We develop everywhere where there is a need for quality housing. We prefer vertical developments; we mostly build in suburban areas, though there is a trend of people returning to city centers. We are still looking for a formula that goes well in city centers where we can deliver a way of living that is different from any other development. We have been in talks with many funds and they find us attractive because we have been in the market for almost 50 years; for a fund, this is important as there are companies that have grown significantly but do not have the resilience to stay. Government regulations can learn from us the benefits of high rises. Newer constructions do not have problems so four or six lots can be merged to construct taller buildings with more open spaces. There are many things that can be done to improve the quality of life in urban developments and we have the chance to do it now.
Director, Frondoso Grupo Inmobiliario
Jorge Casar Aldrete
Director General, Altozano
We are planning the first development in Morelia measuring 1,000ha. We decided to go in another direction and build the key portions of the project first, including a shopping mall, university, hospital, gas station, and a sports center. From the beginning, we have focused on the quality of life for people living there; all the streets have pavements for walking, trees, bicycle lanes, and a great deal of landscaping, including lakes. We are currently on our 10th project and every time we learn something for the next project. The model that we develop is tough to replicate in major cities because it is impossible to find large pieces of land. The difficult part sometimes is that the laws are completely different in each state and for each piece of land there is never one owner. We do not plan on going to Mexico City because we have a great future doing small projects. Our priority is to finish current projects before moving onto new ones.
Juan Ramón Leñero
Terrafondo Capital is a private fund that was created a year and a half ago; MXN1.5 billion was raised in equity and another MXN1.5 billion was brought from banking institutions to create a fund of MXN3 billion. We created the fund for three main reasons: first, we wanted to turn the company into a more institutional vehicle with better internal control, auditors, and a board of directors in order to operate at a level of a public company; second, we wanted to diversify; third, we already had a series of projects that belong to the fund and have profitability far superior to the competition. Prior to the fund, Terraforma bought a plot with equity and presales in mind. The fund replaced the capital of presales with the capital of the fund, reach the edge of the price we estimate and this improves the yields markedly. We realized we were leaving a great deal of value on the table because we did not have a secure funding structure.
CEO, Thor Urbana
As the company has grown, we have always tried to find different sources of investors in order to diversify our platform. We have been lucky to forge great relationships with foreign institutions and we were not yet focused on Mexican investors. Regulations changed, but the CKD is still a new product despite being around for around 10 years. Mexican institutional investors were only allowed to invest in fixed income, so we saw an opportunity. Most of our platform and projects are here, meaning Mexican investors are right to put money into domestic projects in order to reach desired returns. Hence, we raised MXN5 billion. We are seeing mixed-use as a global trend for multiple reasons, but mainly efficiency and quality of life. There was no infrastructure in the suburbs so we decided to change our policy and bring people back into the urban centers. As land becomes more expensive, in order to make a project work you have to go vertical.