Opportunities in Mexico

Real Estate Forum 2013

Global Property Market

Toronto, Canada December 2013

Agenda Mexico Fundamentals Opportunities Representative Transactions

Mexico Fundamentals – Low Debt-to-GDP

Source: International Monetary Fund (IMF)

Government Debt-GDP

Mexico’s Debt-to-GDP is 44% (US-106%, Canada- 87%, EU- 90%, Brazil – 67%)

Mexico Fundamentals – Controlled Inflation = Stable Peso

Source: Bloomberg, IMF, Banco de Mexico

Source: Bloomberg

Controlled Inflation

Peso Stable as Signs of Fed QE Tapering Emerge

Mexico Fundamentals – Low Unemployment

Source: International Monetary Fund (IMF), World Economic Outlook Database, Sep 2011. The IMF estimates final figures for 2011 and forecasts thru 2016. Note: * Latin America & Caribbean

Mexico has one of the lowest unemployment rates in the region, generally between 4.5%-5.5%.

Mexico Fundamentals – Diversified Trade Platform

Source: International Monetary Fund (IMF), World Economic Outlook Database, Sep 2011. The IMF estimates final figures for 2011 and forecasts thru 2016. Note: * Latin America & Caribbean

12 free trade agreements (FTA) with 44 countries—more than any other nation in the world

Mexico Fundamentals – Mexico vs. China

Competitive Manufacturing Industry and Co-Relation to the US.

Narrowing Wage Gap with

China Advantages over China in

exporting to the US The co-relation to the US

economy during global recovery.

The Manufacturing Outsourcing Cost Index is the landed costs in U.S. from China and Mexico relative t US manufacturing cost for market basket of parts. Sources: Top Chart: Bloomberg, INEGI. Bottom Chart: AlixPartners.

Mexico Fundamentals – Economic Reforms

2013 elected President Nieto’s agenda focuses on four major reforms: Fiscal Reform – Passed Education Reform – Passed

Energy Reform – In Process

Electoral Reform – In Process

Mexico Fundamentals – Demographic Bonus

114.3 million people in 2010

127.1 million people in 2020

Workforce

Age G

roups

Source: CONAPO demographic forecast 2010-2050, updated based on the 2010 census.

Mexico Fundamentals– Wealth Creation and Emerging Middle Class

Source: International Monetary Fund (IMF), World Economic Outlook Database, Sep 2011. The IMF estimates final figures for 2011 and forecasts thru 2016. Note: * Latin America & Caribbean

Increasing GDP per capita

Mexico Fundamentals– Wealth Creation and Emerging Middle Class

Tertiary Services, Retail, Communications

Secondary Manufacturing,

Infrastructure Construction

Primary Agriculture

Unemployed

Opportunity – Shortage of Formal Retail

Shopping Center Square Meters per 1,000 Inhabitants by Country

2180 1290

340 280 270 265

220 210

170 95 90 80

50

USCanada

NetherlandsPortugal

UKFrance

SpainItaly

GermanyRussiaTurkeyMexico

Brazil

Shortage of Retail

Growing Retail Sales

Enhanced Liquidity – Public Markets

In 2011, Mexico introduced it’s own REIT like vehicle. Currently Mexico has 8 publicly traded Fibras, 6 of which have a market cap of

under CAD$1b. Mexico’s first and largest Fibra, Fibra Uno has a market cap of CAD$5.8b, a 2013E

dividend yield of 5.2% and an implied cap rate of 5.5%.

Sources: Credit Suisse Mexican Real Estate Report.

Enhanced Liquidity – Pension Funds

The growth in “formal” jobs is correlated to the growth of the Pension Funds

Source: BMV (Mexican Stock Exchange)

Growth in Pension Plan AuM

Growth in Vehicles Investing in Real Estate

Representative Deals – Bodega Aurrera (WM) Pad - Puebla

Deal Rationale • Primary market • High density trade area • Lack of formal retail competition • Arterial road frontage and access

Metro Area Puebla, State of Puebla Market Primary Size 160,639 sf NRA 65,685 sf Parking Spaces 183 Type Pad Population State of Puebla - 5.7m Puebla Metro Area - 2.3m Primary Trade Area - 22.5k Income Segment Low-Middle Income Yield-on-Cost (Y1) 8.5% IRR 14.6% Rent Annual CPI Adjustments

Representative Deals – Sam’s Club (WM) Pad - Villahermosa

Deal Rationale • Ground lease in secondary market • High density infill location • Good arterial road access and

exposure

Metro Area Villahermosa, State of Tabasco Market Secondary Size 268,713 sf NRA 102,946 sf Parking Spaces 315 Type Ground Population State of Tabasco - 2.2m Villahermosa Metro Area - 0.7m Primary Trade Area - 70.0k Income Segment Low-Middle Income Yield-on-Cost (Y1) 9.1% IRR 20.1% Rent Annual CPI Adjustments