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New Asset Class

What is a Mortgage REIT?


Mortgage Real Estate Investment Trusts or REITs, are investment vehicles created for the purpose of attracting private capital for investment and financing of real estate, through the acquisition, granting and/or co-participation of mortgages.

This promotes the development and liquidity of the mortgage sector by incorporating capital through the participation of a large number of both institutional and individual investors.

Likewise, since it is a public vehicle, i.e., traded in stock market, it generates attractive returns for investors, driven by solid, stable cash flows and a low-risk profile resulting from interest and repayment of mortgages in the balance of the Mortgage REIT.




First Mortgage REIT listed in the Mexican stock market.


  

Provides a source of funding to the mortgage sector through the origination, co-participation and acquisitions of mortgage loans.

  

The most simple and efficient way for the investing public to access the real estate market, particularly in diversified mortgage portfolios with professional management.

  

They provide access to attractive returns with a mortgage security while providing liquidity through the capital markets.

FHipo Mortgage REIT




Vision

Consolidate as the first mortgage investment trust structured in accordance with the Mexican law and traded in the stock market.

Investment Focus

Investment in real estate-backed mortgage portfolios with a low risk profile through effective payment mechanisms such as payroll deductions.

Pioneers in the Mexican Market

FHipo has the advantage of being the first vehicle of its kind listed in the Mexican Stock Market, which gives us competitive advantages in terms of both the promotion marketing and selection of our portfolio, as well as the possibility of forming solid and strategic alliances for our investors.

Disciplined investment focus and solid selection guidelines.

Our strategy and investment guidelines maximize our risk-return profile for the benefit of our investors through an informed portfolio selection that offers attractive returns. These are only a few of the guidelines that ensure that investors obtain attractive results while minimizing their risk:

  • Debt service in the payment of mortgage loans through payroll deduction.
  • Attractive rates indexed to the minimum wage (VSM).
  • Terms that substantially reduce the risk resulting from interest rate fluctuations.
  • Borrowers with a minimum of 2 years in their current employment and a monthly income 3 times higher than their payment obligation.

Easily scalable model to take advantage of the macroeconomic and social dynamism in Mexico

  • FHipo’s structure allows it to have opportune access to capital and debt markets in favorable terms and conditions, as well as to build solid relations with different mortgage originators.
  • This allows investors to benefit, through FHipo, from the continuous macroeconomic strengthening, the positive developments in the growing and stable Mexican medium/high socioeconomic sector and a constant increase in the demand for housing.
Experience of our advisor and manager with aligned interests

  • Concentradora Hipotecaria’s team has over 50 years of collective experience in the financial sector, carrying out transactions for a consolidated amount of over US$110 billion in Mexico and Latin America.
  • Concentradora Hipotecaria is one of the main sponsors and investors in FHipo, ensuring the best interests of our shareholders.













Business Strategy



FHipo’s strategy in investing in the mortgage market will consist of actual involvement and contribution of expertise and infrastructure for the positive development of the different products in which it participates.



FHipo’s strengths and characteristics


  

Discipline and transparency in the Market.

  

Risk assessment controls.

  

Application of best international practices in the mortgage sector.

  

Platform with the capacity to collect through payroll deductions and otherwise through its strategic alliance with Concord Servicing.

Expected Results and Objectives


  

Continuous follow-up of originated, acquired and co-participated portfolios that allow strengthening the origination, collection and eligibility criteria.

  

Optimization and constant strengthening of the non-payroll collection processes.

  

Responsibility and independence from private institutions in the performance of portfolios.


FHipo is the first mortgage REIT in Mexico through which the public investors can access attractive capital returns in the Mexican mortgage sector, through a liquid and transparent vehicle traded in the stock market.

Diversification
Protection against inflation
Liquidity
Income
Performance
Transparency



Diversification

  • By maintaining a lower correlation with the market, a Mortgage REIT offers diversification benefits superior to those of debt securities or common stock.
  • A mortgage REIT offers investors a vehicle to invest in the real estate sector and obtain the benefits of diversification and cash flows that are not easily accessible otherwise, since the real estate sector requires considerable investment and has low liquidity.
  • Additionally, a Mortgage REIT diversifies the portfolio of its investors not only by making them participants of a fundamentally different type of asset, but also because the vehicle is proactively managed, in such way that risk is reduced while the mortgage portfolio is optimized.

Protection against inflation

  • Interest payments on mortgage loans are mostly denominated in "Minimum Wage" units (VSM), a variable that is periodically adjusted to consider increases in the minimum wage.
  • This way, the cash flow of the portfolios and the purchasing power of the investment are protected over time.
  • Historically, REITs as an asset class, have provided returns consistently above inflation, not only protecting the purchasing power of investors, but also providing consistent actual earnings over time.

Liquidity

  • The real estate market used to be distinguished for being attractive, but inherently illiquid and requiring high investment amounts.
  • Through a Mortgage REIT, individual and institutional investors have access to thousands of mortgage securities through a vehicle that provides affordable investment amounts.
  • Additionally, because they are traded in the stock market, which brings together a large number of national and foreign investors, an investment in a mortgage REIT has high liquidity and marketability.

Income

  • FHipo intends to distribute 95% of its net result to its investors, which represents a source of predictable and growing cash flows over time.
  • As the generation of income derives primarily from payment of interest and amortizations, revenues are less volatile than in other assets, principally during periods of stress in the markets.
  • In addition, since the value of real estate, which guarantees the loans, increases over time, the risk level in the portfolio decreases considerably.

Performance

  • Due to its distribution policy, by investing in a Mortgage REIT, investors evaluate the total return, which in turn is mainly composed of tangible cash flows with low-volatility.
  • In addition, the appreciation in the value of the Real Estate Trust Certificates (CBFIs) offers additional returns to the cash flows received by the investors.
  • The active rate of a residential mortgage portfolio is consistently higher than the capitalization rates and yields of other real estate properties such as shopping centers, industrial parks and office buildings, turning FHipo into an instrument that generates greater return on capital in terms of cash distributions to investors.

Transparency

Because it is a vehicle listed in the stock market, a mortgage REIT offers investors the transparency they require to make investment decisions. In addition to the benefits mentioned above, other important advantages of investing in real estate through a mortgage REIT are:

  • Best practices in corporate governance.
  • Transparent management of portfolios and accountability.
  • Prompt, relevant and accurate information to the Public Investors.
  • Efficient and transparent tax structure.