According to Jones Lang LaSalle’s Mexico Hotel Intelligence Report, Fideicomiso de Inversión en Bienes Raíces (FIBRAs)-new financial vehicles available to hotel investors in Mexico are giving more liquidity to international property investors. Hotel investment in Mexico is expected to rise in the next two years due to this liquidity, along with stronger economic environments in both the U.S. and Mexico.
In 2013, the Mexican hotel market will benefit from the FIBRAs⎯⎯which act similarly to the real estate investment trust (REIT)s in the U.S. that offer tax-favorable investment structures. FIBRA Hotelera Mexicana and Fibra Inn are the country’s first two FIBRAs that focus exclusively on Mexican hotel sector investments.
“FIBRAs offer a strong investment play for the hotel investment market in Mexico. These serve as a tool for domestic and international investors and institutional capital to funnel money into the hotel sector,” says Clay Dickinson, executive vice president of Jones Lang LaSalle’s Hotels & Hospitality Group. “More capital means hotel asset prices will likely increase fueling more transaction activity through FIBRAs, while freeing up banks to redeploy capital as these loans are repaid.”
Another emerging public investment vehicle is the Certificados de Capital de Desarrollo (CKDs). This structure allows investors to participate in private equity projects through long-term public funds.
Jones Lang LaSalle’s report outlines additional impacts from these new vehicles on three major Mexican hotel markets, including Mexico City, Cancun and the Riviera Maya, and Los Cabos.
According to the U.S. Department of State, the resort areas and tourist destinations in Mexico generally do not see the levels of drug-related violence and crime reported in the border region and in areas along major trafficking routes. Lodging performance indicators support a strong lodging performance reality, since RevPAR and ADR levels have increased in all three of the major markets.
