Logistic Properties of the Americas Water Tower Research Virtual Insights Conference

of the WTR Insights Conference featuring Logistic Properties of the Americas. I'm Eric Goldstein, Managing Director of Mobility and Industrial Technology for Water Tower Research, and I will be your host today. We are pleased to be joined by Esteban Saldarriaga, Chief Executive Officer of Logistic Properties of the Americas, and Paul Smith, who is the company's Chief Financial Officer. Esteban and Paul, welcome, and thank you for being here.

Thank you for having us, Eric. It's a pleasure for LPA to join you today.

Before we begin, please note that Logistic Properties of the Americas' safe harbor statements can be found on the Investor tab on their website. Investors are encouraged to enter questions in the chat. We'll aim to answer these questions during today's conversation or in the management series report that will follow. Investors interested in scheduling a meeting with the company can indicate that interest within the conference portal. For investors not familiar with the company, Logistic Properties of the Americas is a leading developer, owner, and manager of institutional-quality industrial and logistics real estate in high-growth and high barrier to entry markets in Latin America. The company's customers are multinational and regional e-commerce retailers, third-party logistic operators, business-to-business distributors, and retail distribution companies, among others. With those housekeeping items covered, let's jump right into it, guys. The company has had some really great operating momentum.

You have continued to deliver strong results with the portfolio fully occupied and rental rates and same-property NOI continuing to grow. What is driving that strength, and what does it tell you about the underlying supply and demand environment for institutional quality logistics real estate across your markets?

Sure, Eric. Going straight to the heart of your question, we think three things are compounding at once, and that together make for very fertile ground. The first one is supply is relatively muted. We see few new buildings coming online. The second one is demand, and it is broad based, and it sits in the essentials categories. Our tenants are consumer, e-commerce, logistics themes that keep growing. Third, I would say more recently, we are now seeing early green shoots in the industries that feed AI. That is a reality, and it is becoming an additional source of demand for the asset class. Meanwhile, supply chains are being redrawn, and there is a genuine race between East and West with regard to tax, so institutional quality space is genuinely scarce. You can see it in our numbers. We are 100% occupied for the third quarter running.

Rents per square foot are up 10%. Same property NOI is up almost 16%. The story is quite simple. These are undersupplied markets with real pricing power, and we are in the right side of that equation.

Okay, that is great. Thank you. You mentioned pricing power, so I guess we will jump into that a little bit more. Your average rent per square foot increased 10% year-over-year in the second quarter, which is a pretty impressive number, while release spreads have remained healthy. As you look across the portfolio, where are you seeing the greatest pricing power, and how much additional opportunity remains to be captured to capture higher rents as leases renew?

Great. We see it as the most prevalent where real estate supply is tightest and our in-place rents are still below market. Mexico is in the early innings for us, so right now in our current portfolio, I would highlight that Peru is the clearest case. Revenue grew there more than 50%. Again, few buildings coming in line with institutional standards, and that is why we now have PepsiCo, for example, as a customer. It is a tenant there. I would say also that Colombia is close behind, up almost 30%. Those are the markets where we have the most room to move. Paul, I will transition over to you.

Yeah. There's still a lot of room left for growth, Eric. Our leases normally step up every year on their own. What happens is when they roll, we typically release at today's market, which is typically higher, and it's basically resulting from all the factors that Esteban already mentioned. Leases start at 7 to 10 years, and the portfolio now averages about 4.5 years of unexpired term. A good slice reprices every single year. That 10% is not a one-time bump. It's a steady multi-year tailwind.

Okay, great. Thank you. You guys recently announced a divestiture. The pending $145 million sale of Parque Logístico Lima Sur seems like a very important milestone for the company and demonstrates the ability to develop, stabilize, and then potentially monetize a high-quality logistic asset. What does that transaction say about the value embedded in the broader portfolio and your ability to fully cycle development, your development capabilities to fully cycle your assets?

The recent sale of the Peruvian asset, Eric, really epitomizes the whole platform model and the capabilities that we have in one take. We sourced the land, we built the park, we leased it, we stabilized it, we funded and financed it. Now we have agreed to sell it to Peru's leading REIT for $145 million, as you rightfully point out. That is a third party putting an institutional price on the work that we did across the full life cycle of the asset, at slightly above a 7% cap rate. In a market that had no institutional offering at all, that really is highly relevant. We really want to stay on as the operator, we want to make the handover easier for the buyer. We want to keep earning fees, and we want to stay in front of our tenants or our customers.

To date, this would be our largest exit so far, and we think it provides concrete evidence that the value we carry on our books is tangible.

Yeah. Paul, I guess, can you remind us maybe just how your accounting works, how you are marking your assets to market pretty much every quarter, and then the gain that you saw roughly on this asset sale?

Absolutely. We do report under IFRS, and under IFRS rules, the International Standard of Accounting. We get to recognize the market value of our assets on a quarter-by-quarter basis. It is important to remind, Eric, that the valuation is not a number that we came up with. This is derived from a report from a third-party independent valuation firm that provides that service for us. What Esteban was alluding to is the 22% gain that we have over our book value of this property was basically recognized with this transaction. So that shows you that the revaluation to market that we have on our books is done conservatively. But it is reflecting the increased value that appraises every quarter, from the factors that Esteban already alluded to regarding the growth of our rents and the growth in our NOI.