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Macquarie Group’s Mexican REIT scores two new acquisitions

Further adding to its collection of commercial properties, Macquarie Group (ASX: MQG) has purchased two Mexico City properties for US $153 million through its real estate investment trust (REIT) subsidiary, Macquarie Mexican REIT.

The Tecamac Power Center and Coacalco Power Center are both metropolitan sites with 98.7% occupancy. Purchased from the Mexican Commercial Fund, they are another move for Macquarie Group to build up their North American property portfolio.

Mexico, Latin America’s second largest economy, is forecasted to be growing by 3.8% this year, and is growing about two times faster than the US and Brazil, so the investment opportunities are attracting a lot of attention.

The REIT was just publicly listed in December 2012, and its CEO, Jaime Lara, said that he saw these two properties as a continuation of the company’s strategy of creating a nationwide commercial platform. The properties are in Mexico’s strongest commercial market and have excellent long-term fundamentals.

Currently, the REIT has about US $101 billion in assets under management. With this purchase, the number of properties comes to 267, and includes industrial, retail and office real estate. It is expected to generate about US $12.7 million of net operating income this year.

Macquarie Group raised US $1.2 billion in the REIT’s initial public offering, of which $775 million was sold internationally and about $370 million in Mexico.

In late July, CEO Lara announced to the media that he was concerned a price bubble could be forming. He said, “The only way for us to defend against that is to be very cautious with new acquisitions.” However, he felt that expected interest rate hikes would dampen gains and keep a lid on the market.

Foolish takeaway

The company is practicing good diversification. In property, there’s always s a boom somewhere, and that means there’s always a bust somewhere, so spreading out into different regions protects against downturns in general.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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