Location, Location, Location | Even More Relevant in Retail

Solid fundamentals in DANHOS (Outperform, P$35 PT). Of all the companies in our Real Estate (Industrial, Commercial & Offices), DANHOS has the highest exposure to Mexico City, with 91% of its GLA concentrated in this region. The capital’s dense population, high labor participation, and predominantly working-age demographic support robust consumption and sustained demand for office, industrial and retail space. After a period of limited growth, DANHOS reactivated resumed growth at the end of 2023 and now has an attractive pipeline, particularly in industrial real estate, positioned to capture strong demand for logistics space in the Metropolitan Area of Mexico City. DANHOS’ also offers a stable cashflow generation with constant distributions (8.% dividend yield) and a strong balance sheet: low leverage of 13% LTV. We thus initiate DANHOS with an Outperform rating and a P$35 PT.

Meanwhile, we are more neutral on FSHOP (Market Perform, P$9.50 PT). The company has strong tenant relationships and deep sector expertise due to its specialization in the retail sector. Additionally, is Centros de Vida concept drives higher traffic and strengthens its competitive position. All this led to a revenue 15.6% CAGR in the last five years, and profitability improved during this period, reflected in rising operating and EBITDA margins. Despite solid operations, FSHOP’s dividend yield has lagged peers: it averaged 6.9% in 2017– 2025, or 8.3% excluding 2022-2023, still below most FIBRAs in a context where declining interest rates heighten yield relevance.

Overall, we expect healthy consumer trends and increasing ecommerce logistics needs to be the main drivers of the sector. We prefer DANHOS due to its diversified portfolio, which allows the company to capture opportunities in both brick & mortar and ecommerce growth. The current context of declining interest rates could further add to the sector’s appeal amid healthy dividend yields and lower financing costs.