General CBFI- Holders’ Assembly Alternate Fee Structure Proposal Employee Compensation Plan Proposal Issuance of New CBFIs Proposal April 4th, 2014
Agenda 1 Alternate Fee Proposal 2 Employee Compensation Plan Proposal 3 New CBFI Issuance Proposal 4 Designation of shareholders representatives 2 2
Alternate Fee Proposal
Understanding Fibra Uno’s current fee structure Fibra Uno’s Fee Structure at IPO was designed considering feedback from prospective IPO investors: Pre - IPO Fee Structure Proposal Investor Feedback IPO Fee Structure Incentivise growth via 3 rd 1.0% of rents Property 3.0% of rents Advisory fee party acquisitions and not Management Fee only through E-Group 1.0% of Gross Asset Value 2.0% of rents Services Fee contributions (“GAV”) Property Management fee 0.5% of undepreciated asset Incentivise growth with value net of debt (Net Asset moderate leverage Value or “NAV”) 3.0% Acquisition Fee over GAV of 3 rd party acquisitions IPO investors requested a change from 100 bps or 1.0% of GAV and 3.0% of Rents for: a) 2.0% of Rents to Advisor (Plus 1.0% of Rents for Management Subsidiary) 3.0% on GAV Acquisition Fee on 3 rd party acquisitions and b) c) 50 bps on NAV Property Management Fee 4 4
FIBRA Fee Benchmark April 2013 Following the success of our IPO and the strong market performance of our CBFIs, some competitors followed our footsteps and got listed in the Mexico Stock Exchange and included different fee structures that enabled them to better reward and retain talent. Asset 0.5% of gross asset cost 1.0% of equity market Management 0.5% of Net Asset Value indexed for inflation capitalization Fee Property Management 1.0% 1.5% to 3.0% 4.0% Fee Leasing Fees 2.0% 3.0% to 6.0% 4.0% (% of rents) Incentive / 10.0% above a 5.0% inflation- 10.0% above 9.0% Performance None adjusted cumulative total return cumulative return Fees (1) Founder’s Fee: Acquisition Fee: 1.5% of the purchase price of the 3.0% of property value (3rd initial portfolio party acquisitions only) Other Fees None Termination Fee: Termination Fee: Receive base and incentive fees 5x Asset Management Fee for up to 10 years 5 5
Current Fibra Uno Fee Status and Benchmark In light of the new competitive environment, as well as the performance of Fibra Uno’s CBFIs (up 134.2% since the IPO), Fibra Uno introduced a “Performance Fee”, which was unanimously approved at the CBFIs holders’ general assembly held in April 23, 2013; but placed on hold by Advisor . Danhos Asset 0.5% of gross asset cost 1.0% of equity market 0.5% of Net Asset Value 1.0% of Net Asset Value Management Fee indexed for inflation capitalization Property 1.0% 1.5% to 3.0% 4.0% 2.0% Management Fee Leasing Fees 2.0% 3.0% to 6.0% 4.0% None (% of rents) High water-mark $45.67 10% of return in excess of 12% Incentive / 10.0% above a 5.0% inflation- 15% of return in excess of 18% 10.0% above 9.0% Performance adjusted cumulative total None cumulative return Fees (1) return 20% of return in excess of 24% The above to be paid in CBFIs − with a 3-year lock-up period Founder’s Fee: Acquisition Fee: Termination Fee: 1.5% of the purchase price of Years 1 – 7: three years of 3.0% of property value (3rd the initial portfolio party acquisitions only) advisory fee Other Fees None Termination Fee: Years 7 – 10: accrued fees Termination Fee: for the total term of the Receive base and incentive 5x Asset Management Fee contract (10 years) fees for up to 10 years 6 Source: Company Public Filings. Fibra Uno’s Performance Fee is approved but suspended by Advisor’s decision. (1)
Fee Structure proposal Since our IPO, our shareholder base has grown and evolved to include a broader range of investors and partners Considering the feedback of our partners and in order to address our investors’ concerns and to better align all of Fibra Uno’s stakeholders’ interests, Fibra Uno’s Practices Committee recommends the adoption of the following changes Fee Structure at IPO Current Proposal 1.0% of rents Management 1.0% of rents Management Management - Fee Fee (Fibra Uno G&A) (Fibra Uno G&A) 2.0% of rents Service / 2.0% of rents Service / Leasing 3.0% of rents Leasing Fee Leasing Fee Property 1.0% of GAV 0.5% of NAV 1.0% of NAV Management 3.0% on 3 rd party acquisitions Acquisition - NONE Employee Compensation Plan Performance - Include Performance Fee Fibra Uno has hired an external consultants to advise our Management, Technical Committee and Practices Committee on development of an Employee Compensation plan that will be in line with global industry standards and best practices 7 7
Employee Compensation Plan (“ECP”)
Employee Compensation Plan (“ECP”) In order to align CBFI Holders’ interests with that of our management, Fibra Uno has been working, both internally and with external advisors, to develop an Employee Compensation Plan (“ECP”) that would replace the Performance Fee approved during our CBFI holders’ general assembly of April 23, 2013 The specific parameters of the ECP are still under development and would include certain conditions and variables that we consider sensitive information from a competitive standpoint and therefore will remain confidential Based on Employee Compensation plans established by leading REITs, Fibra Uno’s stock compensation plan would be structured considering the following: − In line with international standards − Simple to measure and evaluate − Parameters and thresholds should be clearly established upfront − Duration of the program should be for 10 years − Fixed number of shares to be granted over the life of the program − Performance compensation thresholds based on specific operating metrics linked to fundamental Company performance, dividend and indexed based relative return for CBFI holders The proposal outlined herein considers input from our CBFI holders, Employee Compensation consultants, investment banks, as well as from our own research and expertise 9
ECP general parameters I. CBFI based variable compensation structure designed to: a) Reward performance b) Retain key talent Align CBFI holders’ and management’s objectives and interests c) II. CBFI or equity-based compensation parameters: A significant portion of CBFIs granted will “vest” over periods that range from 3 to 5 years a) b) Equity based compensation to be granted as a reward for performance achievements, with well-defined measurable goals appropriate for each individuals, position, responsibilities and organizational objectives c) Organizational objectives and measurable goals shall consider certain key operating metrics, but shall not be limited to: 1. FFO/CBFI and Distributions/CBFI 2. Minimum or target occupation level 3. Minimum or target NOI margin 4. Relative index-based return measurement 10
ECP dimensions and duration In order to account for the aforementioned objectives as well as to consider certain specific factors of Fibra Uno, the ECP should: a) Have a duration or lifespan of 10 years in order to allow for: i. Long-term goal setting ii. Key talent retention iii. New talent additions as Fibra Uno grows and evolves b) Have a defined size equal to 5% of pro-forma 2014 Follow On CBFIs outstanding in order to: i. Create an ECP that will allow Fibra Uno to reward employees at all levels within the organization ii. Enable CBFI holders to asses overall dilution impact of the ECP iii. Define an ECP that will enable Fibra Uno to continue its industry leading performance while addressing our CBFI holders’ feedback 5% of Proforma CBFIs outstanding would be approximately 162.95 million CBFIs (1) c) (1) Assumes currently outstanding CBFIs of 1,809 million, + 200 million CBFIs for G30 and Garza Ponce Acquisitons + 1,250 million for 2014 New Equity 11
ECP Governance I. Employee Compensation shall be governed by a Compensations Committee a) Compensation Committee shall be 100% independent b) Compensation shall be proposed by the CEO and evaluated by the Compensations Committee c) Compensation Committee member changes to be approved by Nominations Committee Compensation Committee’s Mandate will be to: II. a) Maintain a strategic oversight of compensation program b) Evaluate and recommend pay for the CEO c) Conduct pay recommendation for key executives in conjunction with the CEO 12
ECP vs. Performance fee Fibra Uno’s Practices Committee recommends our CBFI holders to adopt the proposed Employee Compensation Plan, a vote will be requested during our upcoming General CBFI Meeting to indicate preference between the recommended ECP or re-instating the current (but suspended) Performance fee Current Proposal Performance High water-mark $45.67 fee 10% of return in excess of 12% 15% of return in excess of 18% N/A 20% of return in excess of 24% − The above to be paid in CBFIs with a 3-year lock-up period 5.0% of shares outstanding pro forma 2014 equity ECP follow-on Valid for 10 years N/A Pay for performance Objective measurement Retention objective 3-5 year vesting period 13
New CBFI Issuance
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