Logistic Properties of the Americas 2026 Q2 Earnings Call

Please go ahead. Welcome to LPA's second quarter 2026 earnings conference call.

My name is Camilo Ulloa, with LPA's Investor Relations team. Joining me on today's call are Esteban Saldarriaga, our Chief Executive Officer, and Paul Smith, Chief Financial Officer. Before we proceed with a review of LPA's financial and operating results, please note that the information presented during this call is intended for informational purposes only and does not constitute an offer to buy or sell any securities. Forward-looking statements made during this call are subject to a number of risks and uncertainties, which are discussed in LPA's filings with the SEC. We undertake no obligation to update or revise any forward-looking statements after this call. We have prepared supplemental materials that we may reference during the call.

We encourage you to visit our website, ir.lpamericas.com, to download these materials. Please also note that all comparisons that we will discuss during today's call are year-over-year, unless we note otherwise. Esteban will begin today's review.

Esteban, please go ahead. Good morning, and welcome, everyone.

Thank you for joining us. This was a breakthrough quarter for LPA in terms of both our financial results and the strategic steps we took to crystallize value and position our platform to build an exciting growth pipeline for 2027 and beyond. I am pleased to report that we extended our strong momentum in the second quarter, while once again outperforming our peers on occupancy, which held at 100% across our regional logistics platform. Revenues materially accelerated again, increasing 26.1% year-over-year, led by Peru and Colombia, where rental revenues increased 50.4% and 29.3%, respectively. In Costa Rica, revenue grew 5.6%, reflecting a fully stabilized operation within LPA's portfolio. Our additional progress was driven by strong leasing activity and occupancy at our newest facilities, together with rising market rents that we captured through renewals, expansions, and re-leasing.

NOI growth was equally strong, increasing 27%, with same property NOI up 14.5%. The sustained growth in our profitability was thanks to the exceptional customer service we provide and the pricing power that our advantageous market position and strong brand afford us, both reflected in still rising average rent per square foot, which increased 10%. Also driving profitability was our operating leverage, which is gradually improving as we scale our platform across the four countries we operate in. In addition to our strong financial and operating results, the second quarter marked a major strategic milestone with the divestment of our Lima Sur Park in Peru for $145 million, representing an in-place cap rate of approximately 7%. In line with our strategy and the repositioning of our business, we will allocate almost all of this transaction's net proceeds into the expansion of LPA's footprint in Mexico.

That is roughly $65 million after repaying approximately $60 million of debt and paying capital gains taxes. Selectively taking profits from stabilized, seasoned assets like Lima Sur and allocating the resulting capital into properties that generate high returns is a distinct advantage of being a multinational, vertically integrated real estate company. It enables LPA to capture the strategic benefits of a balanced and diversified portfolio, while also opportunistically capitalizing on different phases of each country's real estate cycle, rather than being beholden to a single set of economic events in one geography. It is also a new and proven lever of value creation within our core business. Put another way, the monetization of our Lima Sur Park represents a successful round trip across the entire real estate value chain, from greenfield development to leasing, stabilization of a meaningful part of our portfolio.

It is the first of several potential transactions and partnerships to come in the years ahead, followed by reinvestment to create a virtuous cycle of value creation for our fellow shareholders. This will also make LPA more capital light in our foundational markets as we realign our balance sheet more towards Mexico while keeping the vast majority of our assets U.S. dollar denominated and transitioning to a more capital-efficient business model. It is important to note that we sold Lima Sur at roughly 18% above its independently appraised carrying value in our books. That premium and the cap rate behind it are hard and clear evidence of our ability to execute on what we have set out to do with discipline and resolve. Keenly aware of the verifiable underlying value of our assets and their operating platform that has just begun to bear fruit.

We trust this evidence will not be lost on the market, and that it sheds more light on the considerable dislocation between our current public share price and the hard asset value of our company on a book value per share basis. For reference, at the end of the second quarter, that intrinsic value, net of capital gains tax, stood at $8.62 per share, an increase of 16% year-over-year and 8.2% sequentially. Moreover, in our view, this figure excludes the value of the operating platform itself, which we think should sit on top of any fair appraisal of the hard assets underpinning LPA's business. The Lima Sur transaction also reflects the attractiveness of our facilities to institutional third parties, such as FIBRA Prime, the preeminent REIT in this geography.

Furthermore, our agreement with FIBRA Prime gives LPA the option to repurchase the park 4 years after closing the current sale. Optionality like this is yet another way that we are creating long-term shareholder value. The monetization of Lima Sur has also served as a springboard for the strategic alliance that we have formed with Prime, which owns a diversified and stabilized portfolio of commercial real estate in Peru. Our alliance contemplates similar transactions that strategically combine LPA's strong development and operational capabilities with Prime's local and institutional capital base to further exploit Lima's under-penetrated logistics property market. As a reminder, through the alliance, LPA will manage and operate Lima Sur on behalf of Prime, generating ongoing fee income in the process. As the park's operator, we retain control and will continue maintaining tenant relationships and delivering service excellence.

As we have emphasized in prior calls, shifting our portfolio center of mass towards Mexico is a key component of our strategy, enabling us to tap this substantially larger and dynamic industrial real estate market, to further diversify and rebalance our property portfolio and tenant base, and to strengthen LPA's unique cross-bordering offering to global and regional companies. More specifically, our goal in Mexico is to earn higher risk-adjusted returns and further capitalize on our platform's underlying value. We will redeploy capital from the divestment of Lima Sur into our acquisition pipeline, starting with a programmatic purchase agreement for Central Park 57 Class A facilities, which are located in a key logistics corridor of the Greater Mexico City area.

As we have highlighted in the past, the properties that we are set to acquire from Fortem Capital over the next 12-18 months, under that $200 million agreement, will comprise stabilized assets, effectively eliminating the risks associated with developing and leasing up facilities. The remainder of the financing will come from local debt and equity partners. Several prospective partners have already expressed interest, and we still have equity allocations available for additional third parties who want to participate in this park. By way of an update, we've recently appointed a leasing manager to further accelerate the stabilization of the park's facilities. He previously held senior roles in real estate advisory and brokerage, brings over 30 years of experience in the Mexican market, and has deep relationships with blue-chip companies across the country.

To give context to the Central Park 57 purchase program, the 2.1 million square feet represents approximately 34% of our current GLA. Within 2-3 years, we anticipate Mexico will be home to more than 50% of LPA's property portfolio. Based on our current opportunity set, which is about $1 billion of facilities located in key logistics corridors surrounding major metropolitan areas, and those along Federal Highway 57D. There, we intend to deploy capital at cap rates of 8%-9%, depending on the quality of tenants and lease agreements in place. Beyond redeploying the capital freed by asset divestitures, we will fund our broader expansion with a similar mix of conventional bank debt and local equity capital, as we have done successfully in the past.