MERLIN Properties Annual Report 2022

6 | Annual report | 2022 Mr. Javier García-Carranza Non-Executive Chairman Dear shareholders, I am pleased to present to you the 2022 Annual Report of MERLIN Properties (“MERLIN” or the “Company”). The Annual report includes the Annual Financial Statements and the relevant information relating to the 2022 fiscal year. 2022 has been a year of much change in the macroeconomic environment in which MERLIN Properties operates, for the first time in many years, we find ourselves in an environment of price instability or high inflation, which has led central banks to initiate a process of withdrawal of monetary stimulus together with an aggressive increase in interest rates. Real estate is by definition a very capital-intensive industry and therefore very sensitive to interest rate levels. Although our rents are reviewed annually with inflation, the value of the assets is fixed by the rate at which they are discounted. Therefore, we have faced in 2022 a significant increase in interest rates which has impacted and may continue to impact the value of our assets and the cost of our financing in the long term. In this difficult macro environment for the sector, the management team has done an excellent job in improving the Company’s operational management and strengthening its balance sheet with a significant debt reduction through asset disposals. In this line, MERLIN Properties has completed a very solid 2022, having recovered pre-pandemic levels in its different asset classes. In this fiscal year we have seen MERLIN reach the highest occupancy level in its history (95.1%), along with growth in almost all its relevant metrics. All this has led the Company to achieve a cash flow generation (“FFO”) of € 290.5 million or € 62 cents per share, beating the forecast provided to the market at the beginning of the year. Letter from the Chairman MERLIN Properties has completed a very solid 2022, having recovered pre-pandemic levels in its different asset classes.