© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good afternoon. My name is Hector, and I will be your conference operator today. At this time, I would like to welcome everyone to Fibra Uno's Third Quarter 2018 Earnings Conference Call. Fibra Uno issued its quarterly report on Thursday, October 25, 2018. If you did not receive a copy via e-mail, please do not hesitate to contact us in New York City at (646) 284-9435. Before we begin the call today, I would like to remind you that forward-looking statements made during today's conference call do not account for future economic circumstances, industry conditions, company performance and financial results. These statements are subject to a number of risks and uncertainties. All figures included herein were prepared in accordance with IFRS and are stated in nominal Mexican pesos, unless otherwise noted.
Joining us today from Fibra Uno in Mexico City is Mr. André El-Mann, Chief Executive Officer; Mr. Gonzalo Robina, Deputy CEO; Zury Attie, Executive Vice President of Strategy and Finance; Fernando Alvarez, Vice President of Finance; Mr. Javier Elizalde; Vice President of Treasury; and Mr. Jorge Pigeon, Vice President of Capital Markets and Investor Relations. And now, I will turn the call over to Mr. André El-Mann. Sir, please begin.
Thank you, Hector, and thanks, everyone, for attending our quarterly conference call. I am very pleased to be able to share with you what I believe is a very solid quarter for our company. Among the key highlights for the quarter are the solid growth in AFFO of more than 41% on a year-on-year basis or 23% in terms of AFFO per CBFI.
These results stem from a combination of efforts at our company, starting with a stable occupancy rate close to 95%, this quarter we closed with 95.4%; maintaining healthy margins, our NOI margin over revenues in this quarter was 88%; same-store rents grew 7.5% from the previous year, that is 290 bps above the weighted inflation for the quarter; and leasing spreads of 9.1% in pesos and 4.1% in dollars, representing an increase above inflation of 460 bps and 170 bps in pesos and dollars, respectively. All of the above was achieved while maintaining our debt levels stable at 32.6% and being closer to completing many of our developments that will in turn begin to generate revenues in the coming quarters.
I want to highlight that this is the 30th consecutive quarter in which UNO records stable occupancy and margins. We saw a marginal increase in insurance premiums and property taxes this quarter. Yet, our NOI margin over property revenues stands at a healthy 88%.
In a long-term business like real estate, we must say that we are pleased with our performance, but not satisfied. We will continue to work very hard, not only to maintain these trends, but also to improve in all areas that enhance the value of our company.
One of the key focus currently is to execute and deliver our assets on the development. In this front, I would like to take a moment to highlight one of our key assets on the development, Midtown Jalisco, which is presently 70% preleased in the office segment and 75% preleased in the retail segment. We expect to deliver this asset for operating during first quarter of '19. Delivery for development properties will continue to accelerate revenues and net AFFO in the coming quarters.
In addition, during the quarter, we continued with some asset sales at 1.3x above the book value or NAV. This is equivalent to value our CBFI at MXN 50. In my view, this shows that the valuation of our properties is not only expressed at reasonable levels in our balance sheet, but also, that we are considering a conservative valuation method for our books.
We have destined the majority of these resources to repurchase our own CBFIs. As you know, we are required to distribute the portion of asset sales that falls under the net fiscal results. At the close of the third quarter '18, we have repurchased close to 67 million CBFIs, and I want to say that we fully expect to continue recycling noncore assets as part of our business model. And therefore, allocating the sale proceeds towards the highest value creation alternatives available to Fibra Uno, which at the moment, is the repurchasing of our own CBFIs. The effect of the repurchase of shares will continue to positively impact per share AFFO performance. I also want to address the volatility issue in the financial market, which were one reason or the other has been the norm for at least the past 24 months. I want to stress one more time that the real estate business is a long-term business, and as such, our strategy is focused on the long term. Of course, we consider the short and medium-term effects that such volatility causes. But we do not lose sight that our objective is to maximize the value of the properties, which is to create amount of sustainable shareholder value over time. In this sense, Fibra Uno's business model is countercyclical. Within a business that by nature is cyclical, our business model can be summarized with the following concepts: competitive rents, the best properties in the best locations and prudent leverage structure.
However, I do not want to overlook the most relevant fact for us, which is that we are talking about Mexico. We are invested in Mexico for the long term, and we believe that the country offers unbeatable investment opportunities. We have growing middle-class and higher disposable income, a demographic bonus that is perhaps one of the best on the planet, and a healthy and stable economy. The starting point is solid and the perspective are even better. Our middle class has a low banking penetration and even lower credit penetration, which will continue to encourage consumption in the long term. We have a very competitive rent level in -- levels in all the sectors in which we operate. In a real-estate market with overall low penetration and overall increasing replacement costs, which implies that only -- the only direction for the absolute rent levels in all segments in which we operate is the medium and long-term -- in the medium and long-term is up.
Mexico is a country with a population of nearly 130 million, a GDP of almost USD 1 trillion and a momentum -- and momentum that will lead us to be one of the top 10 economies in the world in the medium term. Mexico has a lot to offer, and we're convinced that it continues to be a great place to invest. We firmly believe that if we take care of our fundamentals, the rest will fall into place eventually. As for FUNO, we are loaded with good news this quarter. In this quarter, we announced a strategic alliance with WeWork in the corporate office segment. With this synergy, we strengthened our wound -- our bond with them today, has become the most relevant player in this segment, not only in Mexico, but in a vast number of geographies. The innovative and modern business model of WeWork has given the office space a fresh new approach, and for our properties has become some sort of an anchor for the releasing which WeWork operates. We also announced a strategic alliance with BBVA to establish a very innovative kiosk in 75 different locations across the country in our properties. This is the result of a very long time taken by FUNO's team to design a tailor-made space for BBVA. This at the end resulted in a very much appreciated plan for both our partnering bank of BBVA and FUNO. This is going to change the experience of our visitors for the better and is going to provide banking services in a much friendly environment for our millions of visitors every year. Lastly, we announced the grand opening of our -- of the gourmet market, Parques Polanco. This brand-new model was born in 2016 from the FUNO's original design in Samara, which tried to entertain the different levels of demand in the restaurant industry. We focus on a very targeted consumers, and thus far, Samara's mercado gourmet is serving more than 850,000 people visitors every year. We expect an even higher success for mercado gourmet, Parques Polanco. We will continue to create value through organic growth and also with the delivery of our development projects. With all this, we only can say to our investors that the best is yet to come.
I will now pass the mic to Jorge Pigeon. Jorge, please?
Thank you very much, André. Thanks, Hector. Thanks, everybody, for being here at the conference. I would like to start by addressing a change in our accounting policies that we have undertaken recently, and that has obviously an impact in the results of the company at FUNO.
We have been very conservative in our accounting policies in all fronts, property valuation, the capitalization of interest or expense of interest, among others. Regarding this last one, for a long time, FUNO expensed 100% of the interest associated with property development. And as you know, the interest expense associated with development is part of the cost of such development. And as such, it is a global practice in our sector to capitalize interest on development projects. So we are migrating toward this practice and aligning ourselves with the global industry standards. I will discuss the effect of capitalization of interest in greater detail in the interest expense section of the MD&A. Going into MD&A, starting with the revenues. Property revenues rose by MXN 130 million to MXN 4.3 billion, which was a 3.1% increase over the second quarter of '18. This increase mainly due to higher total occupancy of the portfolio, higher maintenance revenues and the effect of obviously contract renewals and leasing spreads.
In terms of occupancy, Funo's total occupancy closed -- at the close of the quarter was 95.4%, 80 bps above the second quarter of '18. The variation stems from an increase of 490 basis points in the office segment, derived from the new classification of in-service property. The idea of implementation of the in-service classification is to isolate the impact of the ramp up stage of newly delivered properties. We have a whole detail in our quarterly presentation in which we described the policies that we will take to classify properties as in-service, and we can go through the detail later, if you want. Also 10% increase in the industrial segment from second quarter and stable occupancy rate in the retail segment.
In terms of maintenance expenses, property taxes and insurance -- maintenance expense and property tax and insurance decreased by 27% from the -- by MXN 27 million from the second quarter as a result of delay in some payments, which tend to be something that happens naturally towards the end of the year. Insurance expenses increased by MXN 23 million as we added the recent acquisitions, primarily of the Apollo portfolio, to our insurance policy. And in terms of property taxes, an increase of almost MXN 10 million are recorded, and this is something that happens at a municipal level, depends on where you are in the country.
The net effect in to -- in our net operating income as of the third quarter rating is that it rose by MXN 90 million or 2.7% compared to the previous quarter. NOI margin calculated over rental revenues was 88%, and as André mentioned, we're very pleased with our performance.
In terms of interest expense and interest income, the net interest expense and income declined by MXN 183 million in the third quarter compared to the second quarter of '18, mainly by the increase in capitalized interest associated with properties under development, which amounted to MXN 389 million this quarter compared to MXN 75 million the previous quarter -- almost MXN 76 million the previous quarter, sorry. We saw a decline in interest expense when we reflect the adjustment to fair value of our properties and also savings in financial expenses due to a lower FX that impacts the expenses when translating the debt of the -- dollar debt into pesos.
At the bottom line, the FFO reflected an increase that was the effect of the combination of the increase in revenues, lower interest expense, asset sales -- and asset sales have totaled -- and as well as the repurchase of CBFIs. The growth was MXN 245 million compared to the prior quarter, and on a per CBFI basis, we grew from $0.49 to $0.55, which as I mentioned is the effect of all the above plus the repurchase of almost MXN 67 million CBFIs at this point.
The gains in sale of investment properties. We closed on the previously announced sale of Reforma 155, which if you recall is the building that is right across the street from Montes Urales 620. It's a building that we had in condominium. We did not own the whole building. We owned only certain floors in that building. So we closed on the sale of those floors, and we received a gain of MXN 64.1 million, which as André mentioned, is 1.3x above our stated book value, which we'd rather say that a more appropriate valuation or a market valuation of that property should have been 30% higher than we have reported in our books, which shows the superior execution capacity of our management team to deliver on not only asset acquisitions, but also asset sales at the time of recycling.
Adjusted fund from operation increased MXN 221.9 million from the previous quarter, mostly due to an increase in FFO, the gain recorded from the sales of the aforementioned Reforma 155. And in terms of AFFO per CBFI, we saw an 11.2% increase from MXN 0.51 in the second quarter of '18 to MXN 0.57 in the third quarter of '18. And as I mentioned, this also includes the effect of the repurchase of CBFIs, which as André mentioned, we fully expect to continue as part of our business model, the asset recycling of shared noncore assets and using the proceeds of those sales for the highest value-creation alternative. At this point, the repurchase of our own shares.
Going to the balance sheet, accounts receivable amounted to 1.3 -- almost MXN 1.4 billion, MXN 206 million below those of the second quarter, mainly due to administrative efficiencies gained by collections or improving collections basically. Investment properties increased by MXN 3.5 billion compared to the third quarter of '18, which is the net effect of investments of projects under development, additional CapEx under development projects; closing of the sales of the Reforma 155 floors 2 and 4; and obviously, the asset revaluation, which is the mark-to-market that we do on a quarterly basis, and it's done by third-party appraisers on the fourth quarter of the year.
Total debt amounted to MXN 75.5 billion compared to MXN 72.9 billion. The increase is basically the net effect of the following: the last -- in the last 3 weeks, if you recall, we issued MXN 9.2 billion, which is the return of the FUNO 17 fixed-rate bond for MXN 3.8 billion; a new issuance of a FUNO 18 variable rate note for MXN 5.4 billion; repayment of short-term debt in the amount of MXN 5.6 billion; the appreciation of the currency from MXN 19.86 per $1 to MXN 18.81 per $1 at the close of September, which reduced the dollar portion of our debt when expressed in pesos. At the end of the day, all of this results in cost of capital decrease of MXN 2.9 million -- billion, including the depreciation of controlling or noncontrolling interest. And this is the net effect of the CBFIs repurchased; the increase in the contribution to HELIOS Trust as we consolidated the control of the Trust 2584, which is the HELIOS Trust; the increase in the estimates for employee compensation plan, which has to do with the expectation of the acceleration of FFO; improvement in the results of the company we expect as the properties start to ramp up -- the development properties start to ramp up; the net effect of quarterly distributions as well as the distributions to shareholders related to the previous quarter.
So with this, I conclude the MD&A. And I'd like to open the floor for Q&A. Hector, can you please open the floor for Q&A?
[Operator Instructions] Our first question comes from the line of Carlos Peyrelongue with Bank of America Merrill Lynch.
My question, first, is related to the interest portion that you're now capitalizing. Can you provide that amount? I'm not sure if you did -- I didn't get it during the call as to what is the amount that you're now capitalizing. And on that same line of thought, what would be the FFO per share growth if you have not capitalized those interests? Just to get a sense of how much it's growing without the change in accounting, please. And lastly, for FFO per share growth for next year, André mentioned that there's several developments that are coming in. Can you comment as to your expectation for FFO growth next year? Would you expect it to grow double digit supported by these new GLA from different projects on your pipeline?
Thank you, Carlos. I'll take the second question first, which is the growth in FFO. Yes, we expect to grow double digits, meaning about 10%. Yes, that's more or less the expectation. In terms of the capitalized interest, it was MXN 389 million versus MXN 76 million the previous quarter -- MXN 75 million the previous quarter, more or less. The calculation, I don't have it off the top of my head, but I can...
We can do it.
The expectation for 10%, Carlos, we will receive the impact of the new development for almost half of the year. Because if we start and we're thinking about opening Midtown Jalisco at least by the end of the year, we have a great experience and we have a rent already charged. So the impact will be here in the -- in that FFO for the second semester. So -- and the properties that we'll be opening in the first quarter will be held on the third quarter or fourth quarter of the next year. So having said that, the impact is low and that's what we are thinking around those digits. That the full impact will be held in...
In 2019.
2020.
Our next question comes from the line of Eugenio Saldaña with GBM.
I have 3. The first one, regarding industrial renewal's performance on the niching spread section, the price that you perform those renewals looks -- I mean, well below, I mean, market value from the information that I have. I just wanted a comment on this, if it was some geographic shift or something like that, that affected those numbers. Or what do you think on that? Second one is referring to the capitalization of interest. You mentioned that you capitalized 39 -- sorry, MXN 390 million on CapEx for the quarter that was MXN 780 million. I just was wondering how much of the debt you are classifying to underdevelopment projects -- I mean to drive to that number, a reversal on that? The third one is you mentioned a pipeline of acquisitions. Are those from related parties? And if so, I mean, could you give us some color on the geographic of those potential acquisitions, especially the retail ones?
Yes, the last question first is easiest. It's just the remaining portion of the Turbo portfolio that we have in the acquisition pipeline. And it's 2 shopping malls in Querétaro. I think it's something that we have disclosed a couple of years ago, and it remains the same. It hasn't changed. For the development, that I'll ask Fernando to answer that question in a second. And regarding the leasing spreads, we do not see them as something low, $5 for industrial in dollars sounds very reasonable. And the peso segment at MXN 70, specifically, we would have to look specifically at which contracts and warehouses we were renewing contracts. You have to remember that if you have an older warehouse where you are charging MXN 40 or MXN 50 moving to MXN 60 or MXN 70, it's a strong increase, and you cannot go or should not go quicker than that. But...
Also the renewal -- the price on the warehouse is directly proportional to the price of the land. If you are renewing in the northern area of the country or in Querétaro or in Guanajuato, you should have lower prices than if you are renewing on the metropolitan area. So it's case-by-case.
This is Fernando. Regarding the questions about interest, the current method that we are using to capitalize interest is a better method for this growth that Fibra Uno has currently. As you know, we currently are holding an important development portfolio that some years ago we didn't. We had a much lower investment in development. So this is a better way to reduce the interest for the profile that currently Fibra Uno is holding. Right now, we have a 14% of the interest of the period of the current exercise that have been reduced as part of the cost of the properties in development. And you should expect for the rest of the year that we allocate a similar amount for the fourth quarter.
Okay, I think just a follow-up. I mean, sorry, I was referring -- I mean, for the industrial rental rate, I was referring to the in peso, the MXP 70, the rental rate that -- I mean, it's like below $4.
It's exactly as André mentioned. It depends on where you are geographically in the country, associated with the price of land.
MXP 70 sounds like there is a fulfillment.
Our next question comes from the line of Nikolaj Lippmann with Morgan Stanley.
Just 2 very simple and quick questions. Could you provide a bit of additional color on what you're seeing in terms of the pricing trends, especially the office segment and the premium retail? And second question, if you don't mind reminding us where we are in terms of the buyback, the amount of certificates that have been canceled and what is remaining in terms of firepower.
Okay, I'll take the second question, which is regarding the buyback. The buyback, Nikolaj, is associated with the asset sales at this moment. Whatever proceeds we have received from asset sales is what we have invest into the buyback. We expect to continue, as André mentioned, recycling assets. I do not want to give a specific amount, but I can tell you that what we have authorized is up to 5% of the company in terms of buyback capacity by the shareholder meeting. So we will continue to, with this asset recycling program, selling assets and directing those proceeds to asset sales. And the bend we have -- yes?
I wasn't ready for that.
And we have 1 year obviously within to -- within which we do the repurchase to cancel the shares. You cancel the shares, and automatically, you have another 5% available. So it's a rolling 5% of the outstanding shares. And regarding the pricing trends in office and premium retail, I'll ask Gonzalo to take the question.
In terms of the office market, what we have been seeing new in this year is that the prices have been stable. I can give you certain specific information. For example, in Torre Diana and Torre Mayor, the average price have been is $30 per square meter per month for the last 18 months. And probably, we will be seeing this being stable for an additional 6 months. And as we have stated before, if the new mayor for the city will be freezing new developments until she understands perfectly fine the matters in terms of the use of land, that will be benefiting the offer of office spaces. And that means that probably we will be seeing a little bit growth on that. Just another example, Torre Reforma Latino is on $27 per square meter average. So that's where the market is. And I'm giving you the Reforma corridor averages, which is the most common one that everyone is familiar with. And jumping into the retail, what we have been seeing in the retail, there are some shopping malls that we have been renewing with U.S. inflation, but in the majority of the cases of that renewals, we have been seeing increases above the inflation. So definitely, we still see room in there, we want to keep on raising our rents per square meter.
[Operator Instructions] Our next question comes from the line of [ Roberto Wiseman ] with Bradesco.
My first question was regarding the CBFI repurchasing program. I'm not sure if I fully understand the answer of the last one. But what's, like, the minimum discounts running this, which makes the purchase program to continue making sense? And my second question is regarding the maintenance CapEx. We know that through the third quarter of 2017, you choose to publish MXN 7.7 million maintaining CapEx for each quarter and then for the last 12 months, that is no longer included with declining queue. I wonder what exactly happened, is it change in accounting or something like that?
Okay, first, regarding the repurchase program, we have said since day 1 that we will own a reserve, that the right to decide at what price, when exactly how to operate our repurchase program, we are not going to give specific guidelines on how we're going to act or when we're going to act in the market. We are going to be opportunistic about it.
Having said that, if you ask me, at the core price, if we are selling assets at MXN 50 and buying shares of MXN 25, it's a no-brainer. So you can expect us to continue doing it so long as shares remain at these prices. In terms of the amount specifically that will be destined to the repurchase program, what I responded to Nikolaj is that the size of the program is -- it's 5% of the company -- of the company's outstanding shares, which we have roughly 4 billion. That means 200 million shares roughly, that's what the shareholders authorized. We have repurchased 67 million out of the 200 million. So we are roughly at 1/3 of the capacity of the program so far in 2 quarters that we have been executing this. And we expect to continue, as André mentioned, to recycle the noncore assets. Exactly how much and what amount will be available for additional repurchase in the coming quarters is going to depend on that M&A activity. And this something that obviously we'll announce whenever we have that availability. But we have the possibility, let's say so to speak, to repurchase another 130 million shares roughly without them canceling those, and then we will have another 200 million shares and so on and so forth. That's how the program works. And in terms of the pricing, as I mentioned, I mean, we are selling assets at MXN 50 and buying shares of MXN 25, it's a no-brainer. That's regarding the repurchase program. Now regarding maintenance CapEx. Maintenance CapEx is included in the overall CapEx of the company. We have 2 lines addressing the CapEx portion of the equation. We have 2 lines in which we used to maintain our properties. One is the maintenance expenses, which roughly end up being about 5% or 6% of our income, depends on obviously every quarter. We try to charge back most of that to our tenants, and that's why you see a line in our income that is called maintenance reimbursements or tenant reimbursements. And in terms of accounting, the classification of what falls into CapEx and what falls into maintenance expense, so to speak, has to do with whether something increases the value of the property or the expense enables me to maintain the rent levels I have at a certain shopping mall. For example, if I paint the whole shopping mall and I spend MXN 50 million, I have to expend it because that is not going to change necessarily the value of the shopping mall. If I have to change the floor of a shopping mall and if I don't change the floor, then I'm going to lose tenants, then that is something that I can say was something that was going to increase the value and that would be capitalized. If it doesn't move the needle for tenants and I still have to change the floor, then it will be expensed. That's basically the accounting policy. So we roughly spend about 6% -- 5% to 6% of our revenues in CapEx. And in terms of maintenance, it's probably somewhere between 0.5% to 1% of revenues, and it's included in the maintenance -- in the total CapEx of the company. And we do not run that through the P&L as we don't think it is, obviously, part of the operations because the cash for that does not come from the operations, but rather from funding that we do with our debt of equity from the markets.
[Operator Instructions] Our next question comes from the line of Pablo Ordóñez with Itaú.
Can you give us an update on Mitikah, how is the preleasing? And when do you expect to deliver the first phase of the project? And the potential impact on your financials?
Yes, thank you Pablo. About Mitikah. Mitikah is for all the...
Crown jewel.
The crown jewel. We are ahead on the schedule in the construction, and we are right on target on the project. About the occupancy or the commercialization level, we have -- until today, we are working on 2 different buildings of office space. One accounting for 60,000 square meters and the other one for 10,000 square meters. Out of the 70,000, we have leased 30,000 square meters, so we are at 40%, 40% and change. And if you add to that the existing building, which is fully leased, 100,000 square meters, we are way beyond what we expected. We know that the current deal in the lease that is currently leased may have a change in tenants and may have a change in the construction because we are going to refurbish it. But as of today and for the next 5 years, it's fully leased. For the retail space, we are -- I could say that we are 200% leased. We have waiting list. It's a very wanted location, and we expect to be leased at 100%, without a doubt, by the opening.
And I would add that on the bundle sales, we've sold some -- I think around 500 out of 660 condos, 540, somewhere around there. So we are way ahead of schedule in terms of the condo sales, and we actually selling at better prices than we already or had originally anticipated. So Mitikah, as André mentioned, is the crown jewel of Fibra Uno and not only that, it's going much better than we expected.
Okay and one question. When should we start -- when are you planning to officially start seeing the impact on results? When should we think of the commercial operation for this project?
We are planning on delivering next year the first office building. We are already receiving the rent for the existing building, and we expect that the delivery of the retail space will be by the end of next year. So we will expect that on 2020, the first revenues of the retail space. Now the business plan of Mitikah has a leverage component, and in this particular business plan, we will use the revenues of the first years to repay the debt and services at -- for Mitikah. So we expect the full impact of the full product of all the development for 2023. And you will see in our balance the revenues every year, and you will see that the vesting of these particular revenues in this period will serve with that -- with this.
Basically, you'll see us from the balance sheet we'll add more debt for the development of Mitikah. We'll add the revenues because we consolidated the projects, and then on the cash flow, we will use the cash flows from the revenues that we received from Mitikah to service the debt and repay the debt. The idea -- the business plan for Mitikah is that when the project is stabilized, it's also debt-free. So that when everything is said and done, that project is going to have 0 debt associated with it. So you're going to see us start from debt 0 to debt somewhere around MXN 5 billion, MXN 6 billion or something like that maybe, and then it starts to go down, and we would see that with -- we should finish the asset with 0 debt.
And just to add something. Mitikah has its own line of credit. The interest of all the debt for Mitikah will be 100% capitalized for the project as cost. The interest that we've capitalized as of now is 100% for the rest of the portfolio -- of the development portfolio. So just wanted to clarify that.
[Operator Instructions]
If there's no more questions, then I think we can finish the call.
Okay, yes. No more questions, so I'll turn the call back to Mr. El-Mann for any closing remarks.
I would just like to say thank you very much, everybody, for joining our call. As André mentioned, we're pleased but not satisfied with the results. We're going to continue to work very hard to deliver results that enhance the value of our properties, enhance the value of our companies. The focus right now is to operate our portfolio to fill the developments as we complete them to continue to execute on the asset recycling program and repurchase of shares as long as they continue to show present valuation levels.
And as André mentioned in his letter, since we are not satisfied, it's time to redouble our efforts. So we're happy with the performance, but the best is yet to come, and we have to work harder, and that's what you can expect from us at Fibra Uno.
So thank you very much, everybody, for joining our call.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.