Merlin Properties Reports First-Quarter Performance
Merlin Properties closed the first quarter with rental income around 119.2 million euros, showing an 8% rise compared with the same period in 2022 when only its existing holdings were considered. Operating profit stood at 75.3 million euros, down 5.6% from the previous year’s first three months due to the sale of the BBVA branch portfolio, a move completed in mid-2021.
Under the leadership of Ismael Clemente, the firm began the year with momentum. The company continued its strategy of deleveraging, reducing debt to 32.5%. The report attributes this improvement to the sale of two shopping centers, Bonaire and Vilamarina, to the Hungarian fund Indotek for 22 million euros. The transaction occurred a few weeks prior.
Merlin restructured its liabilities: refinanced 744.5 million in bonds with a syndicated loan of 665 million euros and two loans of 60 million euros each. As a result, the average debt cost rests at 1.98%, with the majority at a fixed rate, and the average maturity extends to 4.7 years.
Behavior Across Segments
The office segment faced a slight downturn in employment by year-end 2022, with the occupancy at 92.2%. The company notes that the office rental market remains active but expects lower activity in the coming months.
The logistics portfolio similarly saw a small occupancy dip of 1% due to tenant movement. The largest declines occurred outside Madrid and Barcelona, at about 5.36%. Nevertheless, rents grew by 4.3% versus Q1 2022. The 47,342 square meter Cabanillas Park II B project is on track for completion in the second half of the year, with commercialization conversations moving forward aggressively.
Shopping centers posted a 16.7% rise in sales, yet the entry rate remained near pre-pandemic levels at about 1%. The occupancy rate for this asset class reached 94.4%, showing a modest year-over-year improvement.
Data centers continued toward completion, with work entering the final phase and all three assets slated for delivery in the second half of the year. Pre-commercialization has accelerated beyond expectations and orders have been placed to scale capacity from 9 MW to 15 MW immediately. The assets are located in Madrid, Catalonia, and the Basque Country, with Lisbon awaiting a construction license.
Stock Market Performance
Despite strong operational results, Merlin’s stock market performance lagged, with a year-to-date decline of 15.6%. The Ibex-35 index has fallen by more than 44% from highs reached before the Covid-19 outbreak. Merlin Properties carries assets valued at approximately 7,682 million euros, while its market capitalization stands at around 3,540 million euros, representing a roughly 46% discount compared with last year’s real estate valuation.
In summary, Merlin Properties remains active across its core segments, advancing with refinancing and selective disposals to reduce leverage while progressing major development projects and maintaining a disciplined approach to capital management. [Source: Merlin Properties Q1 results report, cited for stakeholders and investors.]