SECOND QUARTER 2018 EARNINGS REPORT

[Pages:33]SECOND QUARTER 2018 EARNINGS REPORT

Mexico City, July 26, 2018 ? Terrafina? ("TERRA" or "the Company") (BMV: TERRA13), a leading Mexican industrial real estate investment trust ("FIBRA"), externally advised by PGIM Real Estate and dedicated to the acquisition, development, leasing and management of industrial real estate properties in Mexico, today announced its second quarter 2018 (2Q18) earnings results.

The figures in this report have been prepared in accordance with International Financial Reporting Standards ("IFRS"). Figures presented in this report are presented in millions of Mexican pesos and millions of U.S. dollars, unless otherwise stated. Additionally, figures may vary due to rounding. Terrafina's financial results included in this report are unaudited. As a result, the mentioned figures in this financial report are preliminary figures and could be adjusted in the future.

This document may include forward-looking statements that may imply risks and uncertainties. Terms such as "estimate", "project", "plan", "believe", "expect", "anticipate", "intend", and other similar expressions could be construed as previsions or estimates. Terrafina warns readers that declarations and estimates mentioned in this document, or realized by Terrafina's management imply risks and uncertainties that could change in function of various factors that are out of Terrafina's control. Future expectations reflect Terrafina's judgment at the date of this document. Terrafina reserves the right or obligation to update the information contained in this document or derived from this document. Past or present performance is not an indicator to anticipate future performance.

Operating and Financial Highlights as of June 30, 2018

Operating

? As of June 30, 2018, the occupancy rate was 95.5%, a 68 basis point increase compared to the second quarter of 2017 (2Q17). Additionally, considering signed letters of intent (LOI), occupancy for 2Q18 was 96.4%.

? Annualized average leasing rate per square foot at 2Q18 was US$5.07, a US$0.08 increase compared to 2Q17.

? Terrafina reported a total of 40.9 million square feet (msf) of Gross Leasable Area (GLA) comprised of 286 properties and 298 tenants in 2Q18.

? 2Q18 leasing activity totaled 1.4 msf, of which 18.0% corresponded to new leases, 39.0% to lease renewals and 43.0% to early renewals. Leasing activity was mainly concentrated in the Chihuahua, Ciudad Juarez, Tijuana, Ramos Arizpe, Queretaro, Silao, Cuautitlan Izcalli, San Luis Potosi, Guadalajara, Irapuato and Hermosillo markets.

Contacts in Mexico City:

Contacts in New York:

Francisco Martinez

Maria Barona

Investor Relations Officer

i-advize Corporate Communications, Inc.

Tel: +52 (55) 5279-8107

Tel: +(212) 406-3691

E-mail: francisco.martinez@terrafina.mx

E-mail: mbarona@i-

1

Financial

? Rental revenues reached US$47.6 million, a 14.2% or US$5.9 million increase compared to 2Q17. ? NOI was US$47.9 million, a 14.6% or US$6.1 million increase compared to 2Q17. ? The NOI margin reached 94.9%, a 82 basis point increase compared to 2Q17. ? EBITDA reached US$43.6 million, an increase of 15.0% or US$5.7 million compared to 2Q17. ? EBITDA margin was 86.4%, a 111 basis point increase compared to 2Q17. ? Adjusted funds for operations (AFFO) reached US$28.8 million, an increase of 18.2% or US$4.4 million compared to

2Q17. ? AFFO margin was 56.7%, a 241 basis point increase compared to 2Q17. ? Distributions totaled US$28.8 million. As a result, Terrafina will distribute Ps.0.7020 per CBFI (US$0.0364 per CBFI)

for distributions corresponding to the April 1 to June 30, 2018 period. ? The annualized distribution was US$0.1456; considering the average share price for the 2Q18 of US$1.47 (Ps.28.46),

Terrafina's dividend yield for the quarter was 9.9%.

2

Operating and Financial Highlights

Operating

Number of Developed Properties

Gross

Leasable

Area

(GLA)

1

(msf)

Land Reserves (msf) Occupancy Rate2

Avg. Leasing Rent / Square Foot (dollars)

Weighted Average Remaining Lease Term (years) Renewal Rate3

Quarterly Financial

Rental Revenues4 Other Operating Income Net Revenues Net Operating Income (NOI)* NOI Margin EBITDA5* EBITDA Margin Funds from Operations (FFO)* FFO Margin Adjusted Funds from Operations (AFFO)* AFFO Margin Distributions Distributions per CBFI6

Balance Sheet

Cash & Cash Equivalents Investment Properties Land Reserves Total Debt Net Debt

Jun18 286 40.9 6.17 95.5% 5.07 3.46 90.4%

Jun17 260 36.5 6.26 94.9% 4.99 3.49 87.9%

Var. 26 4.4 -0.09 68 bps 0.08 -0.03 245 bps

2Q18

2Q17

Var.

2Q18

2Q17

Var.

fx 19.3911

18.5666

(millions of pesos unless otherwise stated)

(millions of dollars unless otherwise stated)

921.8 50.9 981.1 926.9 94.9% 842.0 86.4% 604.2 62.0% 555.3 56.7% 555.3 0.7020

773.6 45.8 825.1 776.3 94.1% 704.5 85.3% 500.8 60.6% 452.5 54.3% 452.4 0.5720

19.2% 11.2% 18.9% 19.4% 82 bps 19.5% 111 bps 20.6% 145 bps 22.7% 241 bps 22.7% 22.7%

47.6 2.6 50.6 47.9 94.9% 43.6 86.4% 31.3 62.0% 28.8 56.7% 28.8 0.0364

41.6 2.5 44.4 41.8 94.1% 37.9 85.3% 26.9 60.6% 24.3 54.3% 24.3 0.0308

14.2% 7.8% 14.0% 14.6% 82 bps 15.0% 111 bps 16.3% 145 bps 18.2% 241 bps 18.2% 18.2%

Jun18 Mar18

Var. fx Jun18 Mar18

Var.

(millions of pesos unless otherwise stated)

19.8633

18.3445

(millions of dollars unless otherwise stated)

2,042.4 46,176.3 1,032.2 19,826.6 17,784.2

2,035.7 42,165.3

950.8 18,623.4 16,587.7

0.3% 9.5% 8.6% 6.5% 7.2%

102.8 2,324.7

52.0 998.2 895.3

111.0 2,298.5

51.8 1,015.2 904.2

-7.3% 1.1% 0.3% -1.7% -1.0%

Figures in dollars in the Income Statement were converted into pesos using the average exchange rate for the period. (1) Millions of square feet. (2) Occupancy at the end

of the period. (3) Indicates the lease renewal rate of the leases, includes early renewals. (4) Excluding accrued income as it is a non-cash item. (5) Earnings before interest,

taxes, depreciation and amortization. (6) Certificados Burs?tiles Fiduciarios Inmobiliarios - Real Estate Investment Certificates. (*) Revenues and expenses have been

adjusted for the calculation of the above mentioned metrics. Figures in dollars in the Balance Sheet were converted using the closing exchange rate of the period. Please

refer to the "2Q18 Financial Performance" and "Appendices" section available in this document.

Source: PGIM Real Estate ? Asset Management and Fund Accounting

3

Comment by Alberto Chretin, Chief Executive Officer and Chairman of the Board

During the second quarter of 2018, we continued to generate solid results and began capturing the benefits from the acquisitions of industrial assets that were concluded at the beginning of the second quarter. Moreover, the strength of the industrial real estate sector in Mexico was reflected in high leasing levels, which represented a total of 1.4 million square feet for Terrafina. The main leasing activity was concentrated in the markets of Chihuahua, Ciudad Juarez, Tijuana, Ramos Arizpe, Queretaro, Silao, Cuautitlan Izcalli, San Luis Potosi, Guadalajara, Irapuato and Hermosillo markets. Renewal activity for Terrafina reached 0.6 million square feet and, in terms of early renewals, these were an additional 0.6 million square feet ? a clear indicator that our tenants want to secure the permanence of their operation in the long-term. As a result of the strong leasing activity experienced in the first half of 2018, Terrafina lowered the remaining portion of the maturity schedule for the year from 8.1% in the first quarter to 5.2% in the second quarter of 2018. Second quarter 2018 occupancy levels reached 95.5% and same-store occupancy was 95.2%. Including signed letters of intent, occupancy levels for the quarter reached 96.4%. Occupancy rates by region remained stable, reaching 97.2% in the Northern region, 92.2% in the Bajio region and 93.7% in the Central region. Average annual leasing rent for 2Q18 was US$5.07 per square foot, a US$0.08 increase compared to the second quarter of 2017 and a US$0.01 increase compared to the first quarter of 2018. Average rents by region remained in line, with US$4.99 per square foot in the Northern region, US$5.16 per square foot in the Bajio region and a US$5.27 average rent per square foot in the Central region. As for Terrafina's main financial indicators for the second quarter of 2018, rental revenues reached US$47.6 million, Net Operating Income reached US$47.9 million with an NOI Margin of 94.9%, as well as generating US$28.8 million in Adjusted Funds from Operations. Finally, Annualized Distributions per CBFI were Ps. 2.81, or US$0.1456, which represented a 9.8% dividend yield, considering the average CBFI price for the second quarter of 2018.

Thank you for your interest in Terrafina. Sincerely,

Alberto Chretin Chief Executive Officer and Chairman of the Board

4

Operating Highlights

Highlights by Region

(as of June 30, 2018)

# Buildings # Tenants GLA (msf) Land Reserves (msf) Occupancy Rate Average Leasing Rent / Square Foot (dollars) Annualized Rental Base %

Source: PGIM Real Estate - Asset Management

North 201 203 25.5 2.7 97.2% 4.99 62.4%

Bajio 55 56 9.1 0.2

92.2% 5.16 22.0%

Central Total

30

286

39

298

6.3

40.9

3.3

6.2

93.7% 95.5%

5.27 5.07

15.7% 100.0%

Composicon by Asset Type

as of 2Q18

(as a % of total GLA)

NORTH -

Baja California Sonora Chihuahua Coahuila Nuevo Leon Tamaulipas Durango

BAJIO -

San Luis Potosi Jalisco Aguascalientes Guanajuato Queretaro

Terrafina's 2Q18 Operations

CENTRAL - State of Mexico - Mexico City - Puebla - Tabasco

26.5%

73.5% Distribujon Manufacturing

Leasing Activity

Operating Portfolio (msf): Renewals Early Renewals New Leases

2Q18 2Q17

Var.

0.6

0.9

-0.3

0.6

0.1

0.5

0.3

0.5

-0.3

Total Square Feet of Leases Signed

1.4

1.6

-0.1

Source: PGIM Real Estate - Asset Management

5

Operating Highlights (continued)

Occupancy and Rents by Region

Occupancy

(As of June 30, 2018)

Rate

North

97.2%

Baja California

100.0%

Tijuana

100.0%

Sonora

88.5%

Hermosillo

88.5%

Chihuahua

97.8%

Chihuahua

98.0%

Ciudad Juarez

97.8%

Delicias

100.0%

Gomez Farias

100.0%

Casas Grandes

100.0%

Coahuila

96.4%

Ciudad Acu?a

100.0%

Monclova

100.0%

Ramos Arizpe

96.2%

Saltillo

91.0%

Derramadero

100.0%

San Pedro de las Colinas 89.3%

Torreon

100.0%

Nuevo Leon

93.3%

Apodaca

100.0%

Monterrey

91.0%

Tamaulipas

100.0%

Reynosa

100.0%

Durango

100.0%

Durango

100.0%

Gomez Palacio

100.0%

Bajio

92.2%

San Luis Potosi

89.5%

San Luis Potosi

89.5%

Jalisco

100.0%

Guadalajara

100.0%

Aguascalientes

100.0%

Aguascalientes

100.0%

Guanajuato

94.4%

Celaya

100.0%

Irapuato

81.8%

Silao

100.0%

Queretaro

85.8%

Queretaro

85.8%

Central

93.7%

State of Mexico

92.7%

Cuautitlan Izcalli

100.0%

Toluca

81.6%

Ciudad de Mexico

100.0%

Azcapotzalco

100.0%

Puebla

100.0%

Puebla

100.0%

Tabasco

100.0%

Villahermosa

100.0%

Total

95.5%

Source: PGIM Real Estate - Asset Management

Avg. Leasing Rent/ Square Foot (dollars)

4.99

4.40 4.40 4.57 4.57 5.03 5.43 4.70 5.98 3.34 4.21 5.05 6.11 5.46 4.88 5.44 6.64 2.10 4.26 5.03 5.51 4.84 4.65 4.65 4.79 4.95 3.14

5.16

4.89 4.89 6.51 6.51 4.76 4.76 4.80 5.29 5.24 4.55 4.78 4.78

5.27

5.49 5.51 5.39 9.22 9.22 3.20 3.20 3.99 3.99 5.07

Maturities and Renewals by Region

0

Consolidated

(As of June 30, 2018)

Maturities

(number of contracts)

% of Total Maturities

Renewals

(number of contracts)

% of Total Renewals

North

7

53.8%

5

71.4%

Baja California Tijuana

Sonora Hermosillo

Chihuahua Chihuahua

1

7.7%

1

100.0%

1

7.7%

1

100.0%

1

7.7%

1

100.0%

1

7.7%

1

100.0%

3

23.1%

3

100.0%

1

7.7%

1

100.0%

Ciudad Juarez

2

15.4%

2

100.0%

Delicias Gomez Farias Casas Grandes Coahuila Ciudad Acu?a Monclova

0

0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

2

15.4%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

Ramos Arizpe Saltillo

1

7.7%

0

0.0%

1

7.7%

0

0.0%

Derramadero

0

San Pedro de las Colinas

0

Torreon

0

Nuevo Leon

0

Apodaca

0

0.0% 0.0% 0.0% 0.0% 0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

Monterrey Tamaulipas

0

0.0%

0

0.0%

0

0.0%

0

0.0%

Reynosa Durango Durango Gomez Palacio

0

0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

Bajio

5

38.5%

5

100.0%

San Luis Potosi San Luis Potosi

Jalisco

0

0.0%

0

0.0%

0

0.0%

0

0.0%

1

7.7%

1

100.0%

Guadalajara

1

7.7%

1

100.0%

Aguascalientes Aguascalientes

Guanajuato Celaya Irapuato Silao

0

0.0%

0

0.0%

0

0.0%

0

0.0%

3

23.1%

3

100.0%

0

0.0%

0

0.0%

1

7.7%

1

100.0%

2

15.4%

2

100.0%

Queretaro Queretaro

1

7.7%

1

100.0%

1

7.7%

1

100.0%

Central

1

7.7%

1

100.0%

State of Mexico

1

7.7%

1

100.0%

Cuautitlan Izcalli Toluca Ciudad de M?xico Azcapotzalco Puebla Puebla

1

7.7%

1

100.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

0

0.0%

Tabasco

0

0.0%

0

0.0%

Villahermosa

0

0.0%

0

0.0%

Total

13

100.0%

11

84.6%

Source: PGIM Real Estate - Asset Management *Over the number of matured leases in the quarter

6

2Q18 Operational Performance

Composition by Geographical Diversification

The geographic diversification of Terrafina's properties at 2Q18 (based on GLA per square foot) was as follows: the

Northern region of Mexico represented 62.4% of GLA, while the Bajio and Central regions represented 22.3% and 15.3%

of GLA, respectively.

Geographic Distribution by Region and State

2Q18

as a % of Total GLA 2Q18

2Q17

as a % of Total GLA 2Q17

North

25.55

62.4%

21.01

57.5%

Baja California Tijuana

Sonora Hermosillo

Chihuahua Chihuahua Ciudad Juarez Delicias Gomez Farias Camargo Casas Grandes

Coahuila Ciudad Acu?a Monclova Ramos Arizpe Saltillo Derramadero San Pedro de las Colinas Torreon

Nuevo Leon Apodaca Monterrey

Tamaulipas Reynosa

Durango Durango Gomez Palacio

0.90 0.90 0.33 0.33 14.29 5.83 7.76 0.52 0.08 0.02 0.09 6.84 0.24 0.35 4.54 0.62 0.54 0.15 0.39 1.94 0.50 1.44 0.47 0.47 0.78 0.71 0.07

2.2% 2.2% 0.8% 0.8% 34.9% 14.2% 19.0% 1.3% 0.2% 0.1% 0.2% 16.7% 0.6% 0.8% 11.1% 1.5% 1.3% 0.4% 1.0% 4.7% 1.2% 3.5% 1.1% 1.1% 1.9% 1.7% 0.2%

0.90 0.90 0.33 0.33 13.66 5.44 7.74 0.29 0.08 0.02 0.09 3.49 0.24 0.34 2.00 0.62 0.00 0.15 0.13 1.38 0.50 0.89 0.47 0.47 0.78 0.71 0.07

2.5% 2.5% 0.9% 0.9% 37.4% 14.9% 21.2% 0.8% 0.2% 0.1% 0.2% 9.5% 0.7% 0.9% 5.5% 1.7% 0.0% 0.4% 0.4% 3.8% 1.4% 2.4% 1.3% 1.3% 2.1% 1.9% 0.2%

Bajio

9.12

22.3%

9.26

25.4%

San Luis Potosi San Luis Potosi

Jalisco Guadalajara

Aguascalientes Aguascalientes

Guanajuato Celaya Irapuato Silao

Queretaro Queretaro

3.31

8.1%

3.30

9.0%

3.31

8.1%

3.30

9.0%

1.66

4.0%

1.81

5.0%

1.66

4.0%

1.81

5.0%

0.75

1.8%

0.75

2.1%

0.75

1.8%

0.75

2.1%

1.42

3.5%

1.42

3.9%

0.12

0.3%

0.12

0.3%

0.44

1.1%

0.44

1.2%

0.87

2.1%

0.86

2.4%

1.98

4.8%

1.98

5.4%

1.98

4.8%

1.98

5.4%

Central

6.25

15.3%

6.25

17.1%

State of Mexico Cuautitlan Izcalli Toluca Huehuetoca

Ciudad de Mexico Azcapotzalco

Puebla Puebla

Tabasco Villahermosa

5.40

13.2%

5.40

14.8%

4.26

10.4%

4.26

11.7%

0.91

2.2%

0.91

2.5%

0.23

0.6%

0.23

0.6%

0.02

0.1%

0.02

0.1%

0.02

0.1%

0.02

0.1%

0.18

0.5%

0.18

0.5%

0.18

0.5%

0.18

0.5%

0.65

1.6%

0.65

1.8%

0.65

1.6%

0.65

1.8%

Total

40.92

100.0%

36.52

Total Gross Leasable Area / million square feet. Potential leasable area of land reserves are not included.

Source: PGIM Real Estate - Asset Management

100.0%

7

Composition by Asset Type

At the end of 2Q18, 73.5% of Terrafina's portfolio consisted of properties dedicated to manufacturing activities while 26.5% were dedicated to distribution and logistics activities.

Composicon by Asset Type as of 2Q18

(as a % of total GLA)

26.5%

73.5% Distribujon Manufacturing

Composition by Asset Type

2Q18

Distribution

26.5%

Manufacturing

73.5%

Source: PGIM Real Estate - Asset Management

2Q17 26.4% 73.6%

Var. 9 bps -9 bps

Composition by Sector

As of June 30, 2018, tenant diversification by industrial sector was as follows:

Diversificacon by Sector as of 2Q18

(as a % of leased GLA)

Automojve Industrial properjes Consumer goods Logisjcs and Trade Aviajon Non-durable consumer goods Electronics

8.0% 3.9% 9.8%

9.6%

34.5%

14.5% 19.8%

Industrial Sector Diversification

2Q18

Automotive

34.5%

Industrial properties

19.8%

Consumer goods

14.5%

Logistics and Trade

9.6%

Aviation

9.8%

2Q17 31.9% 20.0% 15.2% 9.8% 10.4%

Non-durable consumer goods

3.9% 4.4%

Electronics

Total

Source: PGIM Real Estate - Asset Management

8.0% 8.3% 100.0% 100.0%

Var. 257 bps -26 bps -69 bps -21 bps -59 bps -47 bps

-35 bps

8

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