FibraHotel strives to be dominant Mexican owner
 
FibraHotel strives to be dominant Mexican owner
19 MARCH 2019 7:41 AM

FibraHotel Chief Investment Officer Guillermo Bravo believes his company is well on its way to being the undisputed top hotel ownership group in Mexico.

MEXICO CITY—Guillermo Bravo, chief investment officer for FibraHotel, said the blueprint for what his company wants to be has already been set.

Simply put, its goal is to be Mexico’s equivalent to Host Hotels & Resorts.

As one of Mexico’s two hotel-focused FIBRAs—the country’s version of real estate investment trusts—FibraHotel aims to emulate the scale and quality of Host’s portfolio, Bravo said, but the road to that point is long and winding.

“We have the biggest portfolio (of hotels) in the market for investors, and we’re in a good position to maximize value at the edges of the portfolio,” he said.

FibraHotel currently has 85 properties with roughly 12,300 rooms, as well as a 255-room property currently under development. Those numbers aren’t quite on par yet with Host’s more than 52,000 rooms, but Bravo said he’s pleased with the progress FibraHotel is making.

“I think we’re a good ways along, but we’ll need more size to get there,” he said. “But I’m proud to say if someone were to come to Mexico, we’re where you’d want to have your money invested in hotels.”

Slowing investment
Bravo said FibraHotel just completed a wave of hotel development, but that pace is likely to slow in the near future because the company’s stock is currently trading at a discount to its net asset value.

He said the hotel sector has been hit by the volatility of the Mexican economy in the short term.

“We’re trading at a big discount to private transactions,” he said. “And things won’t be clear until the private market comes down or the public market comes back up. But at some point, things are going to normalize.”

In Mexico, FIBRAs often develop their own properties, unlike REITs in the U.S. and other countries that are more apt to buy established hotels. Bravo said he would prefer to buy rather than build, but there is currently a dearth of REIT-quality hotels on the market in the country.

“We definitely prefer to see people come to us with assets with established cash flow, and we believe we’ll start to see that more as the market gets more liquid,” he said.

In the near term, Bravo said his company will be primarily focused on making investments in its existing portfolio.

Long-term growth
FibraHotel was once privately owned, but went public as a FIBRA with 17 hotels. Since then, the company has grown its portfolio in both size and quality, Bravo said, and it continues to seek better representation and diversity in brands and markets.

The company currently works with mostly Marriott International and Grupo Posadas brands and has historically been more focused on business-oriented hotels. But Bravo said FibraHotel executives have worked to add more resort properties, which he said will be key to the company’s growth as international travel to Mexico’s primary leisure destinations continues to grow.

“We like our diversification,” he said. “We think it’s the right mix to have.”

He said FibraHotel would like to add another international operator to its brand portfolio in the long run. The company previously worked with Starwood Hotels & Resorts Worldwide before that company was acquired by Marriott.

Bravo said he remains a “firm believer” in the long-term growth prospects of the Mexican hotel industry.

Mexico “offers a very compelling story and value proposition to customers,” he said.

He also said FibraHotel is well-positioned in terms of debt. While the company maintains good access to capital, he noted it carries less than 20% of the company’s asset value in debt.

“We don’t like to have high leverage,” Bravo said. “We try to stay below 30%.”

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