Business Context and Reporting Period
Company: Logistic Properties of the Americas (LPA)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2024
Accounting Basis: International Financial Reporting Standards (IFRS)
Business Overview: LPA is a Cayman Islands exempted company formed in October 2023 to effectuate a business combination with LatAm Logistic Properties, S.A. (LLP). The company develops, owns, and manages a portfolio of Class A logistics and industrial real estate in Costa Rica, Colombia, and Peru. As of December 31, 2024, the portfolio consisted of 30 operating properties with over 5.1 million square feet of Gross Leasable Area (GLA) and a stabilized occupancy rate of 98.3%.
Key Financial Metrics
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Total Revenues | $43.86 million | $39.44 million | $31.98 million |
| Profit (Loss) for the Year | $(19.43) million | $7.16 million | $11.44 million |
| Net Operating Income (NOI) | $36.61 million | $34.18 million | $26.48 million |
| Cash NOI | $35.83 million | $33.15 million | $24.06 million |
| Adjusted EBITDA | $25.60 million | $25.95 million | $22.20 million |
| Total Debt (Outstanding) | $265.89 million | $269.85 million | $209.33 million |
| Cash and Cash Equivalents | $28.83 million | $35.24 million | $14.99 million |
| Net Debt | $231.22 million | $231.93 million | $191.09 million |
| Net Debt to NOI | 6.3x | 6.8x | 7.2x |
| Investment Property Valuation Gain | $32.35 million | $20.15 million | $3.53 million |
Material Changes vs. Prior Period
- Net Loss vs. Profit: The company reported a net loss of $19.43 million in 2024 compared to a profit of $7.16 million in 2023. This reversal was primarily driven by a one-time Listing Expense of $44.47 million recognized in connection with the Business Combination consummated in March 2024, and increased General and Administrative (G&A) expenses of $15.63 million (up 83.6% YoY) due to share-based payments and public company costs.
- Revenue Growth: Total revenues increased 11.2% to $43.86 million, driven by the stabilization of three new buildings (two in Peru, one in Costa Rica) and positive rental rate growth.
- Operating Expenses: Investment property operating expenses increased 35.6% to $6.97 million, largely due to the stabilization of new assets. G&A expenses surged due to $2.06 million in share-based payment expenses and $3.1 million in D&O insurance and professional fees.
- Valuation Gains: Investment property valuation gains increased 60.5% to $32.35 million, driven by land lease liability adjustments and fair market value increases in Colombian properties.
- Debt Structure: Total debt decreased slightly to $265.89 million. The company refinanced several facilities, including a $60 million facility with BAC Credomatic and a $60 million facility with BBVA Peru.
Guidance, Outlook, Risks, and Unusual Items
- Unusual Items: The $44.47 million listing expense is a non-cash, one-time charge related to the reverse capitalization accounting treatment of the Business Combination. Additionally, $10.38 million in "Other Income" was recognized from Lock-Up Release Agreements.
- Internal Control Weaknesses: Management identified material weaknesses in internal control over financial reporting related to the control environment, risk assessment, and monitoring activities. These weaknesses led to the restatement of 2021 and 2022 financial statements. Remediation efforts are ongoing, including hiring additional accounting personnel and engaging external consultants.
- Debt Covenants: The company has a history of covenant breaches. While waivers were obtained for Bancolombia covenants for the periods ending June 30, 2024, and December 31, 2024, the company notes that the current interest rate environment could result in further breaches requiring additional waivers.
- Key Risks:
- Concentration Risk: The top 10 tenants accounted for 46.5% of rental income in 2024.
- Geopolitical & Economic: Operations in Colombia, Costa Rica, and Peru expose the company to currency devaluation, inflation, and political instability.
- Interest Rate Risk: Approximately 37% of debt is variable rate; a 1% increase in rates would increase interest expense by approximately $1.0 million.
- Legal Proceedings: The company is defending a lawsuit filed by a former employee but believes the claims are without merit.
- Outlook: Management expects to continue recognizing profits as it executes its operating plan and expands warehouse offerings. The company has authorized a $10 million share repurchase program.
Investor Verification Checklist
- Verify Listing Expense Impact: Confirm the non-recurring nature of the $44.47 million listing expense and its exclusion from Adjusted EBITDA and FFO calculations.
- Assess Internal Control Remediation: Review the progress of remediation plans for the identified material weaknesses in internal controls over financial reporting.
- Monitor Debt Covenant Compliance: Track the company's ability to maintain compliance with debt covenants, specifically with Bancolombia, given the variable interest rate environment.
- Review Tenant Concentration: Analyze the financial health of the top 10 tenants, which represent nearly half of the rental revenue.
- Check Currency Exposure: Evaluate the impact of potential devaluation of the Colombian Peso, Costa Rican Colon, and Peruvian Sol on reported USD revenues and expenses.
- Validate Valuation Gains: Scrutinize the assumptions used by independent appraisers for the $32.35 million investment property valuation gain, particularly regarding discount rates and occupancy assumptions.