LPA (LPA) Q4 2024: Occupancy Jumps 400bps to 98.3%, Fueling NOI Expansion and Mexico Entry
LPA closed its first year as a public company with a decisive occupancy surge and disciplined asset execution, positioning itself for accelerated NOI growth and strategic expansion into Mexico. Management’s focus on mark-to-market lease spreads, pre-leased development, and selective capital deployment signals a platform built for resilience and upside, even as tariff uncertainty clouds Mexican nearshoring. Investors should watch for further asset scaling and operational leverage as new markets come online.
Summary
- Occupancy-Driven NOI Upside: LPA’s rapid occupancy gains set the stage for ongoing margin expansion.
- Strategic Mexico Entry: The new joint venture and anchor tenants in Puebla broaden growth avenues beyond core Andean markets.
- Disciplined Capital Allocation: Share buybacks and targeted development reinforce management’s confidence in intrinsic value.
Performance Analysis
LPA delivered double-digit revenue growth for 2024, with a pronounced acceleration in the fourth quarter as occupancy in its operating portfolio surged 400 basis points to 98.3%. This leap in utilization, combined with strong mark-to-market leasing spreads—sometimes exceeding 25% over expiring leases—drove a 7.1% increase in net operating income (NOI). The company’s portfolio, now at near full occupancy, benefited from stabilization of major projects in Costa Rica and Peru, as well as a robust pipeline of pre-leased developments.
Regionally, Peru led with 18% revenue growth (driven by new building stabilization), while Colombia and Costa Rica also posted solid gains. However, general and administrative (G&A) expenses rose due to public company transition costs, restricted stock unit (RSU) compensation, and modest headcount growth. Management flagged that these costs should normalize by Q2 2025. Meanwhile, the company secured a $25 million fixed-rate loan to accelerate Lima warehouse expansion, underscoring confidence in demand for Class A logistics assets.
- Occupancy Surge: Operating portfolio occupancy hit 98.3% in Q4, up 400bps, setting up higher run-rate NOI.
- Leasing Power: Mark-to-market spreads above 25% on some renewals highlight pricing leverage in supply-constrained markets.
- Cost Structure Shift: G&A inflation tied to public company status and RSUs is expected to recede, improving future margin optics.
With nearly all development space pre-leased and stable tenant demand, LPA’s revenue visibility and cash flow profile are strengthening even as it takes on measured expansion risk in new geographies.
Executive Commentary
"In the fourth quarter, occupancy in our operating portfolio surged 400 basis points from the previous quarter, reaching 98.3% by year-end, a momentum that we expect will drive further NOI growth this year."
Esteban Saldarriaga, Chief Executive Officer
"Double-digit revenue growth in our operating assets was driven by 3.6 million in additional rents from the stabilization of three properties last year, along with 1.9 million in higher rental rates from lease renewals and automatic contractual increases across our markets."
Paul Smith, Chief Financial Officer
Strategic Positioning
1. Occupancy and Mark-to-Market Execution
LPA’s ability to drive occupancy to 98.3% and secure mark-to-market lease increases above 25% on some renewals reflects its strong competitive positioning in logistics real estate. The company’s focus on institutional-grade, EDGE-certified Class A facilities—high-quality, energy-efficient industrial buildings—attracts top-tier tenants and enables pricing power in supply-constrained markets. This dynamic underpins both current NOI growth and future cash flow resilience.
2. Mexico Expansion via Joint Venture
The entry into Mexico through a joint venture with a leading local design-build partner marks a pivotal strategic step. By leveraging the partner’s landowner relationships and technical expertise, LPA gains immediate access to two logistics assets in Puebla, anchored by DHL, and positions itself for broader expansion in a key North American nearshoring corridor. Management is intentionally avoiding sectors most exposed to U.S. tariff volatility, focusing instead on domestic consumption-driven logistics demand.
3. Diversified Regional Growth and E-Commerce Tailwind
LPA’s core markets—Costa Rica, Peru, and Colombia—continue to deliver robust growth, largely insulated from Mexico’s export-driven cycles. With economies growing at or above 4% and e-commerce penetration still low, these regions offer secular upside. The acceleration of the Parquet Logistico Callao project in Lima, set to exceed one million square feet, is a case in point for high-value, pre-leased development with blue-chip tenants.
4. Capital Allocation and Shareholder Alignment
Management’s tactical repurchase of LPA shares and the securing of fixed-rate development financing signal a commitment to value creation and balance sheet discipline. The platform’s largely dollar-denominated rent base and multinational tenant roster further de-risk cash flows, while selective buybacks reflect confidence in intrinsic value.
Key Considerations
This quarter was defined by operational outperformance, measured expansion, and a focus on maintaining pricing leverage in tight logistics markets. The company’s strategy is to capture value through disciplined leasing, selective regional growth, and prudent capital deployment, while navigating macro and sector-specific risks.
Key Considerations:
- Occupancy-Driven Margin Expansion: Full occupancy unlocks incremental NOI and improves operating leverage as fixed costs normalize post-public transition.
- Mexico Market Entry Risk: New joint venture brings growth optionality but also exposes LPA to nearshoring volatility and tariff-driven demand swings.
- Pre-Leased Development Pipeline: Nearly all new space is pre-leased, reducing lease-up risk and supporting forward cash flow visibility.
- G&A Normalization: Elevated public company costs are expected to subside by Q2, supporting margin recovery and improved earnings quality.
- E-Commerce and Domestic Demand: Low e-commerce penetration in core markets offers long-term tailwinds for logistics asset demand.
Risks
LPA faces external risks from U.S. tariff policy shifts, particularly in Mexico, which could dampen nearshoring-driven demand and complicate price discovery in border regions. The company is also exposed to execution risk as it expands into new geographies and ramps up large-scale developments. Rising G&A costs, while flagged as temporary, could pressure margins if normalization is delayed. Tenant concentration and economic cyclicality in Latin America remain ongoing watchpoints.
Forward Outlook
For Q1 2025, LPA guided to:
- Continued high occupancy in the operating portfolio
- NOI growth driven by stabilized assets and mark-to-market lease renewals
For full-year 2025, management maintained a focus on:
- Accelerating development in Lima, with new Class A warehouse completions
- Closing and integrating the Mexico joint venture, with DHL-anchored assets
Management highlighted several factors that will shape outcomes:
- Normalization of public company G&A expenses by Q2
- Resilient tenant demand in core Andean markets, relatively uncorrelated with Mexican export cycles
Takeaways
LPA’s Q4 and full-year results reflect a platform with strong operational execution, high occupancy, and prudent expansion into new growth markets. Investors should monitor the pace of Mexico integration and G&A normalization as key levers for margin and earnings trajectory.
- Occupancy and Leasing Strength: Surging occupancy and strong lease spreads provide a foundation for sustained NOI growth and cash flow resilience.
- Strategic Expansion Discipline: The Mexico JV offers optionality but management’s selective approach mitigates exposure to tariff-driven volatility.
- Margin and Cost Watch: G&A normalization and efficient capital allocation are critical to unlocking operating leverage as the platform scales.
Conclusion
LPA’s first year as a public company demonstrates robust asset execution, disciplined expansion, and a clear focus on value creation. With high occupancy, pre-leased development, and a measured approach to new markets, the company is well positioned for durable growth and operating leverage in 2025 and beyond.
Industry Read-Through
LPA’s results underscore the ongoing strength in Latin American logistics real estate, particularly where supply constraints and e-commerce tailwinds support pricing power. The company’s selective approach to Mexican nearshoring, with a focus on domestic demand and avoidance of auto sector overexposure, offers a playbook for peers navigating tariff uncertainty. For the broader sector, LPA’s experience highlights the value of pre-leased development, institutional-grade facilities, and diversified regional exposure in building resilient, high-margin platforms.