Logistic Properties of the Americas (LPA)

Executive Summary / Key Takeaways

• Regional Moat Meets Global Scale Deficit: LPA has carved out a defensible niche as the only cross-border provider of premium logistics real estate in Central and South America, delivering 98% occupancy and 14.3% revenue growth in Q3 2025, yet its $92 million market cap makes it a minnow against global giants, limiting bargaining power and inflating relative development costs.

• 2026 NOI Inflection Point: With 75% of 478,000 square feet of new Peruvian development pre-leased under dollar-denominated contracts and Mexico expansion just beginning, management's vision of "significant NOI growth in 2026" appears credible, but execution risk remains high in a capital-intensive business.

• Valuation Disconnect Creates Asymmetric Setup: Trading at 0.38x book value and 7.75x EV/Revenue despite 82.7% gross margins and 51.7% operating margins, the stock prices in permanent skepticism, likely reflecting lockup overhang and LatAm risk premium rather than operational reality.

• Mexico: The Make-or-Break Expansion: The August 2025 Puebla acquisition with DHL (DPSGY) as anchor tenant represents LPA's first step into a market 10x the size of its existing footprint; success here validates the cross-border model, while failure would strand capital and confirm scale limitations.

• Macro Headwinds Are Real But Manageable: While slower U.S. rate easing and evolving tariff policies create uncertainty, LPA's dollar-denominated leases, 41% net debt-to-assets ratio, and local equity partnerships provide buffers that larger, more exposed competitors lack in the region.

Setting the Scene: The Unloved LatAm Logistics Specialist

Logistic Properties of the Americas (LPA) develops, owns, and manages institutional-grade logistics real estate across Costa Rica, Colombia, Peru, and now Mexico. Unlike global industrial REITs that treat Latin America as an afterthought, LPA has built a vertically integrated platform specifically engineered for the region's unique challenges: seismic risks, bureaucratic permitting, and chronic undersupply of modern Class A facilities. This focus has created a genuine moat—management explicitly positions LPA as "the region's only cross-border provider of premium logistics solutions to global and regional companies."

The company generates revenue through long-term leases to third-party logistics providers, retailers, and consumer goods distributors, with a development pipeline that adds fee income and asset value. Its strategy emphasizes capital efficiency through local equity partnerships and disciplined development—"no development projects will be spec built at this time," as CEO Esteban Gaviria emphasizes. This approach minimizes vacancy risk but requires deep local relationships and regulatory expertise that global players like Prologis (PLD) cannot easily replicate at scale.

LPA's history reveals a methodical builder rather than a rapid aggregator. Operational revenue dates to at least 2021 ($25.6 million), growing steadily to $39.4 million by 2023. The March 2024 business combination brought legacy shareholders who faced an 18-month lockup expiring in September 2025—a technical overhang that coincided with the stock's pressure and entry into the Russell indexes in June 2025. This timing matters because it explains why strong fundamentals haven't translated to valuation recovery.

Technology, Products, and Strategic Differentiation: LEED Gold as a Competitive Weapon

LPA's competitive advantage rests on three pillars: vertical integration, regional expertise, and sustainable design. The vertical integration—from land acquisition through property management—enables 20-30% faster project delivery than competitors who outsource permitting and construction. This speed advantage is crucial in markets where logistics demand from e-commerce and nearshoring is growing 15-20% annually, but supply remains constrained by regulatory bottlenecks.

The regional expertise manifests in site selection and tenant customization that global players cannot match. When LPA delivered Building 300 at Parque Logistico Callao on November 3, 2025, it wasn't just another warehouse—it became Peru's first LEED Gold logistics facility. This achievement signals more than environmental virtue; it demonstrates LPA's capability to execute demanding specifications on time and budget, a key differentiator for multinational tenants like DHL that require consistent standards across jurisdictions. The building is pre-leased to a major food and beverage company, illustrating how sustainability credentials translate directly to occupancy and rent premiums.

Sustainable design creates tangible economic benefits. LEED Gold buildings command 5-10% rent premiums while delivering 30%+ energy savings, directly boosting net operating income margins. In Peru, where electricity costs are high and environmental regulations are tightening, this advantage is magnified. LPA's ability to deliver such facilities while competitors struggle with basic permitting reinforces its positioning as the premium provider.

The development pipeline shows disciplined capital deployment. The 750,000 square foot Costa Rica facility financed with local equity investors enhances returns by reducing LPA's capital at risk while maintaining operational control. In Peru, 75% of the 478,229 square feet under development is pre-leased under dollar-denominated contracts, de-risking the 187% year-over-year increase in development GLA. This pre-leasing strategy is critical in volatile LatAm markets, providing cash flow visibility that speculative development cannot.

Financial Performance & Segment Dynamics: Growth Despite Headwinds

LPA's Q3 2025 results demonstrate resilient growth in a challenging environment. Revenue reached $12.9 million, up 14.3% year-over-year, driven by Peru (+16.9%) and Colombia (+17.6%) while Costa Rica declined 1.5%. The divergence matters: it shows LPA's geographic diversification is working, with growth markets offsetting temporary weakness.

The Costa Rica decline stemmed from rent leveling adjustments and short-term vacancies, not structural demand issues, as the July 2024 stabilization of Building 400 continues to contribute positively.

Net Operating Income grew 8.7% to $10.4 million, while Cash NOI increased 13.5% to $10.5 million—a spread that reflects timing differences in lease escalations and expense recoveries. For the first nine months, revenue grew 11.2% to $36.4 million and NOI grew 6.2% to $29.4 million, pacing toward sustained double-digit growth. The 98% occupancy rate across 5.6 million square feet of operating GLA validates the no-spec-build strategy and underscores demand for quality logistics space.

Segment performance reveals the underlying drivers. Colombia's 17.6% revenue growth came from lease rollovers with U.S. CPI-linked escalations and occupancy of previously vacant space, demonstrating pricing power in a market with limited supply. Peru's 16.9% growth reflects the February 2025 stabilization of Building 100 and higher occupancy at Lima Sur Parque. Mexico contributed $222,000 in its first partial quarter—immaterial now, but management expects it to "grow significantly over time" as the Puebla facilities ramp.

The balance sheet supports expansion. Net debt to investment properties improved 70 basis points to 41%, well below typical REIT leverage of 50-60%. Financing costs dropped 15% year-over-year due to lower rates in Costa Rica and Colombia plus capitalized interest on Peruvian developments. SG&A expenses fell 5%, showing operating leverage as the portfolio scales. These metrics matter because they indicate LPA can fund growth without dilutive equity raises, preserving value for existing shareholders.

Outlook, Management Guidance, and Execution Risk

Management's guidance points to accelerating momentum. The company envisions "sustained double-digit revenue growth" and expects "significant NOI growth in 2026" from the 478,000 square feet of pre-leased Peruvian development coming online. With all leasing renewals completed for the next 12 months, revenue visibility is unusually high for a development-stage REIT. The Bogota facility reaching full lease status by year-end will add incremental cash flow without additional capex.

The Mexico expansion is the critical variable. The Puebla acquisition—two facilities anchored by a five-year dollar-denominated DHL lease—represents LPA's first move into a market 10x larger than its existing footprint. Management calls this the "first of many investments" and is prioritizing Mexico over Chile despite monitoring opportunities there. The strategy leverages partnerships like Alas to combine local market insights with LPA's institutional expertise, a model that reduces entry risk but requires careful execution to maintain quality standards.

The potential ATM-like arrangement reveals management's capital discipline. As Gaviria explains, the goal is "to preserve flexibility" and "have an additional funding mechanism" for acquisitions, not to fund development. This is discretionary and company-choice driven, suggesting it would only be used for accretive deals. The fact that it's not yet effective due to SEC review delays indicates LPA isn't desperate for capital—a positive signal.

However, execution risk is material. The 187% increase in development GLA to 478,229 square feet must be delivered on time and budget to meet pre-leasing commitments. Any construction delays or cost overruns would compress margins and damage credibility. Similarly, the Mexico expansion requires replicating LPA's model in a new regulatory environment while competing with established players like Prologis, which has deeper relationships with global tenants.

Risks and Asymmetries: What Could Break the Thesis

The lockup expiration for legacy shareholders in September 2025 created immediate stock pressure, explaining the depressed valuation multiples. While this technical overhang is temporary, it signals that early investors may have been sellers, creating a ceiling on near-term price appreciation until the shareholder base stabilizes. The stock's 5.98 beta reflects this volatility, making it unsuitable for risk-averse investors.

Macro headwinds pose real threats. Slower-than-expected U.S. rate easing keeps dollar strength elevated, pressuring LatAm currencies and potentially squeezing tenants' ability to pay dollar-denominated rents. Evolving tariff policies in Mexico create uncertainty for cross-border trade, though management notes encouraging signs: vacancy levels in key northern markets like Juarez are abating, closing rents remain resilient, and net absorption is recovering. This matters because it suggests LPA's timing may coincide with a cyclical upturn, but any reversal would hit the Mexico thesis hard.

FX exposure is a structural vulnerability. While 75% of Peruvian development is pre-leased in dollars, local operating expenses and potential tenant credit issues remain exposed to peso volatility. Costa Rica and Colombia operations face similar risks. This contrasts with Prologis's predominantly USD-based cash flows, giving the global giant a cost advantage that LPA cannot easily offset.

Scale remains the fundamental constraint. At $92 million market cap and $368 million enterprise value, LPA is roughly 1/400th the size of Prologis. This limits access to capital, increases borrowing costs, and reduces bargaining power with multinational tenants. The partnership model mitigates this but also shares economics, capping upside. If LPA cannot scale Mexico rapidly, it risks being stuck in small-market purgatory—profitable but irrelevant to institutional investors.

Valuation Context: Pricing in Permanent Discount

At $2.93 per share, LPA trades at a stark discount to asset value and operational quality. The 0.38x price-to-book ratio implies the market believes LPA's properties are worth less than their carrying value or that the business model is impaired. Yet the 7.75x EV/Revenue multiple is reasonable for a logistics REIT with 14% growth, and the 15.95x EV/EBITDA ratio reflects development-stage investment rather than mature cash generation.

Comparative metrics highlight the disconnect. Prologis trades at 2.3x book value and 17.8x EV/Revenue despite 4-5% growth—LPA's growth is triple that, yet it trades at one-sixth the book multiple. IRSA (IRS), with its Argentina-heavy risk profile, trades at 13,204x book value (distorted by near-zero book) but only 5.3x EV/Revenue, showing that even troubled LatAm assets command higher multiples than LPA. LOG Commercial, the closest pure-play, isn't directly comparable due to its Brazil concentration but trades at healthier multiples in its home market.

The 82.7% gross margin and 51.7% operating margin are best-in-class, exceeding Prologis's 76.1% and 42.7% respectively. This reflects LPA's premium positioning and development expertise. The 14.1% profit margin trails Prologis's 35.2% due to smaller scale and higher financing costs, but it's positive and growing. The 5.21% ROE and 2.18% ROA are depressed by the low equity base and development investments—metrics that should improve as new buildings stabilize.

The balance sheet provides optionality. With 41% net debt-to-assets, LPA has capacity to add leverage if needed, though management appears conservative. The 1.05 current ratio and 0.93 quick ratio indicate adequate liquidity. The 5.98 beta reflects both small-cap volatility and LatAm risk premium, suggesting the stock moves aggressively on sentiment shifts.

Conclusion: A Compelling Risk/Reward for LatAm Exposure

LPA represents a rare pure-play on Latin American logistics real estate growth, trading at a valuation that implies permanent impairment rather than temporary overhang. The company's 98% occupancy, 14.3% revenue growth, and pre-leased development pipeline provide fundamental support for management's 2026 NOI growth vision. The Mexico expansion, if executed well, could transform LPA from a niche player into a regional force.

The central thesis hinges on whether the market's skepticism—driven by lockup selling, macro headwinds, and scale concerns—creates an opportunity or signals deeper problems. LPA's operational metrics suggest the former: the business generates high margins, maintains disciplined capital allocation, and occupies a defensible market position. However, the risks are material: FX volatility, execution missteps in Mexico, and persistent small-cap discount could limit upside.

For investors, the key variables are Mexico lease-up velocity and shareholder base stabilization post-lockup. If Mexico contributes meaningfully to 2026 NOI and the stock finds institutional sponsorship, the 0.38x book value multiple could re-rate toward 1.0x or higher, offering 150%+ upside. If execution falters, the downside is cushioned by asset value and operational cash flow. This asymmetry—limited downside with high operational leverage on success—makes LPA a compelling, if speculative, bet on Latin America's logistics modernization.