LPA (LPA) Q3 2025: Mexico Entry Adds $222K Revenue, Broadens Cross-Border Logistics Platform
LPA’s Q3 saw its first revenue from Mexico, validating its cross-border expansion thesis while core markets Peru and Colombia delivered robust growth. The company’s disciplined approach—prioritizing partnerships and targeted acquisitions—positions it for continued double-digit revenue growth and operational leverage. Management’s focus on occupancy, lease renewals, and selective capital deployment signals a platform well-placed for regional leadership and future scale.
Summary
- Mexico Expansion Begins: First revenue from Mexico signals execution on cross-border growth ambitions.
- Occupancy and Lease Visibility: 98% occupancy and all renewals completed provide strong revenue foundation into 2026.
- Strategic Capital Discipline: Selective acquisitions and partnerships drive growth while containing risk.
Performance Analysis
LPA’s third quarter results confirmed the resilience of its regional logistics model, with consolidated revenue nearing $13 million, up mid-teens year-over-year. Colombia and Peru were the primary engines, with rental revenue up 17.6% and 16.9% respectively, reflecting both healthy domestic consumption and favorable leasing conditions. Mexico contributed $222,000 in rental revenue, marking the company’s first tangible step into this strategically important market, with management signaling expectations for significant growth as the platform scales.
Occupancy remained exceptionally high at 98%, and NOI (net operating income, a key real estate profitability metric) climbed 8.7% to $10.4 million. SG&A expense fell 5%, demonstrating early operating leverage as the portfolio expands. Development activity accelerated, with total GLA (gross leasable area) up 14% year-over-year, and pre-leasing for new developments in Peru providing future revenue visibility. Valuation gains moderated versus last year, as mark-to-market rent appreciation in Colombia stabilized, but overall property values remain robust.
- Mexico Revenue Debuts: The $222,000 contribution is small but strategic, validating the cross-border thesis and providing a base for future growth.
- NOI and Operating Leverage: NOI growth outpaced expenses, as SG&A fell and new assets came online, supporting margin expansion.
- Development Pipeline: GLA expanded 14%, with significant pre-leasing, positioning the company for 2026 rental income growth.
LPA’s disciplined cost management, high occupancy, and expanding footprint underpin its double-digit growth narrative, even as valuation gains normalize and cost pressures in operating markets persist.
Executive Commentary
"Our international logistics platform continued to perform very well in the third quarter, delivering mid-teen revenue growth driven primarily by Peru and Colombia, where domestic consumption remains healthy and leasing conditions highly favorable. Although not observable in our 3Q figures, just last week we leased the remaining available space in our operating portfolio in Bogota to a now cross-border customer, one that is renting space in Costa Rica."
Esteban Saldarriaga, Chief Executive Officer
"Colombia and Peru drove the double-digit increase in our consolidated revenue, which was 12.9 million in the third quarter and in line with our forecast. Their rental revenue increased 17.6 and 16.9% respectively, while Costa Rica's decreased 1.5%. Mexico is now a reporting segment and contributed roughly $222,000 in rental revenue in the quarter. Revenue from Mexico is expected to grow significantly over time as we expand in this key market."
Paul Smith, Chief Financial Officer
Strategic Positioning
1. Mexico Market Entry and Expansion Model
LPA’s entry into Mexico is structured for risk-mitigated growth, with a focus on both organic development and acquisition through local partnerships. The inaugural Puebla facilities, anchored by DHL under a dollar-denominated lease, exemplify this approach. By leveraging partner expertise (e.g., ALES) and land contributions, LPA aims to maximize return on invested capital and accelerate scale while minimizing execution risk. Management is prioritizing submarkets driven by domestic consumption, mirroring the demand profile that has underpinned success in Peru and Colombia.
2. Regional Platform and Cross-Border Tenant Strategy
The company’s regional platform enables multinational tenant retention and expansion, as evidenced by cross-border leasing activity between Colombia and Costa Rica. High occupancy and pre-leasing rates—98% occupancy and 75% pre-leased new builds— reflect sustained demand for premium logistics assets and reinforce LPA’s competitive position as a cross-border operator.
3. Development Discipline and Capital Allocation
LPA maintains a strict capital allocation framework, avoiding speculative development and instead focusing on pre-leased or high-barrier projects. Recent development in Peru (LEED gold logistics building) and Costa Rica demonstrates the company’s ability to deliver on time and on budget, attracting blue-chip tenants and enhancing portfolio quality. Management’s approach to equity and funding—introducing an ATM-like facility for optionality— signals an intent to remain opportunistic but disciplined in pursuing growth opportunities.
4. Cost Structure and Operating Leverage
SG&A reductions and stable expense outlook position LPA for enhanced operating leverage as the portfolio grows and lease rates are rolled over to market levels. Financing costs declined 15% year-over-year, supported by lower rates in key markets and capitalization of interest on development projects, improving the company’s debt profile and supporting future investment capacity.
Key Considerations
LPA’s Q3 performance and commentary highlight a company executing on a multi-market, cross-border logistics strategy while maintaining cost discipline and operational rigor. The following considerations are central to the investment case:
- Mexico Market Ramp: Initial revenue is modest, but the pipeline of partnerships and acquisitions could transform the segment’s contribution over the next 12-24 months.
- Occupancy and Lease Renewal Execution: Near-full occupancy and completion of all renewals for the next 12 months provide revenue visibility and mitigate near-term vacancy risk.
- Development-Driven Growth: Expansion in GLA, particularly in Peru and Costa Rica, is set to fuel NOI growth in 2026 and beyond, with pre-leasing reducing absorption risk.
- Capital Allocation Flexibility: The company’s new ATM-like facility is unutilized but offers funding flexibility for opportunistic acquisitions, supporting growth without overextending leverage.
- Macroeconomic Sensitivity: While monetary policy and political noise present headwinds, LPA’s focus on resilient demand submarkets and dollar-linked leases provides some insulation.
Risks
Exposure to evolving tariff policies in Mexico, fluctuating interest rates, and political uncertainty across Latin America could impact demand, financing costs, or asset values. Valuation gains have moderated, and future property appreciation is less certain as market rent growth normalizes. Any slowdown in domestic consumption in core markets or missteps in Mexico expansion could disrupt the current growth trajectory.
Forward Outlook
For Q4 and into 2026, LPA management signaled:
- Sustained double-digit revenue growth, underpinned by lease renewals and new developments coming online.
- Stable expenses and operating leverage, with SG&A expected to remain flat as the portfolio expands.
- Accelerated Mexico revenue contribution, as additional assets are acquired or developed and partnerships deepen.
Management emphasized continued focus on disciplined capital allocation, risk management, and opportunistic investment in high-demand submarkets.
- Mexico scale-up is a priority, but only with prudent risk controls.
- Lease renewals and pre-leasing will anchor revenue stability into 2026.
Takeaways
LPA’s Q3 validates its cross-border logistics strategy, with Mexico now contributing revenue and core markets firing on all cylinders.
- Cross-Border Execution: The first Mexico revenue and cross-market tenant wins demonstrate platform scalability and tenant stickiness.
- Operational Foundation: High occupancy, lease renewal completion, and disciplined development underpin the company’s growth visibility and risk management.
- Investor Focus: Watch for Mexico segment ramp, further off-market acquisitions, and ongoing cost discipline as signals of execution strength in coming quarters.
Conclusion
LPA’s Q3 results underscore a business on the front foot—expanding regionally, leveraging partnerships, and delivering high occupancy and NOI growth. With disciplined capital allocation and a clear focus on resilient submarkets, the company is positioned for sustained value creation as its cross-border platform matures.
Industry Read-Through
LPA’s results reinforce the thesis that premium, well-located logistics assets in Latin America remain in high demand, especially where domestic consumption is robust and cross-border trade flows are growing. The company’s partnership-led Mexico entry offers a playbook for other regional operators seeking to expand with local insight and risk sharing. High occupancy and pre-leasing rates signal that supply-demand imbalances persist in key markets, supporting further rent growth and development opportunity for institutional logistics platforms. Operators with disciplined capital allocation and multi-market capability are likely to outperform as the region’s logistics sector consolidates and professionalizes.