FIBRAs as a Tool for Investment Diversification in the Mexican Hotel Sector: The Case of FIBRA Inn

FIBRAs as a Tool for Investment Diversification in the Mexican Hotel Sector: The Case of FIBRA Inn

José G. Vargas-Hernández (University of Guadalajara, Mexico) and Hugo Daniel González-Altamirano (University of Guadalajara, Mexico)
DOI: 10.4018/978-1-5225-8494-0.ch010

Abstract

This chapter seeks to make an approach to the financial instrument called REIT, Real Estate Investment Trust, specifically in the hotel industry in Mexico. This tool has allowed many investors to make business in the real estate sector, and it has provided a wider range of hosting services. This research takes us into the strategies the REIT leader in the hotel industry has implemented to position themselves as such. In large part this is explained by network theory and agent – principal theory. The study method is based on a literature review of several theories, as well as the study of a successful case. The analysis of results presents and describes the features that have contributed to business success.
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Background Of The Problem

The markets have a wide variety of options to invest, in the case of Mexico, of all the assets of the most popular equity and known are the shares, which represent a fraction of the share capital of a company, issued by the same as a financing option and whose market value is affected by supply and demand. The shares have been part of the investment portfolios of Mexican investors for decades, so it is an investment option well known in our market (Cavazos González, Rodríguez García, Garza Sánchez, 2015)

In this same market, another active equity is FIBRAs (Trust Infrastructure and Real Estate). The FIBRAs are an investment instrument whose purpose is to finance the acquisition and / or construction of real estate for leaseback or acquire the right to receive income from the lease of such property. These trusts are responsible for renting and managing a portfolio of real estate such as office buildings, shopping centers, hotels, residential, etc.

While these assets are in the US market since the early 60s, known as Real Estate Investment Trust, REIT, it was in 2004 that these were introduced to the Mexican market with some adaptations, and since its introduction to the domestic market this option investment has gained popularity as a viable and confidence to bet their capital on other assets (Cavazos Gonzalez, et al. 2015) option.

The apparent stability of the Mexican economy to the global crisis during the years 2011 and 2012 contributed to the development of rental properties in the country, mainly in large and medium cities. The FIBRAs promoted the development of real estate in Mexico to be integrated as an instrument through which investors both its institutional and individual serve as a source of liquidity for developers and investors, and contribute to the diversification of risk for investor in real estate (De Leon, 2015).

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