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The International Finance Corporation (IFC) has signed a secured loan of MXN2,000 million (US$107 million equivalent) to support the funding diversification base of Fideicomiso Irrevocable F/2061 FHipo (FHipo), the first Mortgage Real Estate Investment Trust (MREIT) traded in the Mexican Stock Exchange (BMV). The project will increase the liquidity of mortgage originators focused on low- and middle-income segments.
FHipo is the first investment vehicle in Mexico that allows the general public to invest in high quality residential mortgage portfolios, providing capital returns linked to the income of mortgages and contributing to housing financing in Mexico. FHipo is actively looking to diversify its mortgage portfolio by establishing business relationships with different mortgage providers. FHipo currently co-finances mortgages offered by government agencies Instituto Nacional de la Vivienda (Infonavit) and Fondo de la Vivienda del Instituto de Seguridad y Servicio Sociales de Trabajadores del Estado (Fovissste).
Daniel Braatz, FHipos Chief Executive Officer, said: We are proud of being the first Mortgage REIT in Latin America eligible for this innovative secured loan by IFC. Our excitement towards this strategic alliance and partnership, in terms of funding with the IFC will drive FHipo to continue developing our business model and consolidate our commitment with Mexico.
Braatz added that hes confident that through their capital allocation in the mortgage sector, FHipo will continue to contribute in new ways and opportunities for Mexican workers to own a house alongside INFONAVIT and FOVISSSTE under our co-origination programs, and simultaneously yield attractive returns to our investor base, comprised mainly by Mexican pension funds who manage the savings of those same workers in our country, thus closing a circle in which value creation is never ending and proving right our investment thesis focused on long term performance and constant improvement.
Ary Nam, Country Manager of IFC, said: Mexico suffers from a housing gap estimated in 9 million houses. With an innovative capital markets model, FHipo helps channel private funding and free public resources that can in turn be used for the financing of new houses. Its a good example of risk sharing at different stages between the public and the private sector, maximizing finance for development.
According to Nam, part of the loan proceeds will be used to finance green mortgages that encourage the use of systems to reduce household energy and water use: IFCs loan will not only benefit families seeking access to housing finance, but it will also foster climate change mitigation by financing projects that incorporate elements that reduce water and energy demand.
IFC is a leading international investor in housing finance. IFCs goal is to help clients seize opportunities in housing finance, which has an estimated global investment potential of as much as US$700 billion. One of IFCs global objectives is to help finance one million homes to create 5 million jobs by 2020.