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FibraHotel Leads REIT Drop as Dividends Lag: Mexico City Mover

Concentradora Fibra Mexicana Hotelera SA (FIHO12) led a retreat of Mexican real-estate trusts on concern higher interest rates will diminish their appeal as income-producing investments while boosting financing costs.

FibraHotel, as the lodging company is known, fell 3.9 percent to 21.21 pesos at 2:35 p.m. in Mexico City, the biggest drop since its initial public offering in November. Fibra Uno Administracion SA (FUNO11), Mexico’s first and biggest real estate investment trust, fell 1.6 percent to 37.58 pesos. The country’s benchmark IPC index declined 1 percent.

Mexican real-estate trusts, known as Fibras, had become the fastest-growing asset class in the Latin American nation as investors sought access to the property market. Demand waned as surging government bond yields made the Fibras’ dividends less attractive, according to Marco Medina, an analyst at Grupo Financiero Ve Por Mas SA.

“The correction we’ve seen in these issuers has to do in a big way with the performance of rates,” Medina said in a telephone interview from Mexico City.

Yields on the Mexican government’s 10-year bonds denominated in pesos reached a 19-month high of 6.37 percent this week. At current market prices, Fibra Uno offers a 12-month dividend yield of about 4.3 percent, according to data compiled by Bloomberg.

Two other Fibras declined. Asesor de Activos Prisma SAPI decreased 2.1 percent to 17.40 pesos while Mexico Real Estate Management SA fell 0.6 percent to 22.65 pesos.

To contact the reporter on this story: Jonathan Levin in Mexico City at jlevin20@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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