CPA: World-class industrial real estate solutions

Foreign Direct Investment
| The European | 1st February 2016
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Corporate Properties of the Americas (CPA), has been providing multinational clients with high quality warehouse and light manufacturing facilities, throughout Mexico for nearly 20 years. Its success is based on a robust business model that revolves around a number of key strategic elements.

A consistent and focused business plan

Since teaming up with a major US pension fund in 2002, CPA has been singularly focused on generating long-term, high quality, stable income streams from the development and acquisition of industrial real estate in Mexico. Chief Executive Officer, Jaime De la Garza commented: “We have had opportunities to pursue development in other countries in Central and South America, as well as to expand into other real estate markets in Mexico. Our pension fund partner has a global perspective and very specific goals for each of their operating platforms.

“CPA’s goal is to continually optimise its Mexican industrial portfolio and generate consistent above-market returns for shareholders. We interface and share best practice with other platforms, supported by the same pension fund but our mandate does not vary.”

A full-service operating platform

When CPA began, the nascent industrial real estate market in Mexico had little to offer multinational tenants seeking an institutional developer and/or a reliable landlord, executing professional property management. The founders recognised the need to hire and cross-train an integrated operating team that could serve clients from site selection, to build-to-suit construction and subsequent property management, to ensure the longevity and high performance of assets. “CPA does not have a strategy of selling core assets” says Mr De la Garza. “Therefore, we must live with what we develop, and the only way to ensure long-term quality, is to construct with exacting standards and encourage disciplined maintenance. Our clients know that the same company that helped them choose the right location and refine the building layout and specifications, will own that asset during and beyond the initial lease term. The client does not need to rely on third parties; their landlord is local, with on-site property managers and accessible executives, all seeking to exceed the client’s expectations and generate follow-on opportunities for growth.”

Developing Mexico’s best team

Nearly all of Corporate Properties’ staff are Mexican citizens, most are bi-lingual (some multilingual), and few had any prior real estate experience. “All of our key executives are fluent in the important client-focused areas of the business. I served as Chief Financial Officer before becoming Chief Executive Officer, our current Director of Asset Management grew up in the leasing side of the business, and our investments group is closely involved in business development and portfolio management.

“The average tenure of our managers is over 12 years, giving rise to an extremely experienced team which has worked effectively together through a variety of real estate cycles. CPA is not a US company doing business in Mexico – we are a Mexican company serving clients from around the globe.”

A durable business strategy

CPA has thrived despite the global financial crisis (GFC) and various Mexico-specific challenges (currency fluctuations, drug trafficking-related violence and the vagaries of US Homeland Security). Mr De la Garza attributes this to a few key advantages: “Our pension fund partner has a very long-term investment horizon, giving us unparalleled access to patient capital. They also have an appetite for measured risk, which has allowed CPA to take significant land positions in core markets and execute an aggressive program of speculative building development. Finally, we decided early on that CPA would remain at the premium end of the market, where clients always knew to expect quality performance and a consistent presence.

“Even in the depths of the GFC, we were reluctant to cut staff, knowing that our clients would continue to require excellent service and perhaps space for growth when the economy recovered. As a result, we enjoy best-in-class tenant retention rates, and we serve many clients in multiple markets. To me, that is the hallmark of a successful business.”

Corporate social responsibility

Jaime De la Garza, CEO, CPA

Jaime De la Garza, CEO, CPA

All CPA buildings are constructed to LEED Core & Shell specifications, and higher level qualification is available depending on specific tenant finishes. Several CPA industrial parks are located in areas that have benefitted greatly from the employment opportunities generated by the tenants in the parks. “In Mexico City, we redeveloped a brownfield site that had been vacant and an eyesore for many years, into one of our most in-demand logistics centers in the country,” says Mr De la Garza.

“We take seriously the responsibility of being stewards of the pension fund resources, as well as the obligation to be a good corporate citizen of Mexico. In 2014 Corporate Properties was certified as a “Great Place to Work”, and part of our qualifying profile was related to how we interact with the community. All of our stakeholders benefit from this approach to business.”

Looking ahead, Mr De la Garza expects Mexico to continue on its path as a preferred destination for global manufacturers, with an improving economy and demographic profile: “Mexico’s energy industry reforms should attract significant foreign investment and result in more favorable employment opportunities for the country’s citizens. While the recent fiscal reforms have caused some short-term disruption, we believe that increased government support for education, infrastructure, and security, will result in a more positive environment in the future.

“Corporate Properties will continue to grow along with Mexico. We are confident of the country’s direction and our opportunity for market success.”

Further information
www.cpamericas.com

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