Paul Hastings Advises FHipo in US$633 Million First Ever Mexican Mortgage IPO
New York, NY - Paul Hastings LLP, a leading global law firm, represented FHipo (Fideicomiso Hipotecario) in FHipo’s IPO. FHipo is the first Mexican mortgage REIT and raised over US $633 million in its IPO. The groundbreaking offering also had one of the largest number of international purchasers in an IPO in Latin America.
This first of a kind transaction also represented the first mortgage REIT ever sold internationally in Latin America. While REITs are a major asset class in the U.S. that are critical to the American economy, FIBRAs are still new in Mexico. Paul Hastings work on this mortgage FIBRA, a first-of-its-kind product, will mark that next major step in the development of the REIT-like asset class in the emerging markets. This complex deal not only resulted in the creation of a new asset class, but the establishment of an international secondary market for Latin American mortgages. Mexican commercial banks finance very few mortgages compared to developed markets. It is anticipated that this new vehicle will allow the Mexican government to advance many new mortgages and thereby foster home ownership by Mexico’s emerging middle class.
Paul Hastings attorneys also represented the initial purchasers in Fibra Uno’s historic IPO in 2011, its initial follow-on offering in 2012, a subsequent follow-on on offering in 2013, and its first international debt offering. After its IPO, Fibra Uno became the very first Real Estate Investment Trust (REIT) in Latin America and the first Mexican REIT to be utilized in the wake of a comprehensive legal overhaul in Mexico that created the “FIBRA”, a new Mexican investment vehicle, which bears many similarities to the U.S. REIT. The FIBRA provides a transparent and liquid vehicle to allow for individual investors, as opposed to a limited number of families, to own and trade in real estate in Mexico.
The introduction of the FIBRA asset class has transformed the Mexican real estate market. As many other Mexican real estate companies have sought to follow the Fibra Uno precedent and repackage their real estate holdings into newly-created FIBRAs, it is anticipated that many of these companies will also want to participate in the new Mexico mortgage securitization market. Paul Hastings attorneys have worked on almost all international FIBRA transactions to date.
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