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Operator: Ladies and gentlemen, thank you for standing by. My name is Colby, and I'll be your conference operator today. At this time, I would like to welcome you to the FIBRA Prologis Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I will now turn the call over to Alexandra, Head of Investor Relations. You may begin.
Alexandra Violante: Thank you, Colby, and good morning, everyone. Welcome to our fourth quarter and full year 2025 earnings conference call. Before we begin our prepared remarks, please note that all information disclosed during this call is proprietary and all rights are reserved. This material is provided for informational purposes only and is not a solicitation of an offer to buy or sell any securities. Forward-looking statements made during this call are based on information available as of today. Our actual results, performance, prospects or opportunities may differ materially from those expressed in or implied by the forward-looking statements. Additionally, during this call, we may refer to certain nonaccounting financial measures. The company does not assume any obligations to update or revise any of these forward-looking statements in the future, whether as a result of new information, future events or otherwise, except as required by law. As is our practice, we had prepared supplementary materials that we may reference during the call as well. If you have not already done so, I will encourage you to visit our website at fibraprologis.com and download this material. On today's call, we will hear from Hector Ibarzabal, our CEO, who will discuss our strategy and market conditions; and Roberto Girault, our CFO, who will review results and guidance. Also joining us today is Federico Cantu, our Head of Operations. With that, it's my pleasure to hand the call over to Hector.
Hector Ibarzabal: Thank you, Violante, and good morning, everyone. 2025 marked the first complete year with Terrafina fully reflected in our numbers. And once again, we delivered excellent performance. This year, we successfully acquired more than 99% of Terrafina. And last week, we completed its delisting fully aligned with our original plan. We issued our first international bond, achieving the tightest spread ever for FIBRA, a strong validation of our credit quality and balance sheet strength. We delivered solid operational and financial results, maintaining high occupancy levels and capturing meaningful rent growth on rollover. Jorge will provide further details shortly. Last quarter, we noted that if tariff uncertainty continues, companies would still need to move forward to serve their end market. That is exactly what we are seeing. Customers are maintaining and, in some cases, expanding their operations with an important long-term conviction. This is reflected in the strong retention we had for the full year, a weighted average lease term of over 5 years and an expansion driven leasing activity in Guadalajara, Reynosa and Monterrey. Mexico City and Guadalajara remain our strongest markets, supported by domestic consumption. We saw particularly strong activity from 3PLs, electronics, retail and e-commerce customers. In the border markets and Monterrey, demand remains concentrated in logistics, electronics, furniture and home goods. From an industry standpoint, new leasing activity totaled 11.9 million square feet up from 10 million last quarter and above the 8.6 million of the last 12 months. Mexico City led with an outstanding 6.1 million square feet while the rest of our markets performed broadly in line with recent averages. Net absorption reached 8.3 million square feet, slightly above the $8.1 million recorded in the third quarter as Tijuana returned to positive absorption. New supply remained elevated at 11.8 million square feet, primarily driven by Monterrey. This led to vacancy across our markets increasing 80 basis points to 6%. Construction starts declined to 6.7 million square feet with virtually no new starts in the border markets. Developers appear to be adjusting appropriately to current supply conditions, which should help rebalance markets going forward. In terms of rents, manufacturing markets experienced modest declines, while consumption-driven markets continue to post high single-digit annualized rent growth reinforcing the strength of domestic demand fundamentals. The path ahead may include volatility, but we remain constructive on Mexico's long-term outlook. The country's and strategic role within North America supply chain, combined with the structural nearshoring trends and resilient domestic consumption continues to support demand for high-quality logistics real estate. We remain focused on disciplined execution, maintaining a strong balance sheet and driving sustainable rent revenue growth. With that, I'll hand it over to Jorge.
Jorge Girault: Thank you, Hector, and good morning, everyone. Despite regional uncertainties in the context of the USMCA, we delivered a strong quarter and an outstanding year. We grew earnings, maintain high occupancy and further strengthened our balance sheet. In December, we reached 99.8% ownership of Terrafina. And last February 18, we received authorization to cancel its CBFIs. Terrafina is now fully integrated into FIBRA Prologis. This will enhance our scale, liquidity and efficiency, generating synergies that benefit -- that will benefit our holders. Moving to our financial results. FFO was $94 million in the quarter and $376 million for the year or $0.2339 per certificate, up 20% year-over-year. This reflects the Terrafina acquisition and our ability to capture rent to market. AFFO totaled $64.4 million for the quarter and $307 million for the year, up 36%, a record and clear evidence of the strength of our platform. Let me go to the operational fundamentals. We leased 2.2 million square feet during the quarter. Our occupancy average and period end was approximately 97%, in line with expectations. Net effective rent change on rollover was almost 65% in the quarter and 59% for the last 12 months. Same-store cash NOI grew -- growth was 9.4% and GAAP almost 14%. This is a result of capturing markets and market rents as lease roll over, supported by annual escalation and stronger peso. Turning to the balance sheet. We continue to operate with a conservative financial profile. For example, late in '25 and early this year, we issued two $500 million international bonds. Both transactions priced below Mexico sovereign and were significantly oversubscribed, which marks an important milestone. I'm proud and humbled by these results. Not many publicly traded companies in Mexico have achieved something of this nature, certainly not in the FIBRA sector. Proceeds were used to refinance short-term debt and repay Terrafina's bond resulting in a debt neutral transaction. As a consequence, we're maintaining a healthy loan-to-value, extended debt maturities and preserve strong credit metrics. With Terrafina full integrated, we now have greater financial flexibility and enhanced liquidity while remaining disciplined on leverage. Moving to 2025 taxable distribution. Taxable income increased materially during 2025 due to inflation and FX appreciation. As a result, we distributed more than twice our guided amount. The guided portion was paid in cash and the remainder in kind through CBFIs, fully complying with FIBRA requirements. Now let me move to guidance. Looking ahead and based on current visibility, we expect year-end occupancy between 96.5% and 98.5%. Same-store cash NOI growth between 9% and 13%, annual CapEx between 10% and 12% of NOI. G&A expense between $65 million and $70 million. Full year FFO per CBFI to be between $0.24 and $0.26. We are setting our guided distribution per CBFI at $0.17 which represents more than a 13% increase when compared to our 2025 dividend guidance. We expect $200 million to $500 million in acquisitions while maintaining balance sheet discipline. On the disposition front, we will continue to execute our strategy by exiting noncore markets on our own terms and at the right time. As a result, we will not provide guidance on disposition. I want to emphasize that our strategy remains clear. We are focused on delivering long-term value, executing with discipline and leveraging our position as Mexico's largest industrial FIBRA by market capitalization, supported by a strong balance sheet and world-class platform. I want to thank our teams on the ground and across Prologis for exceptional work on strengthening the balance sheet while maintaining operational excellence. I'll now pass it to Hector for closing remarks.
Hector Ibarzabal: Before closing, I would like to address our previously announced management succession. As you know, in early January, we announced my retirement as CEO of FIBRA Prologis, effective June 30. Jorge, our current CFO, will assume the role of CEO. This succession plan has been thoughtfully developed over time, and I have full confidence in his leadership, strategic clarity and deep understanding of our business. Alexandra, currently our Head of Investor Relations, will step into the CFO role. She brings a strong financial expertise and capital markets experience, ensuring continuity and discipline in our financial management. This transition reflects the depth of our team and the strength of our organization. You should expect seamless execution and continuous focus on long-term value creation. Finally, I want to thank our team, our customers and our shareholders for their continued trust and partnership. It has been an honor to lead this company, and I remain fully confident in its future. Now let me open the floor for Q&A. Operator, please go ahead.
Operator: [Operator Instructions] Your first question comes from Adrian Huerta with JPMorgan.
Adrian Huerta: Hector, best wishes on whatever you do, and thank you very much for all these years -- in the future and congrats on the rest of the team. For Jorge and Alexandra. My question has to do with the maintenance cost. We saw a large increase in the quarter and overall in the year, they were significantly higher than what they were in 2024. Any color on this line and what we should expect going forward?
Federico Cantú: Adrian, this is Federico Cantu. Thank you for your question. So if you look at the numbers, we had increases in operating and maintenance costs, primarily driven to -- by inflation and wage increases. We also had property taxes increase, which are noncontrollable. If you look at for the full year, we came out at 87%, and we expect going forward to be in terms of our NOI margin between mid-80s to upper 80s in terms of margin.
Operator: Your next question comes from Pablo Ricalde with Itau.
Pablo Ricalde Martinez: I have 1 question on the CapEx line. We saw -- I think this quarter. I did want to see how should we see that line going forward? I know there was an issue with the core assets and assets related to Terrafina, but I just want to understand further how should this line going forward.
Federico Cantú: Okay. So thank you, Pablo, for your question. This is Federico. So we did have, towards the end of the year, a catch-up in the property improvement investments, plus we had higher TIs and leasing commissions, primarily driven by increased leasing activity in the second half of the year. However, I'd like to encourage you to look at the full year, the trailing fourth quarter average, which came out to 10.7%, which is in line with our expectations.
Operator: Your next question comes from the line of Andre Zini with Citigroup.
André Mazini: Yes. Congrats Jorge and Ale on the new roles and Hector, I know we have at least 1 more earnings call but really hope to keep interacting after that. So the question is on the geographical breakdown of the $200 million to $500 million acquisition guidance, if you could pretty much guide us to where you think you're going to be deploying this capital in terms of geography, maybe the recent events around Guadalajara and that region change anything? And is the breakdown in manufacturing in logistics. And in this point, given all the trade volatility, is it fair to say that you guys are more excited with logistics over manufacturing or not necessarily?
Hector Ibarzabal: Thank you very much, Andre. Going forward, as you know, we have full visibility to -- about what PLD is developing. The most important market today, as I mentioned, in my opening remarks, is Mexico City, where, by the way, and it's not a coincidence, we have our largest exposure. So most of the opportunities are coming from Mexico City market, particularly in Toluca, where we are having a very successful development going on. Talking about the future, I'm very comfortable because the sentiment that we received from our customers in the border is not negative. Our customers keep on operating business as usual. There's very isolated cases of companies shutting down, but that's far away from being a trend. I would highlight that most of our customers are expecting positive news by the end of the second quarter on the USMCA renegotiation, but the leading companies are already commencing to start operations, understanding that uncertainty on this regard might be a constant going forward. So we are very positive about the fundamentals. The fundamentals is still very solid. And the conversations that we have with the authorities make us be optimistic as well on a final resolution. Guadalajara is a market that we like a lot. And it's a market where we are focusing potential future acquisitions.
Federico Cantú: Just if I may add, to your question, Andre about manufacturing and logistics. So if you think about our business, roughly half of it is manufacturing, half is logistics. During last year, we had about 1/3 of our transactions for manufacturing and 2/3 logistics. And bear in mind that we design our buildings to be agnostic so we can have our users, our customers use them for logistics or manufacturing and so we like them both, and we feel very positive going forward on both sectors.
Operator: Your next question comes from the line of David Soto with Scotiabank.
David Soto Soto: Just a quick one regarding to your acquisition guidance. Should we expect a larger share of the transaction to come from third-party acquisitions? Or should we expect a higher portion from your parent company?
Hector Ibarzabal: Thank you, David. We have much better visibility to what is happening on what PLD is developing and we know for sure what is going to be happening on that regard. On the third-party front, we are permanently looking for our potential opportunity that would help us to create value. When we buy from third parties, it's not the objective of trying to be bigger or trying to have a higher penetration. When we buy from third parties it is because we are positive that with that acquisition, we will be creating value. In other words, we buy high-quality real estate and such quality of real estate need to be at the right price in order to be something of our target investments. For us, it's always the most difficult part of our guidance, try to anticipate how many of these opportunities are going to be finalizing on FIBRA Prologis. But we are positive because we know for sure the different opportunities that will be out of the market and understanding the low cost of capital and the very precise view that we have on the potential behavior of our markets going forward, we feel positive that we will be able to land some of those opportunities with us.
Operator: Your next question comes from the line of Jorel Guilloty with Goldman Sachs.
Wilfredo Jorel Guilloty: So I wanted to focus on the acquisition and disposition guidance. So just to understand you have $200 million to $500 million in acquisition guidance, but you have 0 for disposition. So I was wondering, what makes 2026 more of an acquisition market year for you versus a selling market for you? Is it that there's more attractive acquisition pricing versus disposition? Is it due to, I guess, better visibility of what's coming to market from potential sellers versus the possibility of buyers. Just trying to understand why you have -- which is quite different from where we were, I guess, at the very beginning of last year, where we have an acquisition disposition guidance that was sort of balanced out.
Hector Ibarzabal: Yes. Thank you, Jorel. And let me start by the disposition front. As I mentioned in my opening remarks, this is the full year where we have all the numbers in Terrafina incorporated in our P&L. I need to mention that it's not a surprise, but we are very pleased with the performance that such assets has -- they have had with us. The disposition portfolio that we have has importantly increased above 30% on all the renewals that we have had, and its vacancy has been above what we were expecting. We tried to launch the first dispo portfolio last year, and I think that we learn a lot from that process. Our dispo strategy is more regional and being a regional strategy, we need to do a better job on sizing such portfolios. In other words, we are positive about the quality of the properties that we are selling. Number two, we have no urgency to sell those properties because we know today better than ever the quality and the value that those properties have. This is why we are not guiding on dispositions. We will sell the properties at the right timing and in the right conditions. And in the meantime, it's going to be positive for a P&L to keep those assets on board. We are showing that we have good performance on operating those properties, and we will keep on doing them until we reach the right conditions in order to sell them. Talking about acquisitions, through PLD, we have full visibility on replacement costs as of today, and we have full visibility as well on market trend conditions. We have very strong information about the forecast that we do see on market threats. The combination of all these with a low cost of capital, allow us to be a very competitive buyer for the different opportunities that might arise in the market. We anticipate that there's going to be 3 or potentially 4 different sectors that are going to be getting maturity on this year and some of they have interesting properties that eventually we will be analyzing and if we reach the right price and the right conditions, we will be executing on them.
Operator: Your next question comes from the line of [ Jorge Vargas ] with GBM.
Unknown Analyst: Thank you for the call. You achieved nearly 40% rental spreads in the quarter, with vacancy trending upwards and rent growth moderating, what is a sustainable spread assumption for 2026 and 2027.
Jorge Girault: Thank you, Jorge, this is Jorge Girault. Your question, if I heard it right, I have to do with late spreads for '26. That was your question. We don't guide on -- necessarily on rent spreads. What we tell you is where our mark-to-market is today. And you're right, in some market trends have come down, but we still have a nice spread in those mark-to-market spread. Overall, for the whole portfolio on a weighted average basis is around 40%, a little bit less than that, but we feel comfortable to capture that spread during 2026. What will be? It depends on the market, the tenor of the contract, et cetera. But the short answer to your question is we will have -- we do see a nice mark-to-market lease roll during 2026.
Federico Cantú: And if I may add, just would like to highlight the remarkable job that our teams on the ground do every day and taking advantage of our location, the quality of our properties, the quality of our service as well and making sure that we're marking to market and then we're capturing the highest value -- providing the highest value for our customers. So that is something that we'll continue to do. And we expect, despite the challenges in some of our markets to be able to capture good leasing spreads.
Operator: Your next question comes from the line of Alan Macias with Bank of America.
Alan Macias: Congratulations for the new positions. Just on funding for acquisitions, what should we be thinking about what level adjusted FFO payout ratio? And what leverage target would you be willing to reach if you do not do any dispositions of assets during the year?
Jorge Girault: This is Jorge. Look, what we have said in the past is our loan-to-value, our feeling, it would be 35%. Right now, we're in the mid 20. We have just above $1 billion of capacity on the line. We still have $1 billion. We will use the line for any acquisitions that may come during the year. And we have many levers to pull down the road. If we do some dispositions, obviously, we can use part of those proceeds to do these acquisitions. So there are many levers. I can tell you that the balance sheet has the liquidity and the strength today to take care of at least the guidance that we have in place.
Operator: [Operator Instructions] And with no further questions in queue, I'd like to turn the conference back over to Hector Ibarzabal, CEO, for closing remarks.
Hector Ibarzabal: Thank you very much, everyone, for your time devoted to our call this morning. I am very excited about what we have achieved so far, and I'm convinced that the best is yet to come. Our current foundation will bring amazing opportunities going forward. Rest assured that we will remain focused on creating value for our investors. Talk to you in the next opportunity. Thank you.
Operator: This concludes today's conference call. You may now disconnect.