
2   Adjusted EBITDA includes acquisition and organization expenses.       
3   FFO is calculated as the Adjusted EBITDA plus interest gain less interest expense and foreign exchange fluctuations.
4   Calculated based on 429,705,974 CBFIs outstanding at the close of 2Q18; yield is based on Ps. 12.28 per CBFI as of June 30, 2018.

Second Quarter 2018 Results

The sales mix at the close of 2Q18 was comprised of 42 hotels under operation: 11 limited service, 19 select service, 11 full service and 1 extended-stay hotels.  

Total Revenue per Segment
  2Q18 % 2Q17 %
(Ps. million)        
Limited Service   70.8 13.6%   70.3 14.2%
Select Service   270.5 51.8%   233.1 47.2%
Full Service   170.1 32.6%   177.4 35.9%
Extended Stay   10.3 2.0%   13.0 2.6%
Total   521.7 100.0%   493.7 100.0%

        

Financial Highlights
  2Q18   2Q17   Var
(Ps. million, except EBITDA per room)          
Lodging Revenues   494.9 94.9%   472.2 95.6% 4.8%
Rental Revenues   26.8 5.1%   21.5 4.4% 24.6%
Fibra Revenues   521.7 100.0%   493.7 100.0% 5.7%
NOI   186.0 35.6%   179.3 36.3% 3.7%
Adjusted EBITDA   159.8 30.6%   157.0 31.8% 1.8%
EBITDA per Room   23,678.4   -    23,383.1   -  1.3%
FFO    101.2 19.4%   116.2 23.5% -12.9%
Distribution and Dividend Yield          
CBFI Price   12.28     12.16   1.0%
Distribution   110.0     110.0   0.0%
Distribution per CBFI   0.2560     0.2500   2.4%
CBFIs outstanding   429.7     440.0   -2.3%
Annualized Dividend yield at the end of the quarter 8.5%   8.2%   0.2 p.p
Hotels and Rooms          
 Hotels in operation    42     43   -1
 Hotels in remodeling *    1     -    1
 Developments    -      -    0
 Land Lots    1     1   0
 Total number of properties and the end of the quarter    44     44   0
 Weighted number of days per procurement  100%   100%   0
 Footprint (States)    15     15   0
 Rooms in operation    6,748     6,713   35
 Rooms under development    -      222   -222
 Rooms under rebranding    142     -    142
 Rooms in addition    54     -    54
 Rooms in remodeling    -      180   -180
 Total # Rooms    6,944     7,115   -171


* The Casa Grande Ciudad Juarez hotel temporarily closed on September 1, 2017 for conversion to the Holiday Inn brand and the addition of 54 rooms.

Fibra Inn's total revenues during 2Q18 were Ps. 521.7 million, an increase of 5.7% compared to 2Q17. Revenues were comprised as follows:

  • Ps. 494.9 million, or 94.9%, were from room revenues from the 42 properties in operation, equivalent to 4.8% growth compared to 2Q17. This result was due to the following factors:
    1. A 4.1% increase from same-store sales room revenues, which reflected the effects of the initiation of the summer holidays when, due to seasonality, there are a lower number of business travelers as well as the effect of the Soccer World cup in Russia.
    2. 0.7% organic increase during the quarter.
  • Ps. 26.8 million, or 5.1%, in rental revenues from spaces for services other than lodging, such as conference and meeting rooms, coffee breaks and restaurants, as well as the rental of certain commercial spaces, which rose by 24.5% compared to Ps. 21.5 million in 2Q17.

During 2Q18, total operating expenses were Ps. 335.8 million, or 64.4% of total revenues, an increase of 70 basis points (bp), compared with 63.7% during 2Q17. This was the net effect of the following:

  • An 80 bp increase in lodging expenses, representing 25.3% of total revenues, to reach Ps. 132.1 million. This was due to the higher costs for breakfast that is included in the price of the guest stay, as well as commission to travel agencies to generate greater demand from leisure, thereby offsetting the seasonality of the summer holiday vacation period, which results in lower volume of business travelers; as well increasing the number of guests that are members of the global brand loyalty programs.
  • A 50 bp increase in royalties, representing 6.7% of total revenues, to reach Ps. 34.9 million, as several franchise contracts with international brands were renewed.
  • A 50 bps increase in administrative fees, representing 16.5% of total revenues, to reach Ps. 86.1 million due to increases in data processing systems for the operation as well as the reserve for doubtful accounts
  • A slight increase of 10 pb in maintenance, representing 4.2% of total revenues, or Ps. 21.7 million.     

The above was offset by:

  • A 70 bp decrease in marketing and advertising, which represented 4.9% of total revenues, or Ps. 25.5 million, due to lower costs for internet media campaigns for the promotion of the hotels.
  • A 40 bp decrease in energy costs, representing 5.9% of total revenue. In nominal terms this amount remained constant, however it declined in percentage terms due to higher revenue.
  • Property taxes and insurance costs remained flat, at 0.7% and 0.3% of total revenues, respectively.              

Beginning in 1Q18, the Company reported Hotel NOI, which pertains to the operation of the properties and NOI from other businesses; these line items will also include revenues and costs from the Hotel Factory.

As such, Net Operating Income (Hotel NOI) for 2Q18 reached Ps. 186.0 million, which represented a 3.7% increase, compared to Ps. 179.3 million for 2Q17. The NOI margin was 35.6%, which represented a decline of 70 bp compared to 36.3% reached in 2Q17.

In terms of the Hotel Factory, in 2Q18 we have not yet observed revenues from the structuring, development and asset management that Fibra Inn will collect from the external projects, which are expected for the second half of this year. However, expenses of Ps. 5.7 million were registered pertaining to salaries that correspond to the Hotel Factory team; this payroll was formerly included as part of the projects.

As a result of the above, Net Operating Income (Total NOI) for 2Q18 was Ps. 180.2 million, a 0.5% increase compared to the Ps. 179.3 million reported in 2Q17. NOI margin was 34.5% versus 36.3% reported in 2Q17.

For 2Q18, expenses related to the management of the Fibra were Ps. 35.4 million, representing an 80 bps increase as a percentage of revenues. These expenses were equivalent to 6.8% compared to 6.0% in 2Q17 and were the result of the following:

  • A 100 bp increase in acquisition and corporate expenses, representing 1.8% of total revenues, due to the following: (i) payments for hotel operational licenses and construction permits for some of the properties; and (ii) expenses corresponding to the improvement of the SAP system.
  • A 40 bps increase in extraordinary maintenance expenses for the hotels, which represented 1.1% of revenues, due to costs smaller equipment that cannot be classified as assets due to their size.
  • An increase of 60 pb in other revenues due to a cash reimbursement made by the international hotel chain, Wyndham, for the conversion of the Best Western Valle Real hotel.
  • Corporate management expenses remained stable and represented 4.7% of total revenues.

EBITDA reached Ps. 144.8 million in 2Q18, representing a 3.1% decline compared with the Ps. 149.5 million reported in 2Q17. EBITDA margin reached 27.8%, 250 bps below the 30.3% reported in 2Q17.

IFRS 3 Business Combinations
In reference to IFRS 3 Business Combinations, hotel acquisitions are considered business acquisitions, as these reflect the acquisition of a running operation. Therefore, acquisition-related expenses are reported in the profit and loss statement as they are incurred, including notary expenses, legal and appraisal expenses as well as other expenses. This is applicable for hotel acquisitions after 2014.

Adjusted EBITDA of Ps. 159.8 million excludes the previously-mentioned acquisition and corporate-related expenses and increased 1.8% compared to Ps. 156.9 million in 2Q17. Adjusted EBITDA margin was 30.6%, which represented a 120 pp decrease compared to the 31.8% margin reported in 2Q17.

The period included:

  • A depreciation of fixed assets in the amount of Ps. 81.7 million, or 15.7% of total revenues, which was an increase of 31.4% compared to the Ps. 62.2 million reported in 2Q17, due to an increase in the asset base of capitalized projects. The calculation for the depreciation of fixed assets – properties, furniture and equipment – is calculated based on the straight line method based on the estimated useful life of the net assets' residual value.
  • A provision of Ps. 26.2 million that corresponds to the compensation payment that will be made as a result of the termination of the advisory contract, representing 5.0% of total revenues and that declined by 44.2% vs. Ps. 46.9 million reported in 2Q17.
  • The cancellation of the provision for financial assets of Ps. 10.8 million, or 2.1% of revenues, a decline of Ps. 30.7 million, reflecting the adoption of new rule IFRS9, which refers to the measure and classification of financial assets. For Fibra Inn, this line item refers to the clients on the balance sheet.  

Operating Income (EBIT) was Ps. 47.7 million, an increase of 133.3% or Ps. 27.3 million compared to the 2Q17 figure, which was Ps. 20.5 million. The margin was equivalent to 9.1% versus 4.1% reported in 2Q17.

  • Fibra Inn obtained higher interest income totaling Ps. 14.1 million, or 2.6% higher compared to the Ps. 13.8 million reported in 2Q17.
  • Interest expenses were Ps. 73.3 million for 2Q18, compared to Ps. 53.1 million in 2Q17. This interest corresponds to the public debt, which at June 30, 2018 reached Ps. 2,957.0 million, as well as the Ps. 200 million disbursement of a new revolving credit line with Actinver.
  • An exchange rate gain of Ps. 1.6 million.    

The net financial result was an expense of Ps. 58.6 million in 2Q18, Ps. 17.8 million higher than the Ps. 40.8 million expense figure reported in 2Q17.

2Q18 net loss reached Ps. 10.9 million, a Ps. 9.5 million decline versus the Ps. 20.4 million loss experienced in 2Q17. The net margin was -2.1% in 2Q18, vs -4.1% in 2Q17.

The Company reported an effect in the valuation of derivative financial instruments for Ps.1.1 million.

As a result, the Company reported negative comprehensive net income for Ps. 6.3 million in 2Q18.

2Q18 FFO was Ps. 101.2 million, equivalent to a 12.9% decrease, compared to the Ps. 116.2 million reported in 2Q17. FFO margin was 19.4% in 2Q18 compared to 23.5% for the same quarter of the previous year.

Reconciliation to FFO and AFFO
  2Q18 2Q17 Var %
       
FFO   101.2   112.4 -10.0%
 (-)  Maintenance CAPEX   15.7   11.1 0.0%
Adjusted FFO   85.5   101.3 -15.6%
FFO per CBFI   0.2355   0.2555 -7.8%
Adjusted FFO per CBFI   0.1991   0.2302 -13.5%

*Calculations per CBFI based on 429,705,974 shares in 2Q18 and 440,019,542 shares in 2Q17.

Distribution to Holders       

On July 24, 2018, Fibra Inn's Technical Committee approved a cash distribution for the CBFI holders of Ps. 110.0 million related to 2Q18. This distribution was equivalent to Ps. 0.2560 per CBFI, based on 429,705,974 CBFIs outstanding at the close of 2Q18, as a return of capital based in the operations and results of Fibra Inn for the period between April 1 and June 30, 2018.

On July 25, the Company concluded a capital subscription issuing a total of 94,236,874 CBFIs. As such, at the date of this report, there are 523,075,633 certificates outstanding and a total of 598,256,416 CBFIs issued.

Additionally, the distribution amount per certificate will change at the time of payment, which is scheduled to be no later than August 31, 2018, as a result of the CBFI repurchasing program after the presentation of this quarterly report until the ex-date of the distribution payment.

Distribution to Holders
  2Q18 2Q17
  per CBFI* Total per CBFI* Total
   Ps. $   Ps. million   Ps. $   Ps. million 
Taxable income   -    -    -    - 
Return of capital   0.2560   110.0   0.2500   110.0
Total   0.2560   110.0   0.2500   110.0

* The amount distributed per CBFI was calculated based on 429,705,974 CBFIs outstanding in 2Q18 and 440,019,542 for the second half of 2018.

The repurchase program reached a total balance of 10,313,568 CBFIs at June 30, 2018. After the close of the second quarter, 867,215 additional CBFIs were repurchased; as such, the total amount of repurchased CBFIs at the time of this report was 11,180,783 CBFIs.

Shareholder Composition
  At June 30, 2018 As of July 25, 2018  (including the capital subscription)
  CBFIs % CBFIs %
         
CBFIs in Treasury   64,000,000 12.7%   64,000,000 10.7%
Repurchase Fund   10,313,568 2.0%   11,180,783 1.9%
Founders Trust   75,079,170 17.5%   75,079,170 14.4%
Public Float   354,626,804 82.5%   447,996,463 85.6%
Total Outstanding   429,705,974 85.3%   523,075,633 87.4%
Total Issued   504,019,542 100.0%   598,256,416 100.0%

Calculation of the Distribution to CBFI Holders

In accordance with the tax laws applicable to Fibra Inn, the fiduciary is obligated to distribute at least 95% of its taxable income generated in the prior period to CBFI holders by the Trust's assets at least once per year and by March 15 of the consequent period.

On July 24, 2018, Fibra Inn's Technical Committee approved a distribution policy based on Ps. 110.0 million for 2Q18.

In line with the tax code applicable to Fibra Inn, when the fiduciary grants holders of CBFIs that are worth more that the tax amount of the period generated by the trustors' equity, the difference is considered a capital return and will lower the proven value of the purchase of the certificates held by the holders that receive this difference. The capital reimbursement does not generate a tax withholding for Fibra Inn's investors.

Taxable Income Calculation

Taxable Income is calculated from a tax base and may differ from the accounting base calculation. Therefore, it is important to consider the following:

  1. Fiscal depreciation applies to approximately 82% of the total value of the hotels at a 5% annual rate, updated to reflect inflation in the portion corresponding to constructions (74%), while the remaining fixed assets (8%) depreciate fiscally in accordance with the rates applicable. The remaining 18% is the value of the land, which does not depreciate.
  2. IPO expenses are tax deductible in straight line depreciation for 7 years updated to reflect inflation.
  3. Monetary assets – mainly cash and cash equivalents – generate a tax deduction due to inflation effects over the average balance of those assets.

Therefore, use the following formula to calculate the Taxable Income:
Accountable Income
(+) Accountable depreciation, not deductible
(-) Taxable depreciation
(-) IPO expenses amortized to 7 years
(-) Annual adjustment from deductible inflation
               = Taxable Income

Use of the CAPEX Reserve
The capital expenditure reserve for hotel maintenance is provisioned as per the investment requirements in each line item for each period, plus a reasonable reserve for future requirements. As of June 30, 2018, this reserve reached Ps. 24.6 million compared to Ps. 24.4 million at March 31, 2018. The total amount for capital expense reached Ps. 15.5 million during 2Q18 of which Ps. 5.8 million were included as expenses in the profit and loss statement.

Balance Sheet
As of June 30, 2018, Fibra Inn held Ps. 492.9 million in cash and equivalents and nearly the entire outstanding recoverable VAT amount has been recovered from the Mexican Tax Authority, leaving a remainder of Ps. 0.5 million yet to be recovered.

Accounts receivable registered Ps. 109.0 million from regular business operations. Other accounts receivable were Ps. 28.1 million mainly pertaining to operating expenses of the amortized hotels during the period, as well as property taxes, insurance, fiduciary fees, independent board members and administrative payments.

Accounts payable reached Ps. 98.2 million registering Ps. 199.1 million of the bank debt from the revolving credit line with Actinver.

As of June 30, 2018, Fibra Inn registered long-term financial obligations of Ps. 2,957.0 million, which correspond to the balance of the debt from FINN15 and FINN18.

At the close of 2Q18, the gross debt balance was:
(i)           66.7% at a fixed rate of 9.93%, and
(ii)          33.3% at a variable rate covered with weighted fixed rate swaps for 8.48%.
As such, the weighted net cost of debt was 9.45%.

As of June 30, 2018, the Company had the option to take on additional debt (considering the current balance of cash and cash equivalents) for Ps. 1,050.0 million without surpassing the 33% loan-to-value threshold set forth by the Company's Technical Committee.

The FINN15 and FINN18 debt issuance financial covenants at June 30, 2018 are as follows:

Financial Covenants - FINN15 & FINN18 Debt Issuance
  Covenants Al June 30, 2018
     
Loan to Value  Equal or lower than 50%  27.3%
Debt Service Coverage  Equal or higher than 1.0    2.4
Debt Service  Equal or higher than 1.5    2.5
Total Assets no taxable  Equal or higher than 150%  335.0%
Debt to Total Assets  Equal or lower than 40%  0.0%

Fibra Inn has a total loan-to-value of 27.3% as of June 30, 2018. This leverage level is in full compliance with the dispositions of the Mexican Banking and Securities Commission ("CNBV") to regulate the maximum leverage levels for the Fibras of up to 50%. As of June 30, 2018, the debt service coverage was 2.4x; the ratio established must be 1.0x or greater. Both of these figures are calculated in accordance with the methodology in Appendix AA of the Circular Única de Emisoras applicable to CBFIs.

Following is a breakdown of the items used in the calculation of the financial ratios:

Debt Ratios (CNBV)
Loan-to-value At June 30, 2018
(equal or lower than 50%)  
Financing   200.0
Market Debt   3,000.0
Total Assets   11,723.1
Loan-to-value 27.3%
   
Debt Service Coverage Ratio  
(equal or higher than 1.0)  
Liquid Assets   492.9
VAT refunds   0.5
Operating Profit   767.0
Credit lines   300.0
Sub-Total Numerator   1,560.4
   
Amortization of Interests   461.4
Principal Repayments   - 
Capital Expenditure   93.0
Development Expenditure   101.1
Sub-Total Denominator   655.5
   
Debt Service Coverage Ratio  2.4 times 

2Q18 Recent Events

1.    Annual Ordinary Shareholders' Meeting
On April 26, the Company carried out its Annual Ordinary Shareholders' Meeting for CBFI Holders where it approved, among other items, the terms of the Fibra's Corporate Governance Committees report. At the meeting, patrimonial and independent Technical committee members were also nominated and ratified, as well as members that hold over 10% of the CBFIs outstanding. For additional detail regarding this matter, please refer to the press release regarding these resolutions.

2.    Ordinary and Extraordinary Shareholders' Meeting
On May 11, the Company carried out an Ordinary Shareholders' Meeting for CBFI Holders where it approved the establishment of a CBFI Offering Program for up to 900 million CBFIs, without exceeding Ps, 10,000 million. The proceeds will be allocated towards acquisitions of assets, working capital, investment and maintenance expenses, payment or refinancing of liabilities. On the same date, the Company carried out an Extraordinary Shareholders' Meeting where it approved the statutory adjustments to modify the Trust contract, as discussed at Shareholder's Meeting held on February 18, 2018; as well as the exchange of securities deposited in Indeval. For additional detail regarding this matter, please refer to the press release regarding these resolutions.

3.    Extraordinary Shareholders' Meeting
On June 14, the Company carried out an Extraordinary Shareholders' Meeting for CBFI Holders where it approved: (i) the modification of the Technical Committee to consist of mostly independent members; therefore this Committee includes five independent members, two representatives of the Founders Trust, the Chief Executive Officer and, if requested, the representative of the holders who possess more than 10% of the outstanding CBFIs; (ii) the loss of exclusivity and preference rights to acquire assets by the Founders Trust, in case Fibra Inn makes any property disinvestments.    

4.   Afore Invercap removed its representative from Fibra Inn's Technical Commitee
On June 22, 2018, Fibra Inn received a notification from Afore Invercap to revoke the appointment of Mr. Santiago Pinson Correa and its alternate, Mr. Antonio de Jesús Sibaja Luna, as representatives of Afore Invercap in Fibra Inn's Technical Committee. However, on July 24, 2018, the addition of Mr. Santiago Pinson Correa to the Financial Committee was approved and thereby completing the requirement that of the 5 members of this committee, 3 must be independent.

Events after 2Q18

1.    Fibra Inn Consolidates its Leadership in Corporate Governance
On July 3, Fibra Inn released its strategic vision in terms of corporate governance and compiled the initiatives undertaken since its initial public offering.

2.    Subscription Notice to FINN 13 Shareholders
On July 4, Fibra Inn informed about its exclusive subscription notice for Fibra Inn Holders at a price of Ps. 11.10 per CBFI, equivalent to a 9.87% discount. The first round took place from July 4 to 19, 2018, where 63,247,645 CBFIs were subscribed. Holders that 100% subscribed to the first round were able to participate in the second round, which took place from July 20 to 25, 2018, and where 30,989,229 CBFIs were subscribed. The total amount of CBFIs subscribed during this round was 94,236,874, which represented proceeds of Ps. 1,046.0 million. For additional detail regarding this matter, please refer to the press release regarding the subscription notice.

3.    Fibra Inn Entered the Beach Hotel Market with the Signing of a Purchase Option to Acquire Secrets Silversands Riviera Cancun
On July 9, Fibra Inn announced its intention to enter the beach hotel segment and explained the importance of this new business segment. Moreover, Fibra Inn informed about the signing of a purchase option to acquire this property under the Hotel Factory structure, Fibra Inn's external investment framework.     

4.   Fibra Inn Announced the Signing of a Binding Agreement to Sale the Microtel Inn & Suites by Wyndham Hotel in Culiacan
On July 19, Fibra Inn signed a binding agreement to sell this property for Ps. 85.0 million. The property was part of a hotel portfolio that jointly had a cap rate of over 9.5% cap rate in the trailing 12 months.  This sale is part of its capital recycling program for the sale of non-strategic properties. The transaction proceeds will be used to invest in projects with higher profitability.

Hotel Portfolio at 2Q18

  Brand City State Rooms Additions
  Limited Service Hotels
1 Wyndham Garden Irapuato Guanajuato 102  
2 Wyndham Garden Celaya Guanajuato 150  
3 Wyndham Garden León Guanajuato 126  
4 Wyndham Garden Silao Guanajuato 143  
5 Microtel Inn & Suites by Wyndham Chihuahua Chihuahua 108  
6 Microtel Inn & Suites by Wyndham Culiacán Sinaloa 158  
7 Microtel Inn & Suites by Wyndham Toluca Estado de México 129  
8 Microtel Inn & Suites by Wyndham Cd. Juárez Chihuahua 113  
9 Wyndham Garden Guadalajara Andares Jalisco 186  
10 City Express Junior Chihuahua Chihuahua 105  
11 City Express Chihuahua Chihuahua 104  
        1,424  
  Select Service Hotels
1 Hampton Inn Monterrey Nuevo León  223  
2 Hampton Inn Saltillo Coahuila 227  
3 Hampton Inn Reynosa Tamaulipas 145  
4 Hampton Inn Querétaro Querétaro 178  
12 Hampton Inn by Hilton Hermosillo Sonora 151  
14 Hampton Inn by Hilton Chihuahua Chihuahua 190  
5 Holiday Inn Express Saltillo Coahuila 180  
7 Holiday Inn Express Toluca Estado de México 268  
8 Holiday Inn Express Monterrey Nuevo León 198  
9 Holiday Inn Express Guadalajara Jalisco 199  
10 Holiday Inn Express Toluca Estado de México 127  
6 Holiday Inn Express & Suites Juárez Chihuahua 182  
11 Aloft Guadalajara Jalisco 142  
13 Courtyard by Marriott Saltillo Coahuila 180  
16 Courtyard by Marriott Chihuahua Chihuahua 152  
15 Fairfield Inn & Suites by Marriott Coatzacoalcos Veracruz 180  
13 Wyndham Garden Playa del Carmen Quintana Roo 196  
17 Wyndham Garden** Monterrey Nuevo León 85  
14 AC Hotels by Marriott  Guadalajara Jalisco 180  
        3,383  
  Full Service Hotels
1 Holiday Inn & Suites Guadalajara Jalisco 90  
2 Holiday Inn Monterrey Nuevo León 198  
3 Holiday Inn Puebla Puebla 150  
4 Camino Real Guanajuato Guanajuato 155  
5 Marriott  Puebla Puebla 296  
6 Holiday Inn México Distrito Federal 214  
7 Holiday Inn Altamira Tamaulipas 203  
8 Casa Grande Chihuahua Chihuahua 115  
9 Casa Grande Delicias Chihuahua 89  
10 Crowne Plaza Monterrey Nuevo León 219  
11 Holiday Inn Reynosa Tamaulipas 95  
12 Holiday Inn* Cd. Juárez Chihuahua 0 196
        1,824 196
  Extended Stay Hotels
1 Staybridge Suites Guadalajara Jalisco 117  
        117  
  Land Bank
1 Fairfield Inn & Suites by Marriott* Cd. del Carmen Campeche    
          6,748 196
  Total Fibra Inn's Portfolio as of June 30, 2018   6,944  
  (*) Hotel in remodeling, includes 145 rooms and an addition of 51 rooms.    
  (**) Rebranded properties

Information Regarding the Tenant

In order to facilitate the quarter-over-quarter comparisons, additional operational tenant information, as well as statistical indicators, is presented.

Rental revenues for the non-lodging spaces reached Ps. 26.8 million in 2Q18, which was 24.5% higher than the figure for 2Q17.

Rental revenue for food, beverage and other services were Ps. 158.0 million, 2.5% lower than the one registered for 2Q17.

Operadora México Servicios y Restaurantes, SAPI de CV
Combined with Trust F/1765
  2Q18   2Q17  
(Milions of pesos)        
Revenue   158.0 100%   162.1 100%
Sales Cost   91.8 58%   96.1 59%
Operating Profit   66.1 42%   65.9 41%
Operating Expenses   7.3 5%   7.9 5%
NOI   58.8 37%   58.0 36%
Lease paid to Trust F/1616   45.2 29%   41.2 25%
Other Indirect Expenses   6.0 4%   5.9 4%
EBITDA   7.6 5%   11.1 7%
Plus: Other Non-Operating Expenses   -  0%   -  0%
Adjusted EBITDA   7.6 5%   11.1 7%

Hotel Operating Indicators

  1. Quarterly Total Sales       
Quarterly Total Sales
  2Q18 2Q17 %
Number of hotels   42   42  
Lodging Income   494.9   472.2 4.8%
Occupancy  65.5% 64.1% 1.4 pp
ADR   1,231.3   1,206.0 2.1%
RevPar   806.1   773.0 4.3%

 *In 2Q18: The Hotel Casa Grande Ciudad Juarez remained closed (since September 2017) due to its conversion to the Holiday Inn brand as well as its 54-room expansion. It is expected to re-open in 3Q18.In 2Q17: The Arriva Express Guadalajara Hotel remained closed for its conversion to the AC Hotels by Marriott brand.

  1. Quarterly Same-Store Sales
Quarterly Same Stores Sales
 (41 Hotels) 2Q18 2Q17 Variation
Room Revenue   484   464 4.1%
Occupancy  65.6% 64.0% 1.6 pp
ADR   1,233.1   1,213.9 1.6%
RevPAR    809.2   777.0 4.1%

The parameter of same-store sales includes the following:

  • Hotels that are the property of Trust F/1616 and its operations, excluding hotels that are under negotiation as a result of a binding agreement as the phase prior to acquisition; those will be included at the moment of titling.   
  • As a result, the same-store sales indicator for 2Q18 includes 41 hotels of the current portfolio as if they had been part of the Fibra for the full periods, both for 2Q18 and 2Q17.
  • The Company maintains the policy of excluding hotels that have been in Fibra Inn's portfolio for less than half of the quarter under discussion.

This report, excludes the Casa Grande Ciudad Juarez hotel as it remains closed since September 2017 due to its 54-room expansion and conversion to the Holiday Inn brand; this hotel is expected to resume operation in 3Q18. The Arriva Express Guadalajara hotel remained closed in 2Q17 for its conversion to the AC Hotel by Marriott brand.

  1. Information by Segment, by Chain and by Region     
Same Store Sales by Segment
  Occupancy ADR RevPAR Occupancy ADR RevPAR % RevPAR
  2Q18 2Q17  
Limited Service 61.4%   879.3   540.1 61.9%   867.7   537.6 0.5%
Select Service 67.1%   1,297.1   870.4 62.9%   1,252.6   788.1 10.5%
Full Service 66.2%   1,363.4   902.1 65.7%   1,395.2   917.1 -1.6%
Extended Stay 67.6%   1,420.4   959.7 91.9%   1,308.7   1,202.5 -20.2%
TOTAL 65.6%   1,233.1   809.2 64.0%   1,213.9   777.0 4.1%


Same Store Sales by Region
  Occupancy ADR RevPAR Occupancy ADR RevPAR % RevPAR
  2Q18 2Q17  
North 64.3%   1,211.3   778.6 65.3%   1,141.9   746.1 4.4%
Northeast 76.8%   1,385.7   1,064.0 67.1%   1,364.2   915.9 16.2%
Northwest 67.1%   611.2   410.0 62.0%   594.0   368.2 11.4%
South and center 57.0%   1,100.3   627.4 59.4%   1,143.3   678.7 -7.6%
West 66.3%   1,311.6   869.5 69.0%   1,266.2   873.6 -0.5%
TOTAL 65.6%   1,233.1   809.2 64.0%   1,213.9   777.0 4.1%

North: Chihuahua, Sonora     
North-East: Nuevo León, Coahuila y Tamaulipas.                           
West: Jalisco
North-East: Sinaloa   
Mid - Southern: Querétaro, Estado de México, Puebla, Guanajuato, Quintana Roo, Cd México, Veracruz, Campeche.

Same Store Sales by Hotel Chain
  Occupancy ADR RevPAR Occupancy ADR RevPAR % RevPAR
  2Q18 2Q17  
IHG Intercontinental Hotels Group  74.8%   1,318.8   986.2 70.2%   1,310.6   919.7 7.2%
Wyndham Hotel Group  59.0%   919.1   542.6 59.9%   912.3   546.8 -0.8%
Hilton Worldwide 66.8%   1,179.2   787.2 62.9%   1,164.8   733.1 7.4%
Marriott International 53.7%   1,679.6   902.5 57.9%   1,584.3   917.8 -1.7%
Starwood Hotels and Resorts Worldwide 66.5%   1,456.1   967.8 60.5%   1,385.2   837.9 15.5%
Local Brands 58.1%   1,069.8   621.5 59.8%   1,070.3   640.4 -2.9%
Total 65.6%   1,233.1   809.2 64.0%   1,213.9   777.0 4.1%


Hotel Operation
Region Hotels Rooms % Total of Rooms % Total of NOI
North 10 1309 19% 20%
Northeast 11 1953 29% 45%
Northwest 1 158 2% 1%
South and Center 14 2414 36% 23%
West 6 914 14% 12%
TOTAL 42 6748 100% 100%
         
Segment Hotels Rooms % Total of Rooms % Total of NOI
Limited Service 11 1424 21% 11%
Select Service 18 3203 47% 55%
Full Service 12 2004 30% 32%
Extended Service 1 117 2% 2%
TOTAL 42 6748 100% 100%
         
Operator Hotels Rooms % Total of Rooms % Total of NOI
Fibra Inn 40 6443 95% 96%
Camino Real 1 155 2% 2%
Grupo Presidente 1 150 2% 2%
TOTAL 42 6748 100% 100%
         

About the Company

Fibra Inn is a Mexican trust formed primarily to acquire, develop and rent a broad range of hotel properties for lodging in Mexico aimed at the business traveler. The Company has signed franchise, license and brand usage agreements with international hotel brands for the operation of global brands as well as the operation of national brands. Additionally, the Company has development agreements. These hotels enjoy some of the industry's top loyalty programs. Fibra Inn trades its Real Estate Certificates (Certificados Bursátiles Fiduciarios Inmobiliarios or "CBFIs") on the Mexican Stock Exchange under the ticker symbol "FINN13"; its ADRs trade on the OTC market in the U.S. under the ticker symbol "DFBRY".

www.fibrainn.mx

Note on Forward-Looking Statements 

This press release may contain forward-looking statements.  These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, Company performance and financial results. Also, certain reclassifications have been made to make figures comparable for the periods. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the Company, are intended to identify forward-looking statements.  Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements.  Such statements reflect the current views of management and are subject to a number of risks and uncertainties.  There is no guarantee that the expected events, trends or results will actually occur.  The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors.  Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

Fideicomiso Irrevocable No. F/1616 (Deutsche Bank Mexico, S. A.
Multiple Banking Institution, Trust Division) and Subsidiary
Unaudited Condensed Consolidated Statements of Financial Position
As of June 30, 2018 and December 31, 2017
(Thousands of pesos)
         
  As of June 30,
2018
% As of December
31, 2017
%
ASSETS        
Current assets:        
Cash and cash equivalents   492,915   4.2 507,986   4.4
Trade and other accounts receivable, net   109,048   0.9 135,354   1.2
Advanced payments   28,113   0.2 17,692   0.2
Accounts receivables from related parties   10,840   0.1 12,280   0.1
Recoverable value-added tax   519   0.0 31,992   0.3
Recoverable taxes and others   6,119   0.1 4,702   0.0
Total current assets   647,554   5.5 710,006   6.1
         
Non-current assets        
Property, furniture and equipment - net   10,653,702   90.9 10,560,347   90.8
Intangible asset and other assets   65,671   0.6 68,976   0.6
Accounts receivable from related parties   116,650   1.0 120,581   1.0
Prepaid property acquisitions    205,909   1.8 126,888   1.1
Deferred income tax   2,551   0.0 2,551   0.0
Derivative financial instruments   31,083   0.3 38,385   0.3
Total non-current assets   11,075,566   94.5 10,917,728   93.9
         
Total assets 11,723,120 100 11,627,734 100
         
LIABILITIES        
         
Current liabilities:        
Suppliers   98,159   2.9 69,238   2.3
Other payables   12,323   0.4 8,169   0.3
Properties' acquisition liability   2,066   0.1 2,066   0.1
Accounts payable to related parties   31,468   0.9 21,143   0.7
Bank debt   199,084   5.8 0   - 
Liability from debt obligations   83,032   2.4 6,059   0.2
Advances from clients    15,721   0.5 14,540   0.5
Tax payable   10,862   0.3 12,585   0.4
Total current liabilities   452,715   13.2 133,800   4.5
         
Non-current liabilities:        
Debt securities   2,957,046   86.0 2,844,696   94.8
Accounts payable to related parties   26,653   0.8 17,769   0.6
Cash settled executive share-based compensation    3,472   0.1 3,472  
Employee benefits   283   0.0 283   0.0
Total non-current liabilities   2,987,454   86.8 2,866,220   95.5
         
Total liabilities 3,440,169 100 3,000,020 100
         
EQUITY        
         
Trustors' equity:        
Contributed capital   5,662,112   68.4 5,886,250   68.2
Property revaluation surplus   2,802,541   33.8 2,802,541   32.5
Reserve for valuation effect of derivative financial instruments   9,277   0.1 37,405   0.4
Reserve for repurchase of CBFIs   195,108   2.4 214,596   2.5
Share-based compensation reserve   96,073   1.2 77,663   0.9
Retained earnings -482,160 -  5.8 -390,741 -  4.5
Total trustors' equity 8,282,951   100.0 8,627,714   100.0
         
Total liabilities and equity 11,723,120   11,627,734  
         


   
Fideicomiso Irrevocable No. F/1616 (Deutsche Bank Mexico, S. A.  
Multiple Banking Institution, Trust Division) and Subsidiary  
Unaudited Condensed Consolidated Statements of Income and of Other Comprehensive Income  
For the period from April 1 to June 30, 2018 and 2017 and for the accumulated of the year ended June 30, 2018 and 2017  
(Thousands of pesos)  
                         
Revenue from: 2T18 % 2T17 % Var. Ps. Var. % 2018 % 2017 % Var. Ps. Var. %
Lodging 494,939 94.9 472,175 95.6 22,764 4.8 973,839 95.2 930,414 95.5 43,425 4.7
Property leases 26,802 5.1 21,519 4.4 5,283 24.5 48,800 4.8 43,729 4.5 5,072 11.6
Total revenue 521,741 100.0 493,694 100.0 28,047 5.7 1,022,639 100.0 974,143 100.0 48,497 5.0
                         
Costs and expenses from hotel services:                        
Lodging 132,094 25.3 121,070 24.5 11,024 9.1 259,036 25.3 239,827 24.6 19,209 8.0
Administrative 86,119 16.5 79,061 16.0 7,058 8.9 174,328 17.0 159,714 16.4 14,614 9.1
Maintenance 21,692 4.2 20,272 4.1 1,420 7.0 41,499 4.1 39,262 4.0 2,237 5.7
Electricity 30,537 5.9 30,996 6.3 -459 -1.5 56,648 5.5 58,339 6.0 -1,690 -2.9
Royalties 34,886 6.7 30,395 6.2 4,491 14.8 68,058 6.7 60,112 6.2 7,947 13.2
Advertising and promotion 25,459 4.9 27,576 5.6 -2,116 -7.7 51,819 5.1 53,354 5.5 -1,535 -2.9
Property tax 3,544 0.7 3,449 0.7 95 2.8 6,502 0.6 6,797 0.7 -296 -4.3
Insurance 1,455 0.3 1,557 0.3 -104 -6.6 2,893 0.3 3,060 0.3 -167 -5.5
Total costs and expenses of hotel services 335,786 64.4 314,376 63.7 21,410 6.8 660,784 64.6 620,464 63.7 40,320 6.5
                         
NOI Hotel 185,955 35.6 179,318 36.3 6,637 3.7 361,855 35.4 353,678 36.3 8,177 2.3
                         
OTHER BUSINESSES                        
                         
INCOME:                        
Hotel factory  0   -  0   -  0   0   -  0   -  0  
                         
COSTS:                        
Hotel factory  5,730 0.0 0 0.0 5,730   10,423 0.0 0 0.0 10,423  
                         
NOI other businesses -5,730 0.0 0 0.0 -5,730   -10,423 0.0 0 0.0 -10,423  
                         
Total NOI 180,225 34.5 179,318 36.3 907 0.5 351,432 34.4 353,678 36.3 -2,246 -0.6
                         
Other costs and expenses:                        
Corporate administrative expenses 24,499   4.7 23,275   4.7 1,224   5.3 46,955   4.6 46,685   4.8 270   0.6
Acquisition and organization expenses 9,138   1.8 3,742   0.8 5,395   144.2 15,644   1.5 6,189   0.6 9,455   152.8
Maintenance expenses 5,814   1.1 3,740   0.8 2,074   55.4 7,748   0.8 5,852   0.6 1,896   32.4
Others  -4,056 -  0.8 -929 -  0.2 -3,126   336.7 -5,557 -  0.5 -4,066 -  0.4 -1,489   36.6
Total indirect expenses 35,395   6.8 29,829   6.0 5,565   18.7 64,790   6.3 54,659   5.6 10,130   18.5
                         
EBITDA 144,830 27.8 149,488 30.3 -4,659 -3.1 286,642 28.0 299,020 30.7 -12,378 -4.1
                         
Plus: Acquisition and organization expenses 9,138   1.8 3,742   0.8 5,395   144.2 15,644   1.5 6,189   0.6 9,455   152.8
                         
Adjusted EBITDA 159,782 30.6 156,971 31.8 2,810 1.8 310,034 30.3 311,060 31.9 -1,026 -0.3
                         
Estimate of impairment of financial assets -10,760 -  2.1 19,965   4.0 -30,725 -  153.9 -10,760 -  1.1 19,965   2.0 -30,725 -  153.9
AAP Termination of  Advisory Contract 26,160   5.0 46,890   9.5 -20,730 -  44.2 26,160   2.6 46,890   4.8 -20,730 -  44.2
Depreciation of fixed asset  81,717   15.7 62,183   12.6 19,534   31.4 164,259   16.1 126,482   13.0 37,777   29.9
EBIT (Operating income) 47,713 9.1 20,450 4.1 27,262 133.3 106,983 10.5 105,682 10.8 1,301 1.2
                         
Interest income 14,148   2.7 13,792   2.8 356   2.6 46,479   4.5 25,044   2.6 21,435   85.6
Interest expense 73,289   14.0 53,088   10.8 20,201   38.1 121,168   11.8 103,865   10.7 17,303   16.7
Effect of valuation of derivative financial instruments  -1,054 -  0.2 151   0.0 -1,205 -  796.4 -20,827 -  2.0 348   0.0 -21,175 -  6,082.4
Exchange rate loss (gain) -1,611 -  0.3 1,674   0.3 -3,284 -  196.3 -131 -  0.0 4,439   0.5 -4,571 -  103.0
Net income -10,871 -2.1 -20,369 -4.1 9,497 -46.6 11,599 1.1 22,769 2.3 -11,171 -49.1
                         
Other comprehensive income items:                        
                         
Reserve for valuation effect of derivative financial instruments 4,544   0.9 -12,137 -  2.5 16,681 -  137.4 -28,128 -  2.8 -22,648 -  2.3 -5,480   24.2
                         
Comprehensive income -6,327 -1.2 -32,506 -6.6 26,178 -80.5 -16,529 -1.6 121 0.0 -16,651 -13,756.7
                         
FFO 1 101,198 19.4 116,152 23.5 -14,954 -12.9 214,649 21.0 228,147 23.4 -13,498 -5.9
1 Funds from operations: Adjusted EBITDA plus Interest income minus Interest expense and Exchange rate fluctuation.                


Fideicomiso Irrevocable No. F/1616 (Deutsche Bank Mexico, S. A.      
Multiple Banking Institution, Trust Division) and Subsidiary  
Unaudited Condensed Consolidated Income Statements and of Other Comprehensive Income  
For the period from April 1 to June 30, 2018 and 2017 and for the accumulated of the year ended June 30, 2018 and 2017  
(Thousands of pesos)  
                         
Revenue from: 2T18 2T17 Var. Ps. Var. % Ac 2018 Ac 2017 Var. Ps. Var. %
Lodging 494,939 94.9 472,175 95.6 22,764 4.8 973,839 95.2 930,414 95.5 43,425 4.7
Property leases 26,802 5.1 21,519 4.4 5,283 24.5 48,800 4.8 43,729 4.5 5,072 11.6
Hotel factory   -    -    -    -    -    -    -    -    -    -    -    - 
Total revenue 521,741 100.0 493,694 100.0 28,047 5.7 1,022,639 100.0 974,143 100.0 48,497 5.0
                         
Costs and expenses from hotel services:                        
Lodging 132,094 25.3 121,070 24.5 11,024 9.1 259,036 25.3 239,827 24.6 19,209 8.0
Administrative 86,119 16.5 79,061 16.0 7,058 8.9 174,328 17.0 159,714 16.4 14,614 9.1
Maintenance 21,692 4.2 20,272 4.1 1,420 7.0 41,499 4.1 39,262 4.0 2,237 5.7
Electricity 30,537 5.9 30,996 6.3 -459 -1.5 56,648 5.5 58,339 6.0 -1,690 -2.9
Royalties 34,886 6.7 30,395 6.2 4,491 14.8 68,058 6.7 60,112 6.2 7,947 13.2
Advertising and promotion 25,459 4.9 27,576 5.6 -2,116 -7.7 51,819 5.1 53,354 5.5 -1,535 -2.9
Hotel factory 5,730 1.1 0 0.0 5,730   10,423 1.0 0 0.0 10,423  
Total costs and expenses of hotel services 336,518 64 309,369 62.7 27,149 8.8 661,812 64.7 610,607 62.7 51,205 8.4
                         
Gross margin 185,223 35.5 184,325 37.3 896 0.5 360,828 35.3 363,536 37.3 -2,708 -0.7
                         
Other costs and expenses:                        
Property tax 3,544 0.7 3,449 0.7 94 2.8 6,502 0.6 6,797 0.7 -296 -4.3
Insurance 1,455 0.3 1,557 0.3 -104 -6.6 2,893 0.3 3,060 0.3 -168 -5.5
Corporate administrative expenses 24,499 4.7 23,275 4.7 1,224 5.3 46,955 4.6 46,685 4.8 270 0.6
Acquisition and organization expenses 9,138 1.8 3,742 0.8 5,393 144.2 15,644 1.5 6,189 0.6 9,455 152.8
Others  -4,056 -0.8 -929 -0.2 -3,128 336.7 -5,557 -0.5 -4,066 -0.4 -1,489 36.6
Maintenance expenses 5,814 1.1 3,740 0.8 2,074 55.4 7,748 0.8 5,852 0.6 1,896 32.4
Estimate of impairment of financial assets -10,760 -2.1 19,965 4.0 -30,725 -153.9 -10,760 -1.1 19,965 2.0 -30,725 -153.9
AAP Termination of  Advisory Contract 26,160 5.0 46,890 9.5 -20,730 -44.2 26,160 2.6 46,890 4.8 -20,730 -44.2
Depreciation of fixed asset  81,717 15.7 62,183 12.6 19,534 31.4 164,259 16.1 126,482 13.0 37,777 29.9
Total other costs and expenses 137,511 26.4 163,873 33.2 -26,362 -16.1 253,844 24.8 257,853 26.5 -4,010 -1.6
                      0  
Operating income 47,713 9.1 20,451 4.1 27,261 133.3 106,984 10.5 105,682 10.8 1,302 1.2
                         
Interest income 14,148 2.7 13,792 2.8 356 2.6 46,479 4.5 25,044 2.6 21,435 85.6
Interest expense 73,289 14.0 53,088 10.8 20,201 38.1 121,168 11.8 103,865 10.7 17,303 16.7
Effect of valuation of derivative financial instruments  -1,054 -0.2 151   -1,205 -796.4 -20,827 -2.0 348 0.0 -21,175 -6,082.4
Exchange rate loss (gain) -1,611 -0.3 1,674 0.3 -3,284 -196.3 -131 0.0 4,439 0.5 -4,571 -103.0
Net income -10,871 -2.1 -20,369 -4.1 9,497 -46.6 11,599 1.1 22,769 2.3 -11,170 -49.1
                         
Other comprehensive income items:                        
Reserve for valuation effect of derivative financial instruments 4,544 0.9 -12,137 -2.5 16,681 -137.4 -28,128 -2.8 -22,648 -2.3 -5,480 24.2
Comprehensive income -6,327 -1.2 -32,506 -6.6 26,179 -80.5 -16,529 -1.6 120 0.0 -16,649 -13,870.4
                         


Fideicomiso Irrevocable No. F/1616 (Deutsche Bank Mexico, S. A.
Multiple Banking Institution, Trust Division) and Subsidiary
Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity 
From January 1 to June 30, 2018 and 2017
(Thousands of pesos)
                             
                             
          Contributed capital   Share-based compensation reserve   Reserve for repurchase CBFIs Property Revaluation Surplus Reserve for valuation
effect of derivative financial instruments
Retained earnings   Total trustors' equity
As of December 31, 2016   6,327,290   0   0 0 29,241 446,342   6,802,873
                             
Distribution to holders of CBFIs   -221,050                 -221,050
Reserve for acquisition of shares           245,000     -245,000   0
Reserve for share-based payments     38,006             38,006
Comprehensive income                  -22,648 22,768   120
As of June 30, 2017     6,106,240   38,006   245,000 0 6,593 224,110     6,619,949
                             
As of December 31, 2017   5,886,250   77,663   214,596 2,802,541 37,405 -390,741     8,627,714
Distribution to holders of CBFIs   -219,055                 -219,055
Expenses related to the subscription of equity issuance -5,083                 -5,083
Cancellation of repurchase fund            -176,950     176,950   0
Reserve for repurchase CBFIs           250,000     -250,000   0
Equity-settled share-based payments      2,222             2,222
Repurchase of CBFIs for payment of equity instruments      -1,087             -1,087
Repurchase of CBFIs             -92,538         -92,538
Reserve for share-based payments     17,275             17,275
Initial impact in the adoption of IFRS9               -29,968   -29,968
Comprehensive income                  -28,128 11,599   -16,529
As of June 30, 2018     5,662,112   96,073   195,108 2,802,541 9,277 -482,160   8,282,951
                             
                             


Fideicomiso Irrevocable No. F/1616 (Deutsche Bank Mexico, S. A.
Multiple Banking Institution, Trust Division) and Subsidiary
Unaudited Condensed Consolidated Statements of Cash Flows
For the period from January 1 to June 30, 2018 and 2017
(Thousands of pesos)
     
  2018 2017
OPERATING ACTIVITIES    
    1,000   1,000
Net income before taxes 11,599 22,769
Adjustments:    
Depreciation and amortization 164,259 126,482
Uncollectible accounts -10,760 0
Effect of valuation of derivative financial instruments  -20,827 0
Reserve for compensation payment due to termination of AAP 26,160 46,890
Debt interests 121,168 103,517
Gain on interests -46,479 -25,040
  245,121 274,619
     
Receivables and other accounts receivable 22,957 3,907
Related parties -14,395 -7,050
Advanced payments -10,421 -15,664
Recoverable taxes 31,473 103,312
Suppliers and other payables 43,140 7,681
Payable taxes -1,722 2
     
Net cash flows generated by operating activities 316,152 366,806
     
INVESTING ACTIVITIES    
     
Acquisition of property, furniture and equipment -257,615 -223,470
Prepaid property acquisitions  -79,021 0
Acquisition of intangible assets 3,305 -11,263
Gain on interests 46,479 25,040
Loan granted to related parties 3,931 0
     
Net cash flows utilized in investing activities -282,921 -209,692
     
FINANCING ACTIVITIES    
     
Loans received 200,000 0
Interests related to bank debt  -916 0
Expenses related to equity issuance -5,083 0
Repurchase of CBFIs -91,403 0
Distribution to holders of certificates -219,055 -221,050
Debt issuance amortization 112,350 18,723
Debt issuance interests -44,195 -108,150
     
Net cash flows generated by financing activities -48,301 -310,477
     
Net cash flows of the period -15,070 -153,363
     
Cash and cash equivalents at the beginning of the year 507,986 849,077
     
Cash and cash equivalents at the end of the year 492,915 695,713
     


   
In Mexico:
In New York:
Lizette Chang, IRO Maria Barona / Melanie Carpenter
Fibra Inn    i-advize Corporate CommunicationsIn Mexico:           
Tel. 52-1-81-1778-5926    Tel. (212)406-3691
lchang@fibrainn.mx    mbarona@i-advize.com
   


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