For companies operating in Mexico, currency risk is an unavoidable reality. While Mexico continues to attract manufacturing, logistics, and nearshoring investment, fluctuations in the peso remain a key consideration for CFOs and finance teams planning long term capital strategies.
As businesses evaluate how to structure their real estate commitments, lease currency has become an increasingly important part of the conversation. For many companies, especially those with US dollar revenues or cross border operations, dollar denominated lease structures offer a practical way to reduce volatility and improve financial predictability.
Currency movements can materially impact operating costs, cash flow, and financial reporting. Even modest peso volatility can affect rent obligations, particularly under long term leases tied to inflation or indexed adjustments.
For companies with revenues, financing, or reporting obligations in US dollars, peso denominated leases can introduce unnecessary exposure. Over time, that mismatch can complicate budgeting and erode margins, especially during periods of political or economic uncertainty.
Dollar denominated lease structures align occupancy costs with the currency in which many multinational and export driven companies generate revenue. This alignment helps reduce foreign exchange risk and creates clearer long term visibility around real estate expenses.
In sale leaseback transactions, dollar based leases are often favored by both corporate sellers and institutional investors. Investors gain predictable cash flow, while tenants benefit from stability and easier financial planning.
This structure is particularly common in industrial and logistics assets located in key Mexican markets tied to cross border trade.
A sale leaseback allows companies to monetize owned real estate while retaining operational control under a long-term lease. When paired with a dollar denominated lease, the transaction not only unlocks liquidity but also enhances risk management.
Proceeds from the sale can be deployed into growth initiatives, debt reduction, or working capital, while lease payments remain insulated from peso volatility. For CFOs, this combination supports both capital efficiency and financial stability.
Global real estate investors remain active in Mexico, particularly in sectors benefiting from nearshoring and supply chain realignment. Many of these investors prefer dollar denominated leases, as they align with their own funding structures and return targets.
For corporate sellers, this preference can translate into stronger pricing, broader buyer interest, and more competitive lease terms when structured correctly.
While dollar denominated leases offer advantages, they should be evaluated in the context of each company’s revenue profile and risk tolerance. Factors to consider include revenue currency, export exposure, lease duration, escalation structure, and long-term operational plans.
Working with advisors who understand both the Mexican real estate market and cross border capital dynamics is critical to achieving an optimal outcome.
Managing currency risk is not about predicting exchange rates. It is about designing structures that support stability and flexibility over time. In Mexico, dollar denominated lease structures have become an effective tool for companies seeking to reduce volatility while accessing institutional capital.
When combined with a well-structured sale leaseback, they offer a compelling solution for businesses looking to strengthen their balance sheet and position themselves for long term growth. If this may be applicable in your case, do not hesitate to reach out to a member of the Ascension team for a complimentary consultation.