Why did Marhnos transition from a construction company to a real estate developer?
We had been in the construction market for 64 years, and it is still a major part of what we do and in our DNA. Throughout this time, we have completed build-to-suit projects, such as consulates for the US government 40 years ago, not to mention projects for industrial players, such as Grupo Bimbo and Frialsa. We have done many real estate developments and developments on the infrastructure side. The margins are getting tougher and tighter every day for third parties, but we have skills throughout the value chain and expertise to use them. Marhnos is still building, but as a developer, and we see there is much more value creation within the whole development packaging.
What are the main infrastructure gaps in Mexico, and how does Marhnos contribute to fill them?
The greatest opportunity is creating an agency dedicated to PPPs for the country to have a long-term infrastructure plan. There are several 30-year infrastructure plans done by previous administrations and the School of Civil Engineers; however, it is never too late to have one plan that is really accepted by all infrastructure stakeholders. As of now, we need to wait for the new government and bring it on board to create this long-term strategic view, not to mention the different stakeholders. Typically, it is just the government and the constructors who get involved, but really there is much more to it, including consulting and legal firms, institutional investors such as commercial and development banks, and operators such as ourselves. Then, we need a PPP office, which was partly started with the Ministry of Finance in 2017. That office needs to start centralizing some of the norms and identifying the main features and characteristics of PPPs. The country also needs to look at social infrastructure in terms of how we support our service, manufacturing, and logistics platform in Mexico. For this, we need infrastructure like hospitals and waste-water treatment. That said, the PPP law is good. In terms of enforcement, we have sufficient regulations and are where we should be
How do you integrate your projects with their surroundings?
For all our residential projects, we try to ensure we are close to a bus or metro stop so there is access and mobility. On the logistics side, a project has to be on the outskirts of a city because it is industrial. For office projects, we aim to be centrally located. We are also looking at doing some government buildings where we want to change the concept and build an actual public space—a park or an area for open-air concerts or other cultural activities
As a privately-owned company, can you tell us about your strategy to raise funds?
For the larger housing projects, we invite certain funds to participate. For example, Gava, which is a fund from Monterrey, and Peninsula Fund from Miami, which is also focused on investing in Latin America. Our infrastructure unit has issued a Certificate of Capital Development (CKD). For our first CKD we invested 30% while other investors accounted to 70%.
What are your goals for 2018?
In 2018, we won two projects from the Mexican Social Security Institute (IMSS), of which one is a 38,000-sqm, 260-bed development in the metropolitan area of Monterrey. We will do part of the construction for that. We will also build another 260-bed, 38,000-sqm hospital in the north of Mexico City. We are also looking at road projects in Guatemala and hospital projects in Peru. Colombia could also be a possibility. Our housing unit has eight projects underway in Mexico City and three in Guadalajara, where we are opening a new office. In our PPP unit, we are still looking for projects in different states of Mexico.