20-F: Latam Logistic Properties Secures New Credit Facilities and Navigates Financial Reporting Transition
Sentiment:
Annual Results
Latam Logistic Properties details new credit agreements, financial performance, and compliance with regulatory requirements in its latest filing.
Delay expectedThere may also be delays on the part of regulatory and administrative bodies in reviewing our applications and granting approvals, which have become increasingly common since the beginning of the COVID-19 pandemic due to closures and/or reduced operations of public offices.
Summary
- Latam Logistic Properties (LPA) has filed its annual report on Form 20-F, detailing its financial performance and key business activities.
- The company secured a Fifteen billion pesos (COP15,000,000,000) credit facility with Banco BTG Pactual Colombia S.A. with a disbursement date of August 25, 2023, an interest rate of IBR 1M + 7.20% p.a., and a due date of August 26, 2024.
- The company also secured a Ten billion pesos (COP10,000,000,000) credit facility with Banco BTG Pactual Colombia S.A. with a disbursement date of August 30, 2023, an interest rate of IBR 1M + 7.20% p.a., and a due date of August 30, 2024.
- The company refinanced debt outstanding with IFC Tranche 1 and Tranche 2 for a total amount of $46,973,443 with a mortgage loan denominated in U.S. dollar with BBVA Peru for an aggregate amount of $60,000,000 on December 15, 2023.
- The company is in the process of de-listing the LLP ordinary shares in Colombia.
- The company identified material weaknesses in its internal control over financial reporting and is taking remedial measures.
- The company is an emerging growth company and a foreign private issuer, availing itself of certain exemptions from U.S. public company reporting requirements.
- The company has adopted an Equity Incentive Plan to attract and retain key personnel.
- The company is a controlled company under NYSE American rules, allowing it to rely on certain exemptions from corporate governance requirements.
Sentiment
Score: 6
Explanation: The document presents a mixed sentiment. While the company has secured new credit facilities and has a high occupancy rate, there are also concerns about high levels of indebtedness, material weaknesses in internal control, and potential risks related to economic conditions and regulatory compliance.
Positives
- The company secured new credit facilities to support working capital and refinance existing debt.
- The company is taking steps to remediate material weaknesses in its internal control over financial reporting.
- The company has a strategic geographic diversification with operations in Costa Rica, Colombia, and Peru.
- The company has a high stabilized occupancy rate of 100% as of December 31, 2023.
- The company has a well-diversified tenant base of leading multinational and regional companies.
Negatives
- The company identified material weaknesses in its internal control over financial reporting.
- The company has high levels of indebtedness, which may affect cash flows and expose properties to foreclosure.
- The company has previously breached covenants under its loan agreements and obtained waivers for such breaches.
- The company is dependent on its ability to raise capital through financial markets, divestitures or other sources to meet its future growth expectations.
- The company is subject to foreign exchange fluctuations.
Risks
- The success of the company's business depends on general economic conditions and prevailing conditions in the industrial and logistics real estate industry.
- The company is dependent on its tenants for a substantial portion of its revenues.
- An increase in competition could lead to lower occupancy rates and rental income.
- The company is subject to risks related to the development of new properties, including due to an increase in construction costs and supply chain issues.
- The company's real estate assets may be subject to eminent domain and dispossession by the governments of the countries in which it operates.
- The company's business and operations could suffer in the event of system failures or cybersecurity attacks.
- Complications in relationships with local communities may adversely affect the company's business continuity, reputation, liquidity, and results of operations.
- The company is subject to anti-corruption, anti-bribery, anti-money laundering and antitrust laws and regulations in the countries in which it operates.
Future Outlook
The company intends to develop its land reserves over time based on its evaluation of opportunities, market conditions, and the cost and availability of capital.
Industry Context
The company operates in the industrial and logistics real estate sector in Central and South America, focusing on modern Class A logistics real estate in high growth and high barrier-to-entry markets.
Comparison to Industry Standards
- The company competes with Grupo Montecristo and Mobilaire in Costa Rica, and Aldea Logistica Global S.A.C., Megacentro and Bodegas San Francisco Inmobiliaria Alquife S.A.C. in Peru.
- The company's properties are certified by EDGE, a green building certification system sponsored by the IFC, a member of the World Bank Group, and administered by GBCI (Green Business Certification Inc.).
Legal Proceedings
- The company may be subject to claims for construction defects or other similar actions in connection with its lease management business.
- The company is or may become subject to legal and administrative proceedings or government investigations, which could harm its business and reputation.
- The company is subject to anti-corruption, anti-bribery, anti-money laundering and antitrust laws and regulations in the countries in which it operates.
Related Party Transactions
- The company has loan receivables from affiliates.
- The company paid Jaguar Growth Partners LLC for management and advisory services.
Stakeholder Impact
- The company's performance depends on its ability to collect rent payments from its tenants and on its tenants' ability to make those payments.
- The company's ability to raise capital through the issuance and sale of ordinary shares will depend in part on the prevailing market price for its Ordinary Shares.
- The company's credit ratings can affect the amount and type of capital it can access, as well as the terms of any financings it may obtain.
Next Steps
- The company intends to take remedial measures to address material weaknesses in its internal control over financial reporting.
- The company is in the process of de-listing the LLP ordinary shares in Colombia.
- The company intends to develop its land reserves over time based on its evaluation of opportunities, market conditions, and the cost and availability of capital.
Key Dates
| Date | Description |
|---|---|
| 2011-01-01 | Financial reporting period start date |
| 2011-12-31 | Financial reporting period end date |
| 2012-04-05 | Date after which new or revised financial accounting standards refer to updates issued by the Financial Accounting Standards Board. |
| 2012-12-31 | Financial reporting period end date |
| 2015-06-25 | Latam Logistics Investments LLCMember |
| 2015-04-29 | LLP was originally incorporated as a limited liability company |
| 2016-08-16 | LPA:BancoPromericaDeCostaRicaSAMember |
| 2016 | Company began growing portfolio through development of new industrial real estate properties |
| 2017-05-31 | LPA:LatamLogisticsInvestmentsLLCMember |
| 2017 | El Nio phenomenon in 2017 caused severe flooding in Peru, leading to supply chain disruptions and construction delays. |
| 2018-09-01 | LPA:TwoPartnershipEntitiesMember |
| 2018-09-30 | LPA:TwoPartnershipEntitiesMember |
| 2019-06-16 | Financial reporting period start date |
| 2019-12-31 | Financial reporting period end date |
| 2020-12-01 | LPA:ThreePartnershipEntitiesMember |
| 2020-12-31 | LPA:ThreePartnershipEntitiesMember |
| 2021-01-01 | Financial reporting period start date |
| 2021-01-06 | LPA:ITAUCorpbancaColombiaSAMember |
| 2021-01-22 | LPA:BancolombiaSAMember |
| 2021-03-01 | LPA:OnePartnershipEntityMember |
| 2021-03-29 | Founder Registration Rights Agreement |
| 2021-03-31 | LPA:BACCredomaticMember |
| 2021-04-23 | LLP has been registered in the Registro Nacional de Valores y Emisores (RNVE) |
| 2021-04-29 | LLP was originally incorporated as a limited liability company |
| 2021-05-04 | LLP with the Colombian Stock Exchange (BVC) |
| 2021-05-21 | LPA:SecuredBridgeLoanMember |
| 2021-05-24 | LPA:SecondInstallmentPaymentMember |
| 2021-06-30 | LPA:LatamLogisticsInvestmentsLLCMember |
| 2021-07-01 | Financial reporting period start date |
| 2021-07-07 | LPA:BancoBACSanJoseSAMember |
| 2021-08-15 | Business Combination Agreement |
| 2021-08-16 | LPA:BancoPromericaDeCostaRicaSAMember |
| 2021-09-17 | LPA:TwoPartnershipEntitiesMember |
| 2021-12-31 | Financial reporting period end date |
| 2022-01-01 | Financial reporting period start date |
| 2022-01-05 | LPA:BancoDaviviendaCostaRicaSAMember |
| 2022-01-15 | LPA:IFCSecuredCreditFacilityMember |
| 2022-01-19 | LPA:BancolombiaSAMember |
| 2022-01-31 | LPA:BancoDaviviendaCostaRicaSAMember |
| 2022-02-16 | LPA:BACCredomaticMember |
| 2022-03-01 | LPA:BACCredomaticMember |
| 2022-03-14 | Negotiated a new interest rate on the IFC Tranche 1, reducing the spread by 100 basis points, to 425 basis points, effective July 15, 2022. |
| 2022-05-31 | LPA:LatamLogisticsInvestmentsLLCMember |
| 2022-06 | Extended this bridge loan to March 17, 2023, including a substitution of the fixed interest rate to a variable interest rate consisting of SOFR annual average plus 600 basis points. |
| 2022-07-15 | Effective date of new interest rate on the IFC Tranche 1, reducing the spread by 100 basis points, to 425 basis points |
| 2022-10 | The stated interest rate on the debt facility changed to the three-month Secured Overnight Financing Rate (SOFR) plus 378 basis points. |
| 2022-10-31 | As part of the sale of related investment property, the purchaser of the investment property assumed the balance on the loan |
| 2022-12-31 | Financial reporting period end date |
| 2023-01-01 | Financial reporting period start date |
| 2023-01-01 | Early adopted the amendment as of January 1, 2023 together with the 2022 Amendment mentioned below. |
| 2023-01-27 | The Group received the second installment of $ 1,200,000 on January 27, 2022 upon the conclusion of the land infrastructure work. |
| 2023-01-31 | LPA:BancoDaviviendaCostaRicaSAMember |
| 2023-02-16 | TWOA entered into a subscription agreement with Bonaventure Investments Holding Inc. |
| 2023-02-17 | Received the waivers for the requirement to comply with the Banco Davivienda and Bancolombia financial covenants |
| 2023-03-01 | Negotiated a reduced interest rate with BAC, reducing the interest rate from 3-month SOFR plus 378 basis points to 8.1% for six months. |
| 2023-03-17 | Extended this bridge loan to March 17, 2023, including a substitution of the fixed interest rate to a variable interest rate consisting of SOFR annual average plus 600 basis points. |
| 2023-03-27 | Business Combination consummated |
| 2023-04-28 | LPA:BancoNacionalDeCostaRicaSAMember |
| 2023-04-28 | Refinanced its Banco Davivienda debt, thereby relieving any covenant requirement with that lender. |
| 2023-04-23 | The sale subsequently closed on April 23, 2023 upon the transfer of the property title and the receipt of the third installment payment of $ 1,600,000. |
| 2023-08-24 | Credit Agreement |
| 2023-08-25 | BTG Pactual Colombia SAMember |
| 2023-08-29 | Credit Agreement |
| 2023-08-30 | BTG Pactual Colombia SAMember |
| 2023-08-31 | The debt facility with ITAU was paid in full through a sale of the mortgaged property to a subsidiary of Bancolombia. |
| 2023-09-22 | Negotiated a deferral of principal with Bancolombia, deferring all principal payments for seven months, beginning on October 1, 2023. |
| 2023-09-25 | Received the waivers for the requirement to comply with the Banco Davivienda and Bancolombia financial covenants |
| 2023-09-27 | The administrative transfer process was initiated on September 27, 2023 and was completed in November 2023. |
| 2023-10-01 | Financial reporting period start date |
| 2023-10-05 | LPA:BACCredomaticMember |
| 2023-10-16 | Amendment Letter to the Amended and Restated Loan Agreement |
| 2023-10-19 | LPA:BBVAPeruMember |
| 2023-10-25 | LPA:PERUCountryMember |
| 2023-10-26 | LPA:PERUCountryMember |
| 2023-10-31 | As part of the sale of related investment property, the purchaser of the investment property assumed the balance on the loan |
| 2023-11-01 | LPA:BancoNacionalDeCostaRicaSAMember |
| 2023-11-24 | LPA:CapiaRadixFondodeInversionMember |
| 2023-12-15 | LPA:BBVAPeruMember |
| 2023-12-31 | Financial reporting period end date |
| 2024-03-27 | Business Combination consummated |
| 2024-03-28 | As of March 28, 2024, the issuer had 31,709,747 Ordinary Shares outstanding. |
| 2024-04-26 | The consolidated financial statements were authorized for issue by the Groups management on April 26, 2024. |
Keywords
Logistic Properties of the Americas, credit facilities, financial reporting, real estate, internal control, debt, emerging growth company, foreign private issuer, risk factors, financial performance, logistics, properties, tenants, development, acquisitions, Colombia, Costa Rica, Peru
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