Business context and reporting period
Logistic Properties of the Americas (NYSE American: LPA) filed an annual Form 20-F for the fiscal year ended December 31, 2023. The audited IFRS financial statements principally reflect the historical operations of Latam Logistic Properties, S.A. (LLP); LPA completed its business combination on March 27, 2024, after the reporting period. The filing reports annual results, not standalone fourth-quarter results.
LPA develops, owns, leases and manages Class A logistics properties in Costa Rica, Colombia and Peru. At year-end, its portfolio included 28 operating properties, 4.62 million square feet of operating GLA, 53 tenants, 100% stabilized occupancy and a 5.3-year weighted-average remaining lease term.
Financial results and key metrics
| Metric | 2023 | 2022 |
|---|---|---|
| Total revenue | $39.4 million | $32.0 million |
| Profit for the year | $7.2 million | $11.4 million |
| Profit before tax | $12.1 million | $13.7 million |
| Cash from operating activities | $17.2 million | $19.6 million |
| Cash and cash equivalents | $35.2 million | $15.0 million |
| Total debt | $269.9 million | $209.3 million |
| Net debt (non-IFRS) | $231.9 million | $191.1 million |
| Adjusted EBITDA (non-IFRS) | $26.0 million | $22.2 million |
| NOI (non-IFRS) | $34.2 million | $26.5 million |
| FFO (company-defined, non-IFRS) | ($10.3 million) | $4.9 million |
Revenue grew 23.3%, driven by portfolio expansion, lease-up and rental-rate increases. Rental revenue was $39.3 million; other revenue was $0.1 million. Property operating expense declined to $5.1 million from $5.4 million, while general and administrative expense rose 84.6% to $8.5 million. Profit declined 37.5%; the filing reports basic and diluted earnings per LLP share of $0.019 versus $0.048, which is not directly comparable to post-combination LPA shares.
Investment-property fair-value gains were $20.2 million, up from $3.5 million. Financing costs increased to $31.1 million from $11.8 million, including $8.4 million of debt-extinguishment losses and higher interest expense. Other expenses were $6.1 million, largely reflecting $5.8 million of business-combination professional fees. Income-tax expense rose to $5.0 million, and the effective tax rate increased to 41.0% from 16.4%.
Cash used in investing activities was $23.2 million, including $28.4 million of investment-property capital expenditure. Financing activities provided $26.0 million, and cash increased by $20.3 million. Cash included $2.7 million of restricted cash; some cash held in partnership entities was not available for general use. Net debt to Adjusted EBITDA was 8.9x, compared with 8.6x in 2022.
Material changes versus the prior comparable period
- Operating properties increased from 24 to 28, operating GLA expanded from 4.04 million to 4.62 million square feet, and stabilized occupancy rose from 99.6% to 100%.
- Rental revenue increased across all three markets. Colombia grew 41.3%, Costa Rica 23.4% and Peru 10.9%, as reported in the segment table.
- Fair-value gains rose substantially, while higher financing costs, transaction expenses and taxes more than offset operating growth at the profit level.
- Debt increased by $60.5 million, although the current portion fell to $16.7 million from $110.9 million after refinancing and covenant waivers. Capital expenditure declined to $28.4 million from $41.0 million.
- Same-property Cash NOI was $23.5 million versus $14.4 million, a company-defined non-IFRS measure. The company also reports a restatement of its 2021 and 2022 financial statements resulting from internal-control weaknesses.
Outlook, risks, contingencies and unusual items
Management said it expects to continue recognizing profits and to expand warehouse offerings in the near term, but provided no numerical guidance. Development targets include yields on cost 200–300 basis points above estimated stabilized-asset yields and mid-to-high-teens returns on equity for wholly owned projects. Four buildings were under development, totaling about 670,000 square feet; approximately 78.5% of development GLA was pre-leased. Construction commitments at year-end were $8.1 million.
Liquidity and refinancing remain important risks. The company reported compliance with, or waivers for, all debt covenants at December 31, 2023, but Bancolombia covenant testing was scheduled for June 2024 after a waiver and principal deferral. Colombia loans were exposed to high local interest rates; certain BTG credit lines matured in August 2024. A 1% interest-rate increase was estimated to add about $2.1 million to annual interest expense, assuming debt balances were unchanged. Most debt was variable-rate, and no outstanding debt was hedged with interest-rate swaps.
Management disclosed material weaknesses in internal control over financial reporting, ineffective disclosure controls at December 31, 2023, and prior-period restatements. Remediation is underway but was not yet considered complete. The filing also identifies tenant concentration, rent collection, property valuation, development and construction costs, foreign-exchange exposure, and regulatory, tax, environmental and political risks in its operating markets. Ten largest tenants accounted for 47.4% of rental income in 2023, down from 55.1% in 2022.
Legal provisions were $0.2 million at year-end. A construction-services lawsuit was settled in February 2024 for $244,151; a former-employee lawsuit remained under defense, with no sufficient basis to conclude whether a loss was probable. The $9.5 million related-party receivable was in default in January 2024 and was settled through an assignment connected with the business combination. The March 2024 combination included a $15 million PIPE investment. LPA has not paid cash dividends and has no adopted dividend policy.
Most important facts for investors to verify
- Review the audited statements and restatement disclosures, and track whether management remediates the identified control weaknesses.
- Verify post-year-end liquidity, the status of Bancolombia covenant testing and repayment deferrals, and refinancing or repayment of near-term maturities.
- Assess recurring property cash generation separately from fair-value gains, debt-extinguishment charges and business-combination costs; review the company’s non-IFRS reconciliations.
- Confirm the collection and settlement of the related-party loan and remaining installments from the 2023 property sale.
- Check post-combination share count, controlling ownership, lock-up expirations and potential registered resales; the filing reports 31,709,747 LPA shares outstanding as of March 28, 2024.