A FIBRA is a Mexican Real Estate Investment Trust or REIT. Our favorite FIBRA is Deutsche Bank Mexico SA Real Estate Investment Trust orFibra Uno, traded as FBASF.PK in the USA and as FUN011 in Mexico. I recommend it because Mexico is reforming its economy, opening up to more foreign investment, and improving its politics. Mexico is a member of the World Trade Organization; the pro-capitalist western Latin America trade group; NAFTA; and the future trans-Atlantic trade agreement with the European Community where its candidacy is backed by Spain. All this will pay off with new factory leases, is what this REIT offers.

Mexico created the REIT instrument at the end of 2010 after 5 years of parliamentary struggle. As in the US, rules allow FIBRAs to pass through income tax-free to shareholders, on condition that 70% of the assets are invested in real estate, 95% of income is distributed annually, and shares are widely held.

The FIBRA share we tip should generate income as Mexico adopts economic reform programs backed by the PRI and PAN center and right parties. Reforms on the way include allowing private exploration for the country's oil, improving education by cutting the power of the teachers' union (whose members occupied Mexico City to try to maintain its powers), and opening up to foreign investment. The behavior of the teachers' union and the vast wealth from corruption of its former chief should get Mexican parents to support the government reforms for the good of their children.

Oil companies, private schools and training sites, foreign investors, all boost demand for factories while lowering their costs of training and energy. So there will be more demand for Fibra Uno leases.

While recent numbers on Mexican growth rates show a contraction (Q2 is down 0.74% from prior year Q2), the country's respected and honest statistical office still expects a real growth rate of 1.8% for this calendar year. Q2 is a reflection of world conditions rather than a Mexican problem. And Mexican statistics are not like Argentina's and probably better than US ones.

Our fund, launched for US institutions, is now seasoned (so retail investors can buy it). It has a name intended to reassure gringos and other foreigners, Deutsche Bank Mexico SA Real Estate Investment Trust although the German bank's Mexican arm is only the trustee and custodian. It is called Fibra Uno Trust F/1401 in Spanish. The US ticker symbol is FBASF. If you can trade in Mexico City the ticker symbol there is FUN011.

Earlier this week, FBASF bought 334 factories for $372 million (US) in conjunction with AIG (a US insurance company) and Walton St. Capital, a Mexican developer, in northern Mexico, which are 97% occupied. The acquisition is subject to government approval. The annual net income from the new properties will be $29.8 million, a nice rate of return.

The fund managers are members of the El-Mann family, who ran a paint making company, which got into property by the back door when it opened offices and stores in new regions of Mexico and wound up with surplus square footage, which it proceeded to lease to other firms. Now it is a full fledged property company, managing portfolios, doing construction and acquisitions, and providing finance and services to current and potential tenants.

The numbers are good. FBASF has a 2.9% return on assets, a 3.1% return on equity, and a 3.28% return on invested capital. The stock trades at 1.2 times book value at a price/earnings ratio of nearly 35 times. The main reason for that very scary number is that it is growing its metrics very fast. Earnings per share rose 13% last year and dividends by 15%. Operating margins (margins on EBITDA, earnings before interest, taxes, depreciation and amortization) grew 74.87% last year.

Asset turnover is minimal, 0.04% and debt is only 17% of assets, making this a relatively long-term-minded REIT.

The dividend yield is 3.58%, and well covered by earnings. The stock trades at Mexican price levels, but without a huge spread: $2.88 bid, $2.89 ask. We already own this share via the Mexican Equity & Income Fund MXE, where I got the idea.

There are risks: Mexico's economy is linked to that of the US but other influences also apply, like the competition to put things together cheaply, in which it has until the most recent quarter been a winner against China and other Asian sites. We are not talking about the maquilladora plants of old; this is making the parts and not just putting them together, for everything from smartphones to autos. The edge is that Mexico is nearer, cutting reaction and freight time.

Another risk is politics. While the centrist and right-wing parties agree on reforms, opposition comes from the irreconcilable left-wing led by Andres Manuel Lopez Obrador. He may succeed in gathering dissident lazy teachers, lefties and overpaid oil workers to cause trouble for the PRI government. But the odds on AMLO are lowest in years because the reforms are proving popular.

Other FIBRA shares focus on hotels (F/1616, FIBRA Inn, also with Deutsche Bank as trustee). I had a bad experience with a much-heralded ultra-modern hostelry in Medellin, Art Hotel, which was falling apart and mostly empty, I opted against a hotel REIT in Mexico.