LPA (LPA) Q1 2025: Peru Rental Income Jumps 38%, Anchoring Regional Platform Expansion
LPA’s Q1 saw a decisive inflection as Peru’s logistics rental income surged, driving total portfolio occupancy to 100% and validating the company’s consumer-driven strategy in Latin America. With new developments already 73% pre-leased and a disciplined approach to Mexico, LPA is prioritizing resilient domestic demand while maintaining operational selectivity in the face of tariff uncertainty. The company’s forward pipeline and NOI outlook remain robust, underpinned by dollar-denominated leases and a healthy customer mix.
Summary
- Peru Rental Momentum: Domestic demand and e-commerce tailwinds are accelerating lease-up and pre-leasing in Peru.
- Portfolio Stability: 100% occupancy and mostly dollar-based leases protect revenue streams across all core markets.
- Disciplined Mexico Entry: LPA’s selective approach targets logistics over manufacturing, hedging against tariff volatility.
Performance Analysis
LPA delivered double-digit top-line growth in Q1 2025, with revenue rising 12.9% to $11.8 million and NOI (net operating income, a real estate profitability measure) up nearly 6% to $9.4 million. The standout driver was Peru, where rental income soared 38.4% year over year, now accounting for 29% of the total portfolio. Costa Rica, which makes up 47% of LPA’s gross leasable area (GLA), delivered a 6.1% revenue increase, while Colombia (24% of GLA) contributed 2.6% growth.
Operationally, LPA reached 100% occupancy across its 5.6 million square foot portfolio, a milestone reflecting strong demand and high barriers to entry in its markets. Rent per square foot increased 1.9% across the portfolio. General and administrative costs rose sharply, up 112%, driven by public company requirements, share-based compensation, and added headcount. However, financing costs declined 5.6% due to improved debt terms, and net debt to adjusted EBITDA improved by 30 basis points, supporting balance sheet health.
- Peru-Driven Outperformance: Peru’s economic resilience and logistics demand outpaced underwriting, fueling segment growth.
- Occupancy Milestone: Full portfolio lease-up underscores both operating efficiency and customer stickiness.
- Cost Structure Shifts: G&A inflation reflects scale-up for growth and public company compliance, partially offset by lower financing costs.
Rental revenue from new contracts has yet to fully impact cash flows, suggesting further growth momentum in coming quarters as customers settle into new space. Buybacks continued, with $0.8 million repurchased in Q1, totaling $2.1 million to date.
Executive Commentary
"Rental revenues from these recent contracts have not yet been fully reflected in our cash flow statement, but will begin to be over the coming months as customers settle into their space. On the development front, as we announced last month, we will increase our footprint in Lima with the construction of a 215,000 square foot building at Parque Logístico Callao. Reflecting the scarcity of premium logistics facilities in the market, this planned building is already 73% pre-leased, even before construction started, by repeat customers."
Esteban Saldarriaga, Chief Executive Officer
"Compared to the first quarter of 2024, average rent per square foot increased 1.9% across our property portfolio. Peru, which represents 29% of LPA's portfolio GLA, grew much of the quarter's revenue increase. Its rental income grew 38.4%. Revenue from Costa Rica, which accounts for 47% of our property portfolio, increased 6.1%, while the remaining 24% of our portfolio in Colombia delivered a 2.6% revenue increase. Helping protect future revenue streams are mostly dollar-based rents, inflation indexing, as well as remaining interest, the weighted average of which is five years for our property portfolio."
Paul Smith, Chief Financial Officer
Strategic Positioning
1. Peru as a Growth Engine
Peru’s logistics sector is the centerpiece of LPA’s current growth strategy. The Lima Sewer Park reached full occupancy, and a new 215,000 square foot development in Callao is already 73% pre-leased, predominantly to repeat, blue-chip tenants. The market is characterized by limited supply of premium logistics space, fragmented land ownership, and robust domestic consumption, creating high barriers to entry and pricing power for LPA.
2. Resilient, Dollar-Denominated Leases
LPA’s portfolio is anchored by dollar-based, inflation-indexed leases, with a weighted average remaining term of five years. This structure insulates revenue from local currency volatility and inflation, while long lease terms support cash flow visibility and reduce re-leasing risk. The company’s foundational markets—Peru, Costa Rica, and Colombia—are largely consumer-driven, limiting exposure to export-driven tariff shocks.
3. Selective Mexico Expansion
LPA is entering Mexico via a joint venture with Falcon, acquiring controlling interests in logistics assets in Puebla and anchoring DHL as a core tenant. Management is intentionally avoiding heavy exposure to light manufacturing, especially auto-related sectors sensitive to US tariff policy. The focus is on logistics assets serving Mexico’s domestic consumption, which mirrors the successful playbook applied in other foundational markets.
4. Operating Discipline and Capital Allocation
Despite pressure from scaling costs, management continues to prioritize disciplined investment, selective customer acceptance, and ongoing share repurchases. The approach in Mexico is methodical, with a preference for partnerships that provide local expertise and risk mitigation.
Key Considerations
LPA’s Q1 performance highlights the strength of its regional logistics platform and the effectiveness of its consumer-led strategy, but also surfaces the need for ongoing operational discipline and risk management as the company expands into new geographies.
Key Considerations:
- Peru’s Outperformance Sets the Pace: Sustained demand and pre-leasing activity in Lima position Peru as a model for future development and capital deployment.
- Occupancy and Lease Structure Provide Downside Protection: 100% occupancy and dollar-based, long-term leases anchor revenue stability even as macro conditions shift.
- Mexico Entry Remains Cautious: Management’s selective focus on logistics assets reflects a prudent response to tariff uncertainty and sector-specific risk.
- Cost Structure Scaling: Elevated G&A is a function of public company compliance and growth, but requires monitoring to ensure margin preservation as the portfolio expands.
- Pipeline Visibility: Rental revenue from newly signed and pre-leased developments has not yet fully flowed through, indicating embedded NOI growth in coming quarters.
Risks
Tariff policy uncertainty in Mexico and potential spillover into Latin American logistics markets remain key risks, particularly for any expansion into manufacturing or export-reliant assets. Rising G&A costs could pressure margins if not contained as the company scales, and any slowdown in domestic consumption across foundational markets would weaken the current demand thesis. Currency and political risk, while mitigated by dollar leases, are inherent in the region and warrant continued vigilance.
Forward Outlook
For Q2 2025, LPA management expects:
- Continued NOI growth as new rental contracts flow into cash results
- Stabilized occupancy near current levels, with incremental lease-up from new developments
For full-year 2025, management maintained guidance for:
- Additional NOI growth driven by foundational markets and initial Mexico contribution
Management emphasized:
- “We still have a strong pipeline of near and long term investment opportunities in our foundational markets and in Mexico.”
- “Our foundational markets are demonstrating resilience as they continue growing, while our strong and diverse base of high-quality customers would serve as a frontline in any adverse economic scenario.”
Takeaways
LPA’s Q1 results underscore the company’s ability to drive growth through disciplined, consumer-driven logistics investments while managing risk across diverse Latin American markets.
- Peru’s Acceleration Validates Strategy: Strong lease-up and pre-leasing in Lima highlight the power of LPA’s premium, well-located assets and customer relationships.
- Disciplined Mexico Entry Mitigates Policy Risk: The company’s focus on logistics over manufacturing is a prudent response to near-term tariff and export uncertainty.
- Pipeline and Lease Structure Support Forward Growth: Embedded revenue visibility from new contracts and dollar-based leases provide a solid foundation for continued NOI expansion.
Conclusion
LPA’s first quarter demonstrates the strength of its regional logistics platform and the resilience of its consumer-focused business model. As the company expands selectively into Mexico and continues to capitalize on high-barrier markets like Peru, the combination of operational discipline and strategic capital allocation positions LPA for durable growth and risk-managed returns.
Industry Read-Through
LPA’s results reinforce the importance of consumer-driven logistics assets in Latin America, as domestic demand and e-commerce adoption outpace export-driven volatility. The company’s ability to achieve full occupancy and pre-lease new developments signals a supply-demand imbalance that may benefit other logistics operators in the region. Dollar-based, long-term leases are becoming a critical risk management tool for real estate investors facing currency and policy headwinds. The cautious approach to Mexico’s manufacturing sector is a warning for peers—logistics demand tied to domestic consumption offers a more stable growth path amid ongoing trade policy uncertainty.