3M24 RESULTS
Trading Update
CONSOLIDATED PERFORMANCE
+3.8%
Gross rents like-for-like YoY
(4.4%)
FFO per share YoY
- Strong operating performance continues, with healthy rental growth (+3.8% LfL)
- FFO conversion impacted by the drag of data centers and higher financial costs (-4.4% FFO vs 3M23)
- Occupancy remains stable at 95.8%
- € 3.0m in non-core divestments with minimal investment activity. Further € 79.3m non-core disposals signed and expected to be executed in FY24 at a double digit premium to FY23 GAV
- S&P has upgraded MERLIN's credit rating to BBB+ on the basis of sustained lower leverage and expanding cash flow base
- No valuation during the period. NTA per share standing at € 15.20
- € 0.24 per share final 2023 dividend to be paid out on June 4th
(€ million) | 3M24 | 3M23 | YoY |
Total revenues | 127.3 | 121.4 | 4.9% |
Gross rents | 124.2 | 119.2 | 4.2% |
Gross rents after | 117.5 | 112.5 | 4.5% |
incentives | |||
Net rents after propex | 104.1 | 100.9 | 3.2% |
& collection losses | |||
Gross-to-net margin(1) | 88.6% | 89.7% | |
EBITDA(2) | 93.6 | 90.4 | 3.6% |
Margin | 75.4% | 75.8% | |
FFO(3) | 72.0 | 75.3 | (4.4%) |
Margin | 58.0% | 63.1% | |
AFFO | 70.1 | 72.6 | (3.5%) |
Net earnings | 64.8 | 66.2 | (2.1%) |
(€ per share) | 3M24 | 3M23 | YoY |
FFO | 0.15 | 0.16 | (4.4%) |
AFFO | 0.15 | 0.15 | (3.5%) |
EPS | 0.14 | 0.14 | (2.1%) |
EPRA NTA | 15.20 | 15.82 | (3.9%) |
BUSINESS PERFORMANCE
Rents like-for-like YoY
+2.8% | +4.9% | +4.8% |
Offices | Logistics | S. Centers |
Release spread | ||
+3.4% | +5.2% | +7.8% |
Offices | Logistics | S. Centers |
Occupancy vs 31/12/2023
3M24 | Contracted | Rent | Leasing | Occ. vs | |
activity | 31/12/23 | ||||
sqm | €m | LfL | Release | Bps | |
change | spread | ||||
Offices | 48,195 | 66.6 | 2.8% | 3.4% | (30) |
Logistics | 47,429 | 20.9 | 4.9% | 5.2% | (56) |
Shopping | 15,160 | 33.0 | 4.8% | 7.8% | (20) |
centers | |||||
Data | n.a. | 0.4 | n.a. | n.a. | n.a. |
Centers | |||||
Other | n.a. | 3.3 | +8.0% | n.m. | (44) |
Total | 110,784 | 124.2 | +3.8% | (37) | |
(37 bps)95.8%
- Offices: 48,195 sqm contracted.
LfL of +2.8% and release spread of +3.4% - Logistics: 47,429 sqm contracted.
LfL of +4.9% and release spread of +5.2% - Shopping centers: 15,160 sqm contracted. LfL of +4.8% and release spread of +7.8%
- Net of incentives
- Excludes non-overhead costs items (€ 1.9m) plus LTIP accrual (€ 0.7m)
- FFO equals EBITDA less net interest payments, less minorities, less recurring income taxes plus share in earnings of equity method
- Portfolio in operation for 3M23 (€ 115.1m of GRI) and for 3M24 (€ 119.5m of GRI)
Gross rents bridge
(€m) | LfL(4) |
+3.8% |
119.2 | +4.4 | (0.6) | 124.2 |
3M23 | Like-for-Like | Balance | 3M24 |
growth | acquisitions, | ||
disposals & other |
MERLIN Properties3M24 RESULTS Trading Update
OFFICES
Gross rents bridge | Rents breakdown | |||||||||||||||
(€m) | ||||||||||||||||
LfL(1) | Gross rents | Passing rent | WAULT | |||||||||||||
+2.8% | 3M24 (€ m) | (€/sqm/m) | (yr) | |||||||||||||
+1.7 | +2.1 | 66.6 | Madrid | 46.6 | 20.4 | 3.2 | ||||||||||
62.8 | Barcelona | 11.0 | 21.5 | 2.8 | ||||||||||||
Lisbon | 8.3 | 21.9 | 4.0 | |||||||||||||
Other | 0.6 | 11.9 | 6.2 | |||||||||||||
3M23 | Like-for-Like | Balance | 3M24 | |||||||||||||
growth | acquisitions, | Total | 66.5 | 20.7 | 3.3 | |||||||||||
disposals & other | ||||||||||||||||
Leasing activity
- Positive rental increase on renewals continues (+3.4%) despite the high CPI indexation captured in 2022-2023
- 1Q24 leasing activity highlights:
- 9,315 sqm renewal with Ministerio de Interior (Spanish Government) in Alcalá 38-40, Madrid
- 7,962 sqm new leases with Willis Tower Watson and Globant in Plaza Ruiz Picasso 11, Madrid
- 2,641 sqm new lease with Emerson in PE Las Tablas, Madrid
- 2,442 sqm renewal with UPS in PE Alvento, Madrid
- 2,216 sqm new lease with Mango in Diagonal 514, Barcelona
- 2,112 sqm renewal with IQVIA in Juan Esplandiu 11-13, Madrid
- 1,541 sqm new lease with Grupo Serveo in PE Via Norte, Madrid
LTM | |||||||
sqm | Contracted | Out | In | Renewals(2) | Net | Release spread | # Contracts |
Madrid | 40,745 | (15,753) | 25,099 | 15,646 | 9,346 | +3.2% | 92 |
Barcelona | 7,450 | (4,039) | 5,264 | 2,186 | 1,225 | +3.9% | 41 |
Lisbon | - | - | - | - | - | n.m. | n.m. |
Total | 48,195 | (19,792) | 30,363 | 17,832 | 10,571 | +3.4% | 137 |
Occupancy
- Resilient occupancy (92.2%)
- By markets, best performer this quarter has been, once again, Madrid NBA A-1
Stock | 1,151,668 sqm | |||
WIP | 164,603 sqm | |||
Stock incl. WIP | 1,316,271 sqm | |||
Occupancy rate(3) | ||||
Change bps | ||||
3M24 | 3M23 | |||
Madrid | 90.7% | 89.7% | +97 | |
Barcelona | 92.8% | 95.9% | (309) | |
Lisbon | 99.9% | 100.0% | (15) | |
Other | 100.0% | 100.0% | - | |
Total | 92.2% | 92.2% | (1) | |
- Portfolio in operation for 3M23 (€ 60.9m of GRI) and for 3M24 (€ 62.6m of GRI)
- Excluding roll-overs
- MERLIN policy excludes buildings under complete refurbishment. Buildings excluded this period are Plaza Ruiz Picasso, Plaza Ruiz Picasso extension, Torre Lisboa, PE Cerro Gamos 2, 3 & 5, Encinar, PLZFA and Josefa Valcarcel 48
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MERLIN Properties3M24 RESULTS Trading Update
LOGISTICS
Gross rents bridge | Rents breakdown | ||||||||||||||
(€m) | |||||||||||||||
LfL(1) | Gross rents | Passing rent | WAULT | ||||||||||||
+4.9% | |||||||||||||||
+0.2 | 20.9 | 3M24 (€ m) | (€/sqm/m) | (yr) | |||||||||||
19.7 | +1.0 | ||||||||||||||
Madrid | 13.4 | 4.3 | 3.8 | ||||||||||||
Barcelona | 3.0 | 7.8 | 2.5 | ||||||||||||
Other | 4.5 | 4.6 | 1.8 | ||||||||||||
3M23 | Like-for-Like | Balance | |||||||||||||
3M24 | |||||||||||||||
growth | acquisitions, | Total | 20.9 | 4.7 | 3.2 | ||||||||||
disposals & other | |||||||||||||||
Leasing activity
- Compelling organic performance (+4.9% LfL), in line with rental increases on renewals (+5.2% release spread)
- 1Q24 leasing activity highlights:
- 47,429 sqm new lease with Pepco in A2-Cabanillas Park II B
LTM | |||||||
sqm | Contracted | Out | In | Renewals | Net | Release spread | # Contracts |
Madrid | 47,429 | (2,850) | 47,429 | - | 44,579 | +2.2% | 6 |
Barcelona | - | (3,892) | - | - | (3,892) | +12.7% | 3 |
Other | - | (2,192) | - | - | (2,192) | n.m. | n.m. |
Total | 47,429 | (8,934) | 47,429 | - | 38,495 | +5.2% | 10 |
Occupancy
- The portfolio continues running virtually at full occupancy (98.4%)
- MERLIN efforts are now focused on transforming into pre-lets the HoTs for the landbank development
Stock | 1,510,808 sqm | Occupancy rate | ||||
WIP(2) | 557,350 sqm | bps | ||||
3M24 | 3M23 | |||||
Best II | 167,038 sqm | |||||
Madrid | 98.4% | 96.0% | +237 | |||
Best III | 390,312 sqm | |||||
Barcelona | 95.7% | 92.5% | +321 | |||
Stock incl. WIP | 2,068,158 sqm | |||||
ZAL Port | 757,003 sqm | Other | 99.4% | 100.0% | (60) | |
Stock managed | 2,825,161 sqm | Total | 98.4% | 96.8% | 165 |
- Portfolio in operation for 3M23 (€ 19.6m of GRI) and for 3M24 (€ 20.6m of GRI)
- WIP includes in progress and Landbank Best II & III
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MERLIN Properties | 3M24 RESULTS Trading Update |
LOGISTICS (CONT.)
INVESTMENTS, REFURBISHMENTS AND DEVELOPMENTS
Logistics development program (as of 31/03/2024)
- 525k sqm have been delivered to date achieving a YoC at delivery of 7.8%
- 557k sqm of Landbank, all of which has now reached ready to build status, distributed among selected locations in Madrid, Lisbon, Valencia and Seville
Logistics pipeline as of 3M24
GLA | Pending capex | Expected GRI | YoC(1) | |
(sqm) | (€m) | (€m) | (%) | |
Near term pipeline | 141k | 78 | 8.2 | 7.6% |
(2025) | ||||
Medium term pipeline | 98k | 61 | 6.1 | 7.6% |
(2026-2027) | ||||
Non-committed | 318k | 162 | 17.7 | ±7.0% |
long-term pipeline(2) | ||||
- Ca. 40% of total landbank with HoT (113k sqm in the short term and 98k sqm in the medium term)
DATACENTERS
- MAD01-GET,BCN01-PLZF and BIO03-ARAData Centers fully operational and delivered to the anchor tenant, proving to market best-in-classtechnical specifications (1.15 PUE and 0.0 WUE).
- LIS01-VFXData Center license granted and power secured for a >90 MW AI Campus
- BIO02-ARA(76 MW) extension construction license expected before year end
Data Centers pipeline (up to 60 MW IT capacity) w/o Lisbon
Capex Invested | 2024 Capex | +2025 Capex | Expected | Stabilized | Stabilized |
stabilized GRI | |||||
as of 3M24 | (€m) | (€m) | GRI YoC(1) (%) | NOI YoC (%) | |
(€m) | |||||
283 | 120 | 163 | c.81 | c.14.4% | >10% |
- Fully licensed land and power available for an additional 200 MW of IT capacity
- The company continues studying strategic alternatives to fund the program
- Including land cost
- To be developed on a pre-let basis
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MERLIN Properties3M24 RESULTS Trading Update
SHOPPING CENTERS
Gross rents bridge | Rents breakdown | |||||||||
(€m) | ||||||||||
Gross rents | Passing rent | WAULT | ||||||||
LfL(1) | 3M24 (€ m) | (€/sqm/m) | (yr) | |||||||
+4.8% | ||||||||||
TOTAL | 33.0 | 25.5 | 2.2 | |||||||
33.5 | +1.5 | (2.0) | 33.0 | |||||||
Footfall and tenant sales | ||||||
vs 3M23 | ||||||
3M23 | Like-for-Like | Balance | 3M24 | |||
growth | acquisitions, | |||||
disposals & other | Tenant sales | +8.1% | ||||
Footfall | +6.6% | |||||
OCR | 11.6% | |||||
Leasing activity
- Footfall (+6.6% vs 3M23) and sales (+8.1% vs 3M23) setting new records and enabling rental growth while maintaining affordable rents (11.6% OCR in 3M24)
- LfL rental increase (+4.8%) continues performing satisfactorily
- 1Q24 leasing activity highlights:
- 3,049 sqm new lease with Zara and 1,013 sqm new lease (extension) Zara Home and Oysho in Almada
- 1,916 sqm renewal with Mercadona in Arenas
- 1,877 sqm renewal with Altafit in Porto Pi
- 1,011 sqm new lease with El Txiringuito in X-Madrid
- 844 sqm renewal with Mango in La Vital
- 557 sqm renewal with La Tagliatela in Saler
LTM | |||||||
sqm | Contracted | Out | In | Renewals | Net | Release spread | # Contracts |
Total | 15,160 | (8,523) | 7,643 | 7,518 | (880) | +7.8% | 80 |
Occupancy | ||||
• Occupancy stands at 96.0% | Stock | 431,349 sqm | ||
• Best performer this quarter has been | Tres Aguas(2) | 67,940 sqm | ||
X-Madrid | Stock with Tres Aguas | 499,289 sqm | ||
Occupancy rate | ||||
3M24 | 3M23 | bps | ||
Total | 96.0% | 94.4% | +161 | |
- Portfolio in operation for 3M23 (€ 31.4m of GRI) and for 3M24 (€ 32.9m of GRI)
- Tres Aguas at 100% allocation
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MERLIN Properties | 3M24 RESULTS Trading Update |
BALANCE SHEET
- LTV stands at 35.0%
- No further maturities until November 2026 after tackling May 2025 maturity with a mix of banking debt (secured and unsecured) and bond financing, under satisfactory terms
- S&P has upgraded MERLIN's credit rating to BBB+ on the basis of sustained lower leverage and expanding cash flow base
Corporate rating | Outlook |
BBB+ | Stable |
Baa2 | Positive |
Ratios | 31/03/2024 | 31/12/2023 |
LTV (Inc. TC) | 35.0% | 35.0% |
Av. Interest rate | 2.38% | 2.38% |
Av. Maturity (years) | 4.9 | 5.1 |
Unsecured debt to total debt | 90.6% | 90.4% |
Interest rate fixed | 99.7% | 99.7% |
Liquidity position (€m)(1) | 1,393 | 1,309 |
€ million | |
GAV | 11,314.8 |
Gross financial debt | 4,626 |
Cash and equivalents(2) | (561) |
Net financial debt | 4,065 |
NTA | 7,139 |
INVESTMENTS, DIVESTMENTS AND CAPEX
- € 3.0m in non-core divestments. During the quarter € 79.3m of disposals signed and expected to be executed in FY24 at a double digit premium to FY23 GAV for which € 10.4m in deposits have been received by May 2024
- Muted acquisitions during 3M24, limited to consolidating a 100% ownership in Plaza Ruiz Picasso extension, a c. 4,500 sqm building adjacent to our Plaza Ruiz Picasso development. Works are expected to begin in 3Q25
- Capex efforts continue focused on Best II & III and Digital Infrastructure Plan (Mega)
- Plaza Ruiz Picasso 11 continues welcoming tenants, with 7,962 sqm to Willis Tower Watson
and Globant and 6,188 sqm to our coworking subsidiary (LOOM) with 50% already fitted-out and delivered and the rest already committed with end-users. 10,493 sqm for IBM were already delivered in December 2023
Offices | Retail | Logistics | Data Centers | € million | |
Acquisitions | Plaza Ruiz Picasso | 8.1 | |||
extension | |||||
Bilbao Arasur (Data Center) | |||||
Greenfield | A2-Cabanillas Park II Madrid-Getafe (Data Center) | 25.5 | |||
development | Lisboa-Park | Barcelona PLZF (Data Center) | |||
Lisboa (Data Center) | |||||
Plaza Ruiz Picasso | Callao 5 | ||||
Refurbishments | PE Cerro Gamos | 12.7 | |||
Marineda | |||||
Josefa Valcarcel 48 | |||||
Like-for-like portfolio | 3.2 | ||||
(Defensive Capex)(3) | |||||
Total | 49.5 | ||||
- Includes cash (€ 545.3m) and treasury stock (€ 15.4m) and undrawned credit facilities (€ 832.4m) in 3M24
- Includes cash (€ 545.3m) and treasury stock (€ 15.4m)
- € 1.9m are capitalized in balance sheet and € 1.3m are expensed in P&L
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MERLIN Properties | 3M24 RESULTS Trading Update |
APPENDIX
- Consolidated Profit and Loss
- Consolidated Balance Sheet
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MERLIN Properties | 3M24 RESULTS Trading Update |
1. Consolidated Profit and Loss
(€ thousand) | 31/03/2024 | 31/03/2023 |
Gross rents | 124,208 | 119,247 |
Offices | 66,622 | 62,832 |
Logistics | 20,887 | 19,721 |
Shopping centers | 32,956 | 33,519 |
Data Centers | 418 | - |
Other | 3,325 | 3,175 |
Other income | 3,107 | 2,158 |
Total Revenues | 127,315 | 121,405 |
Incentives | (6,661) | (6,741) |
Total Operating Expenses | (29,627) | (25,357) |
Propex | (13,428) | (11,612) |
Personnel expenses | (8,865) | (8,604) |
Opex general expenses | (4,764) | (4,084) |
Opex non-overheads | (1,869) | (356) |
LTIP Provision | (701) | (701) |
Accounting EBITDA | 91,027 | 89,307 |
Depreciation | (578) | (466) |
Gain / (losses) on disposal of assets | 429 | 2,515 |
Provisions | 582 | (7) |
Change in fair value of investment property | - | - |
EBIT | 91,460 | 91,349 |
Net financial expenses | (25,391) | (19,707) |
Debt amortization costs | (1,869) | (1,367) |
Change in fair value of financial instruments | (49) | (6,039) |
Share in earnings of equity method instruments | 2,490 | 3,620 |
PROFIT BEFORE TAX | 66,641 | 67,856 |
Income taxes | (1,854) | (1,683) |
PROFIT (LOSS) FOR THE PERIOD RECURRING OPERATIONS | 64,787 | 66,173 |
Minorities | - | - |
PROFIT (LOSS) FOR THE PERIOD ATTRIBUTABLE | 64,787 | 66,173 |
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MERLIN Properties | 3M24 RESULTS Trading Update |
2. Consolidated Balance Sheet
(€ thousand)
ASSETS | 31/03/2024 | EQUITY AND LIABILITIES | 31/03/2024 |
NON CURRENT ASSETS | 11,532,728 | EQUITY | 6,615,293 |
Intangible assets
Property, plant and equipment
Investment property
Investments accounted by the equity method
Non-current financial assets
Deferred tax assets
1,474 | Subscribed capital | 469,771 |
8,348 | Share premium | 3,541,379 |
10,684,996 | Reserves | 2,548,984 |
539,978 | Results from previous exercises | 97,610 |
220,359 | Treasury stock | (15,440) |
77,573 | Other equity holder contributions | 540 |
Interim dividend | (93,673) | |
Profit for the period | 64,788 | |
Valuation adjustments | 1,334 | |
NON-CURRENT LIABILITIES | 5,393,088 |
Long term debt | 4,763,091 | ||
Long term provisions | 16,807 | ||
Deferred tax liabilities | 613,190 | ||
CURRENT ASSETS | 674,373 | CURRENT LIABILITIES | 198,720 |
Trade and other receivables
Short term investments in group companies and associates
Short-term financial assets
Cash and cash equivalents
Other current assets
54,739 | Short term debt | 48,978 |
3,159 | Trade and other payables | 131,910 |
1,841 | Other current liabilities | 17,832 |
545,295
69,339
TOTAL ASSETS | 12,207,101 | TOTAL EQUITY AND LIABILITIES | 12,207,101 |
APM: definitions and reconciliation of APMs to the latest audited financial accounts can be found on page 57 of https://ir.merlinproperties.com/wp-content/uploads/2024/02/Results-report-3M24-4-1.pdf
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Paseo de la Castellana, 257 28046 Madrid
+34 91 769 19 00 info@merlinprop.com www.merlinproperties.com
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MERLIN Properties SOCIMI SA published this content on 16 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 May 2024 17:40:01 UTC.