959800L8KD863DP30X04-20241231-en

MERLIN PROPERTIES SOCIMI, S.A.

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2024

(Thousand euros)



ASSETS	Notes	31/12/2024	31/12/2023	EQUITY AND LIABILITIES	Notes	31/12/2024	31/12/2023

NON-CURRENT ASSETS				EQUITY	Note 13
Other intangible assets		1,025	1,570	Share capital		563,725	469,771
Property, plant and equipment		22,132	7,142	Share premium		4,259,670	3,541,379
Investment property	Note 7	10,865,480	10,639,763	Reserves		2,529,381	2,729,403
Investments accounted for using the equity method	Note 9	586,513	537,288	Other shareholder contributions		540	540
Non-current financial assets	Note 10	229,934	202,109	Valuation adjustments		(20,411)	(9,475)
Derivatives		1,622	3,429	Tresury shares		(14,450)	(15,410)
Other financial assets		228,312	198,680	Interim dividend		(101,234)	(93,673)
Deferred tax assets	Note 17	53,321	77,573	Profit/(Loss) for the year attributable to the Parent		283,759	(83,497)
Total non-current assets		11,758,405	11,465,445	Equity attributable to the Parent		7,500,980	6,539,038

				Total equity		7,500,980	6,539,038
				NON-CURRENT LIABILITIES
				Debt instruments and other marketable securities	Note 14	2,781,045	3,283,337
				Long-term bank borrowings	Note 14	1,523,202	1,223,731
				Other financial liabilities	Note 15	194,763	171,262
				Deferred tax liabilities	Note 17	607,562	613,190
				Provisions	Note 15	11,390	20,181
				Total non-current liabilities		5,117,962	5,311,701


				CURRENT LIABILITIES
CURRENT ASSETS				Debt instruments and other marketable securities	Note 14	621,361	20,966
Inventories	Note 5.2	54,005	50,976	Bank borrowings	Note 14	4,124	4,528
Trade and other receivables	Notes 10 y 11	60,102	62,598	Other current financial liabilities	Note 15	7,639	7,369
Other current financial assets	Note 10	11,659	4,990	Trade and other payables	Note 16	189,426	164,008
Other current assets		22,348	20,179	Current income tax liabilities	Note 17	6,859	7,591
Cash and cash equivalents	Note 12	1,552,676	461,223	Other current liabilities	Note 15	10,844	10,210
Total current assets		1,700,790	599,966	Total current liabilities		840,253	214,672
TOTAL ASSETS		13,459,195	12,065,411	TOTAL EQUITY AND LIABILITIES		13,459,195	12,065,411

The accompanying explanatory Notes 1 to 24 and Appendix I and II are an integral part of the consolidated statement of financial position as at 31 December

2024.

MERLIN PROPERTIES SOCIMI, S.A.

AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENT FOR 2024

(Thousand euros)


	Notes	Year 2024	Year 2023
	Notes	Year 2024	Year 2023

CONTINUING OPERATIONS:
Revenue	Notes 6 y 18	494,572	464,779
Other operating income		8,428	4,754
Staff costs	Note 18.c	(36,199)	(34,845)
Other operating expenses	Note 18.b	(96,588)	(73,325)
Profit/(loss) on disposals of non-current assets	Note 7	5,351	(7,023)
Depreciation and amortisation charge		(4,350)	(2,075)
Allocation of grants relating to non-financial assets and others		52	36
Provisions	Note 15	5,337	(7,410)
Change in fair value of investment properties	Note 7	(1,067)	(335,984)
PROFIT/(LOSS) FROM OPERATIONS		375,536	8,907

Changes in the fair value of financial instruments-	Note 10 y 14	(1,076)	(6,232)
Finance income	Note 18.d	42,160	10,106
Profit/(loss) on disposal of financial instruments		20	-
Finance expenses	Note 18.d	(134,758)	(127,786)
Share of results of companies accounted for using the equity method	Note 9	14,073	39,923
Exchange differences		(1)	90
PROFIT/(LOSS) BEFORE TAX		295,954	(74,992)
Income tax	Note 17	(12,195)	(8,505)
PROFIT/(LOSS) FOR THE YEAR		283,759	(83,497)
Attributable to shareholders of the Parent		283,759	(83,497)

EARNINGS PER SHARE FROM CONTINUING OPERATIONS (in €):	Note 13.6
Basic		0.56	(0.18)
Diluted		0.56	(0.18)

The accompanying Notes 1 to 24 to the consolidated financial statements and Appendices I and II are

an integral part of the consolidated income statement for 2024.

MERLIN PROPERTIES SOCIMI, S.A.

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 2024

(Thousand euros)


	Notes	Year 2024	Year 2023
	Notes	Year 2024	Year 2023

PROFIT/(LOSS) PER INCOME STATEMENT (I)		283,759	(83,497)

OTHER COMPREHENSIVE INCOME:
Income and expense recognised directly in equity-
Arising from cash flow hedges (*) from continuing operations	Note 13.7	1,017	(17,729)
OTHER COMPREHENSIVE INCOME RECOGNISED DIRECTLY IN EQUITY (II)		1,017	(17,729)
Transfers to the income statement from continuing operations	Note 13.7	(12,369)	(4,544)
Tax effect		416	-
TOTAL TRANSFERS TO THE INCOME STATEMENT (III)		(11,953)	(4,544)
TOTAL COMPREHENSIVE INCOME (I+II+III)		272,823	(105,770)

Attributable to shareholders of the Parent from continuing operations		272,823	(105,770)
Attributable to shareholders of the Parent		272,823	(105,770)

(*) Amounts that will be taken to the income statement in subsequent years

The accompanying Notes 1 to 24 and Appendices I and II are an integral part of the consolidated

statement of comprehensive income for 2024.

MERLIN PROPERTIES SOCIMI, S.A.

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR

ENDED 31 December 2024

(Thousand euros)


	Share Capital	Share premium	Reserves	Shareholder Contribution	Profit/ (loss) for the year	Interim Dividend	Valuation adjustments	Treasury shares	Equity attributed to the Parent Company	Non- controlling interests	Total Equity




Balance as of 31 December 2022	469,771	3,541,379	3,023,630	540	263,087	(444,815)	12,798	(17,166)	6,849,224	-	6,849,224

Consolidated income for 2023	-	-	-	-	(83,497)	-	-	-	(83,497)	-	(83,497)
Other comprehensive income for 2023	-	-	-	-	-	-	(22,273)	-	(22,273)	-	(22,273)
Distribution of 2022 profit	-	-	(181,728)	-	(263,087)	444,815	-	-	-	-	-
Transactions with shareholders or owners
Distribution of dividends	-	-	(113,350)	-	-	(93,673)	-	-	(207,023)	-	(207,023)
Acquisition/(sale) of treasury shares	-	-	(252)	-	-	-	-	418	166	-	166
Recognition of share-based payments	-	-	2,804	-	-	-	-	-	2,804	-	2,804
Delivery of share distribution scheme	-	-	(371)	-	-	-	-	1,338	967	-	967
Other changes	-	-	(1,330)	-	-	-	-	-	(1,330)	-	(1,330)
Balance as of 31 December 2023	469,771	3,541,379	2,729,403	540	(83,497)	(93,673)	(9,475)	(15,410)	6,539,038	-	6,539,038

Consolidated income for 2024	-	-	-	-	283,759	-	-	-	283,759	-	283,759
Other comprehensive income for 2024	-	-	-	-	-	-	(10,936)	-	(10,936)	-	(10,936)
Distribution of 2023 profit	-	-	(177,170)	-	83,497	93,673	-	-	-	-	-
Transactions with shareholders or owners
Distribution of dividends	-	(108,505)	(3,937)	-	-	(101,234)	-	-	(213,676)	-	(213,676)
Capital increase	93,954	826,796	(21,606)	-	-	-	-	-	899,144	-	899,144
Acquisition/(sale) of treasury shares	-	-	(18)	-	-	-	-	(59)	(77)	-	(77)
Recognition of share-based payments	-	-	2,804	-	-	-	-	-	2,804	-	2,804
Delivery of share distribution scheme	-	-	(95)	-	-	-	-	1,019	924	-	924
Other changes	-	-	-	-	-	-	-	-	-	-	-
Balance as of 31 December 2024	563,725	4,259,670	2,529,381	540	283,759	(101,234)	(20,411)	(14,450)	7,500,980	-	7,500,980

The accompanying Notes 1 to 24 and Appendices I and II are an integral part of the consolidated statement of changes in equity for 2024.

MERLIN PROPERTIES SOCIMI, S.A.

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR

ENDED 31 December 2024

(Thousand euros)


	Notes	Year 2024	Year 2023
CONTINUED OPERATIONS	Notes	Year 2024	Year 2023

CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES:		316,784	227,965
Profit for the year before tax		295,954	(74,992)
Adjustments for-		74,279	436,354
Depreciation and amortisation charge		4,350	2,075
Change in fair value of investment property	Note 7	1,067	335,984
Changes in operating provisions		(5,337)	7,410
Profit/(Loss) on derecognition and disposal of non-current assets	Note 7	(5,351)	7,023
Finance income		(42,160)	(10,106)
Finance expenses		134,758	127,786
Changes in fair value of financial instruments		1,076	6,232
Share of results of investments accounted for using the equity method	Note 9	(14,073)	(39,923)
Other adjustments to profit		(51)	(127)
Changes in working capital-		31,825	(35,077)
Inventories		(3,029)	(6,468)
Accounts receivable		2,496	(12,758)
Other current assets		(2,170)	(9,746)
Accounts payable		28,223	5,347
Other assets and liabilities		6,305	(11,452)
Other cash flows from operating activities-		(85,274)	(98,320)
Interest paid		(119,407)	(109,299)
Interest received		32,929	8,994
Income tax recovered (paid)		1,204	1,985

CASH FLOWS FROM/(USED IN) INVESTMENT ACTIVITIES:		(294,378)	(274,747)
Payments due to investments-		(365,661)	(315,528)
Investment property	Note 7	(292,716)	(308,172)
Property, plant and equipment		(18,768)	(1,101)
Contributions to associates and other non-current investments		(53,465)	(5,349)
Intangible assets		(712)	(906)
Proceeds from disposals-		71,283	40,781
Investment property	Note 7	71,283	40,781

CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES:		1,069,047	78,556
Proceeds and payments relating to equity instruments-		691,791	(198,660)
Issue of equity instruments	Note 13	899,487	-
Treasury share purchases / disposals	Note 13	58	418
Premium Refunds	Note 4	(108,505)	-
Dividends Paid	Note 4	(105,171)	(207,023)
Dividends Paid / Premium Refunds from subsidiaries	Note 9	5,922	7,945
Proceeds and payments relating to financial liabilities-	Note 14	377,256	277,216
Debt issuance with credit institutions		297,987	1,021,625
Issuance of debentures and bonds		92,914	-
Repayment of bank borrowings		(13,645)	(1,623)
Return of debentures and bonds		-	(742,786)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		1,091,453	31,774

Cash and cash equivalents at beginning of period		461,223	429,449
Cash and cash equivalents at end of period		1,552,676	461,223

The accompanying Notes 1 to 24 24 to the consolidated financial statements and Appendices I and II

are an integral part of the consolidated statement of cash flows for 2024.

Merlin Properties SOCIMI, S.A. and Subsidiaries

Notes to the consolidated financial statements

for the year ended

31 December 2024

1. Nature and activity of the Group

Merlin Properties SOCIMI, S.A. (“the Parent” or “MERLIN”) was incorporated in Spain on 25 March

2014 under the Spanish Corporate Enterprises Act (Ley de Sociedades de Capital). On 22 May 2014,

the Parent requested to be included in the tax regime for real estate investment trusts (REITs),

effective from 25 March 2014 (date of incorporation of the Parent).

On 27 February 2017, the Parent changed its registered office from Paseo de la Castellana 42 to

Paseo de la Castellana 257, Madrid, Spain.

The Parent's corporate purpose, as in its articles of association, is as follows:

– The acquisition and development of urban real estate for subsequent leasing, including the

refurbishment of buildings as per Spanish Law 37/1992, of 28 December, on Value Added Tax

(Ley 37/1992, de 28 de diciembre, del Impuesto sobre el Valor Añadido);

– The holding of equity interests in real estate investment trusts (“REITs”) or in other non-

resident entities in Spain with the same corporate purpose and that operate under a similar

regime as that established for REITs with respect to the mandatory profit distribution policy

stipulated by law or by the Articles of Association;

– The holding of equity interests in other resident or non-resident entities in Spain whose main

corporate purpose is to acquire urban real estate for subsequent leasing, and that operate

under the same regime as that established for REITs with respect to the mandatory profit

distribution policy enforced by law or by the Articles of Association, and that fulfil the

investment requirements stipulated for these companies; and

– The holding of shares or equity interests in collective real estate investment undertakings

regulated by Spanish Law 35/2003, of 4 November, on collective investment undertakings

(Ley 35/2003, de 4 de noviembre, de Instituciones de Inversión Colectiva), or any law that

may replace it in the future.

In addition to the economic activity relating to the main corporate purpose, the Parent may also carry

on any other ancillary activities, i.e., those that generate income representing less than 20%, taken as

a whole, of its income in each tax period, or those that may be considered ancillary activities in

accordance with the law applicable at any given time.

The activities included in the Parent’s corporate purpose may be indirectly carried on, either wholly or

in part, through the ownership of shares or equity interests in companies with a similar or identical

corporate purpose.

The direct and, where applicable, indirect performance of any activities that are reserved under special

law are excluded. If the law requires a professional qualification, prior administrative authorisation,

registration with a public registry, or any other requirement for the purpose of exercising any of the

activities within the corporate purpose, such activity may not commence until all the applicable

professional or administrative requirements have been met.

Merlin Properties SOCIMI, S.A. and Subsidiaries ("the Group") engage mainly in the acquisition and

management (through leasing to third parties) of offices, industrial buildings, logistic centers, Data

Centers, shops and shopping centers, and they may also invest, to a lesser extent, in other assets for

lease.

On 30 June 2014, the Parent was floated on the Spanish stock market through the issuance of EUR

125,000 thousand shares, with a share premium of EUR 1,125,000 thousand. Merlin Properties

SOCIMI, S.A.'s shares/securities have been listed on the electronic trading system of the Spanish

stock exchanges since 30 June 2014.

On 15 January 2020, the Parent's shares were listed on Euronext Lisbon under a dual listing.

On 24 July 2024, the Parent carried out a capital increase amounting to EUR 93,954 thousand, with a

share premium of EUR 826,796 thousand (see Note 13.1).

The tax regime of the Parent and the majority of its subsidiaries is governed by Spanish Law 11/2009,

of 26 October, as amended by Spanish Law 16/2012, of 27 December and subsequent laws,

regulating REITs (Ley 16/2012, de 27 de diciembre, por la que se regulan las Sociedades Anónimas

Cotizadas de Inversión en el Mercado Inmobiliario). Article 3 of this Law sets out the investment

requirements for these types of companies, namely:

1. At least 80% of a REIT’s assets must be invested in urban real estate for leasing purposes

and/or in land to be developed for leasing purposes provided such development starts within

three years of acquisition, along with investments in the capital or equity of other entities

referred to in Article 2.1 of the above Law.

The value of the asset is calculated based on the average of the quarterly individual balance

sheets of the year. To calculate this value, the REIT may opt to substitute the carrying amount

for the fair value of the items contained in these balance sheets, which will apply to all the

balance sheets of the year. For these purposes, the money and collection rights arising from

the disposal of these properties or shareholdings, if applicable, during the same year or

previous years will not be calculated, provided that, in this last case, the reinvestment period

referred to in Article 6 of this Law has not elapsed.

2. Similarly, at least 80% of the income for the tax period for each year, excluding that arising

from the disposal of shareholdings and properties used in fulfilment of its primary corporate

purpose, once the holding period referred to below has elapsed, should come from the lease

of properties and from dividends or shares in profit from these investments.

This percentage is calculated based on consolidated profit if the company is a parent of a

group, as defined in Article 42 of the Spanish Commercial Code, irrespective of the place of

residence and the obligation to prepare consolidated financial statements. That group will be

exclusively composed of the REIT and all the other entities referred to in Section 1, Article 2 of

said Law.

3. The REIT’s real estate assets must be leased for at least three years. The time that the

properties have been offered for lease, up to a maximum of one year, will be included for the

purposes of this calculation.

This period will be calculated:

a) In the case of properties that are included in the REIT's assets before it avails itself of

the regime, from the date of commencement of the first tax period in which the special

tax regime set forth in this Act is applied, provided that the property is leased or

offered for lease at that date. Otherwise, the following paragraph must be applied.

b) In the case of properties developed or acquired subsequently by the REIT, from the

date on which they were leased or offered for lease for the first time.

c) Shares or equity investments in entities referred to in section 1, Article 2 of the Act

must be kept in the REIT's asset base for a period of at least three years after their

acquisition or, if applicable, from the beginning of the first tax period during which the

special tax regime in the Law applies.

As in transitional provision one of Law 11/2009, of 26 October, amended by Law 16/2012, of 27

December, governing listed companies investing in the property market, these companies may opt to

apply the special tax regime under Article 13 of this Act, even when the requirements stipulated therein

are not fulfilled, under the condition that such requirements are met within two years of the date

application of the REIT tax regime is sought.

REITs are taxed at a rate of 0% for corporate income tax. However, where dividends distributed to an

equity holder owning at least 5% of the REIT’s share capital are exempt from taxation or taxed below

10%, such REIT will be subject to a special charge of 19% of the dividends distributed to the said

equity holder, in respect of corporate income tax. If applicable, this special charge must be paid by the

REIT within two months after the dividend distribution date.

With effect for financial years beginning on or after 1 January 2021, Law 11/2021, of 9 July, on

measures to prevent and combat tax fraud amended Article 9 (4) of Spanish Law 11/2009, of 26

October, regulating REITs. Specifically, a special tax of 15% was introduced on the amount of profit

obtained in the year which is not distributed, in the portion that arises from: a) income that has not

been taxed at the general corporate income tax rate and, b) income that does not arise from the

transfer of eligible assets, once the three-year maintenance period has elapsed, which has been

included in the three-year reinvestment period in Article 6.1.b) of Law 16/2012, of 27 December. This

special tax will be considered corporate income tax and will accrue on the day of the agreement to

apply profit for the year by the general shareholders meeting or equivalent body. The self-assessment

and payment of the tax must be performed within two months of the accrual.

The transitional period in which the Company had to meet all requirements of this tax regime ended in

2017. Group management, based on the opinion of its tax advisers, assessed compliance with the

requirements of the regime, concluding that such requirements were met at 31 December 2024.

Consequently, the Group's consolidated financial statements and the individual financial statements of

the Parent for 2024, prepared by its Directors, which are awaiting approval by the General Meeting,

have been prepared under the REIT Regime. However, the directors of the Parent consider that the

above financial statements will be approved without any material changes.

On the other hand, the financial statements for 2024 for the companies that make up the Group are

pending preparation by their respective Directors and are expected to be approved by their respective

General Shareholders' or Partners' Meetings within the deadlines established by applicable law.

The separate and consolidated financial statements of Merlin Properties SOCIMI, S.A. for 2023

prepared by its directors, were approved by the shareholders at the Annual General Meeting on 9 May

2024.

The 2023 separate annual financial statements of the Group companies, which were prepared by their

respective directors, were approved at the respective General Meetings within the periods in

applicable tax legislation.

In view of the business activities currently performed by the Group, it does not have any environmental

liability, expenses, assets, provisions or contingencies that might be material with respect to its equity,

financial position or results.

The Company did not change its corporate or trading name in 2024 or 2023.

2. Basis of presentation of the consolidated financial statements

2.1 Regulatory framework

The regulatory financial reporting framework applicable to the Group consists of the following:

– The Spanish Commercial Code and all other Spanish commercial laws.

– International Financial Reporting Standards (IFRSs) as adopted by the European Union

pursuant to Regulation (EC) No 1606/2002 of the European Parliament and Law 62/2003, of

30 December, on tax, administrative and social security measures, and applicable rules and

circulars of the Spanish National Securities Market Commission (CNMV);

– Law 11/2009, of 26 October, as amended by Law 16/2012, of 27 December, and subsequent

amendments, regulating REITs, and other commercial law.

– All other applicable Spanish accounting regulations.

2.2 Basis of presentation of the consolidated financial statements

The consolidated financial statements for 2024 were obtained from the accounting records of the

Parent and the consolidated companies, and have been prepared in accordance with the regulatory

financial reporting framework described in Note 2.1 and, accordingly, they present fairly the Group’s

consolidated equity and consolidated financial position at 31 December 2024 and the consolidated

results of its operations, the changes in consolidated equity and the consolidated cash flows in the

year then ended. The consolidated financial statements were prepared on a historical cost basis

except for those items that have been measured at fair value.

Given that the accounting policies and measurement bases applied in preparing the Group’s

consolidated financial statements for 2024 may differ from those applied by some of the Group

companies, the necessary adjustments and reclassifications were made on consolidation to unify

these policies and bases and to make them compliant with IFRSs as adopted by the European Union.

To present the various items composing the consolidated financial statements in a uniform manner,

the accounting, policies and measurement bases used by the Parent were applied to all the

consolidated companies.

2.2.1 Adoption of Financial Reporting Standards and Interpretations effective as from 1 January 2024

In 2024 the following standards, amendments and interpretations entered into force, which, where

applicable, were used by the Group in preparing these financial statements:


Standards, Amendments and Interpretations	Description	Mandatory application in the financial years beginning on or after:
Amendments to IAS 1 Classification of liabilities as current and non- current, and non-current liabilities with conditions	Clarifications regarding the presentation of liabilities as current or non-current, particularly those with maturity conditional on covenant compliance.	01 January 2024
Amendment to IAS 16 Liabilities for leases in a sale and leaseback transaction	This amendment clarifies the subsequent accounting of lease liabilities arising in sale and leaseback transactions.	01 January 2024
Amendment to IAS 7 and IFRS 7 Supplier financing arrangements ("confirming")	This amendment introduces specific disclosure requirements for financial agreements with suppliers and their impact on liabilities and cash flows of the company, including liquidity risk and management of associated risks.	01 January 2024

These standards and amendments have not had a significant impact.

All accounting policies and measurement bases with a significant effect on the consolidated financial

statements were applied.

2.2.2 Standards not yet in force in 2024

The following standards were not yet in force in 2024, either because their effective date is

subsequent to the date of the consolidated financial statements or because they had not yet been

adopted by the European Union.


Standards, Amendments and Interpretations	Description	Mandatory application in the financial years beginning on or after:
Amendments to IFRS 10 and IAS 28 Sale or contribution of assets between an investor and its associates or joint ventures	These amendments clarify the accounting treatment of sales and contributions of assets between an investor and its associates and joint ventures depending on whether the non- monetary assets sold or contributed to an associate or joint venture constitute a “business”.	No date set
Amendments to IAS 21 Lack of exchangeability	This amendment adds requirements to help institutions determine whether a currency is exchangeable for another currency and the spot rate to use when it is not.	01 January 2025
IFRS 18 Presentation and disclosure in financial statements	A new standard replacing IAS 1, the key new concepts introduced relate to the structure of the income statement; disclosures for certain performance measures reported in the financial statements; and improved principles on aggregation and disaggregation of information in the financial statements and notes.	1 January 2027
IFRS 19 Subsidiaries without public accountability: Disclosures	This new standard has been developed to permit subsidiaries without public accountability, with a parent that applies IFRS Standards in its consolidated financial statements, to apply IFRS Standards with reduced disclosure requirements.	1 January 2027
Amendments to IFRS 9 and IAS 7 Amendments to the classification and measurement of financial instruments	These amendments clarify the date of recognition and derecognition of certain financial assets and financial liabilities; clarify and add additional guidance for assessing whether a financial asset meets the solely payments of principal and interest test; include new disclosure requirements; and update the disclosures for equity instruments designated at fair value through other comprehensive income.	1 January 2026
Annual Improvements to IFRS Accounting Standards. Volume 11	The purpose of the amendments is to avoid potential confusion arising from inconsistencies in the wording of the standards by making changes to the following standards: • IFRS 1 “First-time Adoption of International Financial Reporting Standards”; • IFRS 7 “Financial Instruments: Disclosures”; • IFRS 9 “Financial Instruments”; • IFRS 10 “Consolidated Financial Statements”; and • IAS 7 “Statement of Cash Flows”.	1 January 2026
Amendments to IFRS 9 and IAS 7 Contracts referencing nature-dependent electricity	Contracts referencing nature-dependent electricity production, also known as power purchase agreements (PPAs), are contracts to buy and receive electricity that is produced from renewable sources. The amendments include details on which PPAs can be used in hedge accounting and the specific conditions allowed in these hedging transactions and new disclosure requirements.	1 January 2026

At present, the Group is assessing the impacts that the future application of standards with a

mandatory application date from 1 January 2025 could have on the consolidated financial statements

once they come into force, although these impacts are not expected to be significant.

2.3Functional currency

These consolidated financial statements are presented in euros, since the euro is the functional

currency in the area in which the Group operates.

2.4 Comparative information

The information relating to 2023 contained in these notes to the consolidated financial statements is

presented solely for comparison purposes with similar information relating to the year ended 31

December 2024.

2.5 Responsibility for the information and use of estimates

The information in these consolidated financial statements is the responsibility of the Parent's

directors.

In the Group's consolidated financial statements for 2024 estimates were occasionally made by the

senior executives of the Group and of the consolidated companies, later ratified by the directors, to

quantify certain of the assets, liabilities, income, expenses and obligations reported herein. These

estimates relate basically to the following:

– The market value of the Group's property assets (see Note 5.1). The Group obtained

valuations from independent experts at 31 December 2024.

– The fair value of certain financial instruments (see Notes 5.5 and 5.6).

– The assessment of provisions and contingencies (see Note 5.11)

– Management of financial risk and, in particular, of liquidity risk and climate change risk (see

Note 23).

– The recovery of deferred tax assets and the tax rate applicable to temporary differences (see

Note 5.13).

– Compliance with the requirements that govern listed real estate investment companies (see

Note 1).

Changes in estimates:

Although these estimates were made based on the best information available at 31 December 2024,

on the events analysed, events that take place in the future might make it necessary to change these

estimates (upwards or downwards) in coming years. Changes in accounting estimates would be

applied prospectively in accordance with the requirements of IAS 8, recognising the effects of the

change in estimates in the related consolidated income statement.

2.6Basis of consolidation applied

All companies over which the Group is exposed, or has the right, to variable returns from its

involvement in the subsidiary and has the capacity to influence these returns through the power to

direct the activities of the entity have been fully consolidated using the full consolidation method; and

by applying the equity method, where appropriate, when significant influence is held but not a majority

of the voting rights, with a shareholding of more than 20% (see Note 9). Likewise, a significant

influence on the investments held by the Group with a participation rate of less than 20% is considered

to exist if it has representation on the Board of these companies of the parties related to it.

A number of adjustments have been made to align the accounting principles and measurement bases

of Group companies with those of the Parent, including the application of International Financial

Reporting Standards measurement bases to all Group companies and associates.

It was not necessary to unify accounting periods since the balance sheet date of all the Group

companies and associates is 31 December of each year.

2.6.1 Subsidiaries

Subsidiaries are considered to be those companies over which the Parent directly or indirectly

exercises control through subsidiaries. The Parent has control over a subsidiary when it is exposed or

has rights to variable returns from its involvement with the subsidiary, and when it has the ability to

exercise its power to affect its returns. The Parent has power when the voting rights are sufficient to

give it the ability to direct the relevant activities of the subsidiary. The Parent is exposed or has rights

to variable returns from its involvement with the subsidiary when its returns from its involvement have

the potential to vary as a result of the subsidiary’s performance.

The financial statements of the subsidiaries are fully consolidated with those of the Parent.

Accordingly, all material balances and effects of the transactions between consolidated companies are

eliminated on consolidation.

Any third-party interests in the Group's equity and profit or loss are recognised under "Non-controlling

interests" in the consolidated statement of financial position and "Result attributable to non-controlling

interests" in the consolidated income statement and consolidated comprehensive income statement.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated

income statement from the effective date of acquisition or until the effective date of disposal, as

appropriate.

Appendix I includes information on Group companies and associates.

2.6.2 Associates

The companies listed in Appendix I and II, over which Merlin Properties, SOCIMI, S.A. does not

exercise control but rather has a significant influence, are included under “Investments accounted for

using the equity method” in the accompanying consolidated statement of financial position and are

measured using the equity method, which consists of the value of the net assets and any goodwill of

the associate. The share of these companies' net profit or loss for the year is included under "Share of

results of associates accounted for using the equity method" in the accompanying consolidated

income statement.

2.6.3 Inter-group transactions

Gains or losses on transactions between consolidated companies are eliminated on consolidation and

deferred until they are realised with third parties outside the Group. The capitalised expenses of Group

work on non-current assets are recognised at production cost, and any intra-Group results are

eliminated. Receivables and payables between the consolidated Group companies and intra-Group

income and expenses were eliminated from the consolidated financial statements.

2.6.4 First-time consolidation differences

At the date of an acquisition, the assets and liabilities of a subsidiary are recognised at their fair values

at that date. Any excess of the cost of acquisition over the fair values of the identifiable net assets

acquired is recognised as goodwill. When there is an negative difference between the acquisition cost

and the fair values of the identifiable net assets acquired (i.e. a discount on acquisition), the valuations

of the net assets are reviewed and, if applicable, said difference i is credited to profit or loss in the

period in which the acquisition is made.

2.6.5 Business combinations

The Group accounts for business combinations using the purchase method. The date of acquisition is

the date on which the Group takes control of the acquiree.

The consideration paid is calculated at the date of acquisition as the sum of the fair values of the

assets delivered, the liabilities incurred and assumed and the equity instruments issued by the Group

in exchange for control of the business acquired. Acquisition costs, such as professional fees, do not

form part of the cost of the business combination, but are taken directly to the consolidated income

statement.

Where applicable, the contingent consideration is recognised at the acquisition-date fair value.

Subsequent changes to the fair value of the contingent consideration are taken to the consolidated

income statement unless this change arises within the one-year period established as the provisional

accounting period, in which case the business combination will be modified.

Goodwill is calculated as the excess of the aggregate of the consideration transferred, any non-

controlling interests, and the fair value of any previously acquired interest less the net identifiable

assets acquired.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree

and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of

the identifiable net assets acquired is recognised as goodwill. If these amounts are less than the fair

value of the identifiable net assets of the acquired subsidiary, the difference is recognised directly in

the consolidated income statement as a bargain purchase.

2.6.6 Scope of consolidation

The companies composing the Merlin Group at 31 December 2024, along with information relating to

the consolidation method, are listed in Appendix I of the consolidated financial statements.

2.7 Quantitative and qualitative information on current economic and geopolitical impacts

In recent months, no significant changes have been observed in the pattern of global economic

activity, with global GDP growth rates expected to be slightly above 3% over the next few years

(relatively modest rates from a historical perspective). Despite persistently high levels of uncertainty,

the pace of global economic activity remains relatively robust, services are still the main driver of

growth and the Economic and Monetary Union (EMU) continues to show signs of weakness,

especially compared to the United States, where activity remains considerably strong.

The slowdown in inflation is consolidating. In the second half of the year, headline inflation continued

its path of gradual moderation, supported mainly by a sharper than expected slowdown in energy

prices. In any case, core inflation, and especially services inflation, continues to show greater

downward resilience.

Monetary policy continues to be eased in most global economies. Compared to market expectations

three months ago, monetary policy easing is now expected to be more intense in the euro area and

less pronounced in the United States, where good employment data is casting doubt as to whether the

Fed will continue its rate easing path.

The financial markets have seen: (i) recent improved performance of risk assets in the United States

along with an appreciation of the US dollar against major world currencies and rising inflation

expectations, and (ii) an increase in bond yields.

Crude oil prices are below levels anticipated three months ago, partly as a result of weak demand

from China. In contrast, the price of natural gas has recently rebounded due to certain supply-side

disruptions.

However, this scenario is surrounded by exceptionally high uncertainty, mainly associated with

ongoing geopolitical tensions and, more recently, with the possible policies that the newly-elected US

administration could roll out in the coming months (a hypothetical generalised increase in tariffs would

foreseeably put downward pressure on economic activity and upward pressure on global inflation).

Persistent core inflation in Spain

Compared with the projections of the third quarter, the Bank of Spain has revised GDP growth in 2024

and 2025 upwards to 3.1% and 2.5%, respectively, while projections for 2026 have remained

unchanged at 1.9%, before decelerating slightly in 2027 to 1.7%. The upward revision is due to

stronger than expected activity in the second half of the year (lower interest rates, a more depreciated

euro and lower oil prices (in US dollar terms).

Although 2024 ended with an increase in inflation to 2.8%, price increases are expected to moderate

over the next few years. The projected slowdown in 2024-2026 would reflect a gradual moderation of

core inflation and, especially in 2025, a deceleration of inflationary pressures in food. However, core

inflationary pressures have been revised upwards, given the unexpected increases recorded in recent

months in changes in services inflation.

Decrease in operating margin of shopping center tenants

In 2024, we saw an increase in the costs borne by our tenants, especially in shopping centers

(increase in minimum wage, direct cost increases, etc.).

Small and medium-sized enterprises, which form the backbone of many national markets and are a

significant share of our tenants in the shopping centers, are particularly sensitive to cost increases

despite reductions in the leasing effort rate. Companies that are struggling are cutting costs and

unemployment may rise, thus reducing consumer spending and creating a negative feedback loop that

could contribute to a weakening economy.

Measurement of fair value of investment property

The Group adjusted the fair value of its real estate investments according to IAS 40. This fair value is

determined using the reference of the valuations made by independent third parties every six months

so that, at the close of each six-month period, the fair value reflects the market conditions of the

elements of the investment properties at that date.

At 31 December 2024, the valuations performed by CBRE Valuation Advisory, S.A., Jones Lang

LaSalle, S.A. and Savills Consultores Inmobiliarios, S.A. did not indicate any type of uncertainty

regarding the market value of the Group's investment property.

The measurement methodology described in Note 7 was not changed.

In 2024 and 2023, the Group included at fair value those assets constructed that came into operation

during the year in the data center branch of activity, since Group management considers that they

meet the necessary requirements for their valuation at market value.

Although these assets are in their early stages, it should be noted that assumptions have been taken

into consideration for these assets regarding growth in occupancy, rents and normalised margins in

mature markets, and the rate of completion of the capacity expansion work. The valuation of these

assets is therefore highly sensitive to achieving the assumptions made, and there may be significant

changes in value in the event of variances with respect to these assumptions.

Meanwhile, the details of main assumptions used in the appraisals at December 2024 and December

2023 based on the nature of the assets and the sensitivities to increases and decreases of those

variables are included in Note 7.

Liquidity risk

Experience has shown that consumer and investor behaviour can change rapidly during these times of

uncertainty and volatility. Therefore, lending and investment decisions must reflect this high level of

volatility and a potential deterioration in market conditions that may have a significant impact on the

overall financial position of companies, which could be divided into the companies’ or groups’ own

liquidity risk and the liquidity risk or credit risk of their customers.

Against this backdrop, at 31 December 2024 the Group had a leverage ratio of 28.3%, understood as

debt over the fair value of the assets (LTV) (this ratio is obtained by dividing the Company’s net debt

by the fair value of the assets including transaction costs) and cash and cash equivalents (including

treasury shares) amounting to EUR 1,567,126 thousand. The only significant debt maturity for the

Group over the next twelve months is in May 2025, due to the maturity of a bond amounting to EUR

600 million. However, the Group has a liquidity position, including the corporate credit facility and

undrawn borrowings, of EUR 2,364 million (see Note 14).

The Parent's Directors and Management Team are constantly monitoring the evolution of the current

situation and the effects it may have on the credit market, and they believe that the Group's situation

at 31 December 2024 ensures that it will be solvent to fulfil the obligations on the balance sheet at 31

December 2024, and there is no material uncertainty about the continuity of the Group's operations.

Credit risk

With respect to the application of the simplified approach of impairment and credit risk, and also taking

into consideration other differential factors of the Group's portfolio of tenants and the characteristics of

their leases, and the amounts collected thus far, the Group has concluded that the increased credit

risk of its customers has not been significantly affected, this risk falling below 1% of turnover.

In relation to its other financial assets exposed to credit risk, which mainly correspond to loans to

associates and third parties, the Directors of the Parent have determined that there has not been a

significant increase in the risk, considering the measures agreed in some cases with tenants and the

long-term expectations based on the historical experience with those entities, which make it possible

to estimate that the credit risk will remain in line with the previous year.

3. Changes in the scope of consolidation

2024

On 27 May 2024, the merger by absorption of Slack Tailwind Systems, S.L.U. and Slow Rise Spain,

S.L.U. into Merlin Oficinas, S.L.U. was carried out (all of which are wholly owned by Merlin Properties

SOCIMI, S.A.). This transaction had no effect on the consolidated financial statements.

On 27 November 2024, the shareholders at the General Meeting of Global Murex Iberia, S.L. resolved

to dissolve and liquidate the company, which was wholly owned by the Group. This transaction had no

effect on the consolidated financial statements.

On 17 December 2024, the Group acquired 5.84% of the shares representing the share capital of

HCG Levante, S.L. for EUR 1,070 thousand. The company owns land for tertiary use in the city of

Valencia.

2023

The following changes in the scope of consolidation took place in 2023:

On 13 January 2023, the Group acquired 7.32% of the shares representing the share capital of

Moregal Hotels, S.L. for EUR 1,585 thousand. The company owns land for tertiary use in the city of

Malaga.

On 7 November 2023, the Group acquired all the shares representing the share capital of Merlin

Edged, S.L.U. for EUR 3 thousand.

In 2023, Metroparque, S.A. was fully spun off with the dissolution of Metroparque, S.A. through the

transfer en bloc of its shopping center business to Merlin Retail, S.L. and its office business to Merlin

Oficinas, S.L. (both wholly owned by Merlin Properties SOCIMI, S.A.). This transaction had no effect

on the consolidated financial statements.

In 2023, the Group increased its ownership interest in Silicius Real Estate, SOCIMI, S.A. to 17.91%

(previously 17.80%) due to the distribution of a dividend by means of promissory notes convertible into

shares amounting to EUR 1,554 thousand.

4. Distribution of the Parent's profit

The distribution of profit proposed by the Parent's directors for approval by its shareholders at the

Annual General Meeting is as follows:


	Thousands of euros

Profit/(Loss) for the year	124,431
Distribution:
To legal reserves	12,443
To offset interim dividend	101,234
Dividends	10,754
To voluntary reserves	-

Other dividends distributed

On 9 May 2024, the shareholders at the Annual General Meeting approved the distribution of a final

dividend out of 2023 profit in the amount of EUR 3,937 thousand, and the distribution of a dividend

with a charge to the share premium for EUR 108,505 thousand.

On 14 November 2024, the Parent’s Board approved the distribution of an interim dividend out of profit

for 2024 in the amount of EUR 101,234 thousand.

Over the past five years, the Company has distributed the following dividends and share premium

refunds:


	2024	2023	2022	2021	2020

Shareholder remuneration	213,676	207,023	561,926	210,099	68,518

5. Accounting policies

The main accounting policies and measurement bases applied in preparing the Group’s consolidated

financial statements, which comply with the IFRSs in force at that date, are as follows:

5.1 Investment property

Investment property comprises buildings under construction and development for use as investment

property held (by the owner or by the tenant as an asset under usage rights), which are partially or

fully held to generate revenue, profits or both, rather than for use in the production or supply of goods

or services, or for the Group's administrative purposes or sale in the ordinary course of business.

All assets and usage rights (through the corresponding administrative concession or area right granted

by a public body) classified as real estate investments are in operation with various tenants. These

properties are earmarked for leasing to third parties. The Parent's directors do not plan to dispose of

these assets in the coming 12 months and have therefore decided to recognise them as investment

property in the consolidated statement of financial position.

Investment property is carried at fair value at the reporting date and is not depreciated. Investment

property includes land, buildings, usage rights of concessionaire projects and other constructions held

to earn rentals or with the aim of achieving gains on the sale as a result of future increases in the

respective market prices.

Gains or losses arising from changes in the fair value of investment property are included in the

income statement for the year in which they arise.

While construction work is in progress, the costs of construction work and finance costs are

capitalised. The above assets are recognised at fair value when they become operational. The

contingent payments related to the cost of the investment properties are capitalised as an increase in

their value. If the variable payment changes is a result of the asset’s profitability, this change is

recognised as an increase in the value of the asset.

Subsequent expenses are capitalised at the carrying amount of the asset only when it is probable that

the future economic benefits associated with these expenses will flow to the Group and the cost of the

item can be measured reliably. All other repair and maintenance costs are recognised as expenses

when incurred. When part of an investment property is replaced, the replacement cost is included in

the carrying amount of the property and the fair value is reassessed.

In accordance with IAS 40, the Group periodically determines the fair value of its investment property

so that the fair value reflects the actual market conditions of the investment property items at that date.

This fair value is determined every six months based on the appraisals undertaken by independent

experts.

Investment property obtained under a lease is initially measured at the amount of the lease liability

adjusted for any lease payments made on or before the commencement date (less any lease

incentives received), any initial direct costs incurred by the Group and an estimate of the costs to be

incurred by the lessee to dismantle and remove the underlying asset, restore the site on which it is

located or restore the underlying asset to the condition required by the terms and conditions of the

lease.

The market value of the Group's investment property at 31 December 2024, calculated based on the

appraisals carried out by Savills, JLL and CBRE, independent appraisers not related to the Group,

amounted to EUR 10,742,187 thousand (see Note 7).

5.2 Inventories

Land held for sale or integration into property development is considered as inventories. The Group

considers that its inventories do not meet the requirements of IAS 40 for consideration as investment

property.

At 31 December 2024, certain land acquired in 2020 was recognised as inventories, which form part of

an increased development area and are considered to be inventories as they are intended for sale.

Pursuant to the future sale agreement reached with a third party, the land resulting in final residential

use will be transferred to said third party, once all the buildable areas corresponding to each of the

uses are finally assigned by the approved and registered Reparcelling Project. . In accordance with

the above, the intended use of the land will be its recovery through sale, and the Group's objective is

not to obtain rental income on the land. Therefore, they were recognised as inventories at the end of

2024.

In relation to them, the Group has agreements with third parties for the future sale of those intended

for residential use and for which it has received, as of 31 December 2024, advances amounting to

EUR 19,043 thousand that are recognised under “Trade and other payables” in the accompanying

consolidated statement of financial position.

The Group values its inventories at acquisition cost (or at market value if the latter is lower), including

both the acquisition cost of the land and plots, the urban planning costs, the construction costs and the

personnel directly related to the real estate activity, and, where applicable, financial expenses to the

extent that those expenses correspond to the period of urban planning and construction, provided that

they are inventories that need a period of more than one year to be able to be sold. If the inventories

are registered at a cost price higher than their market value, the appropriate valuation adjustments are

made, recording the corresponding impairment.

5.3 Investments accounted for using the equity method

At 31 December 2024, this heading in the consolidated statement of financial position included the

amount corresponding to the percentage of shareholders' equity of the investee relating to the Parent

and accounted for using the equity method once aligned to the accounting criteria applied by the

Group. In addition, and after accounting for these investments using the equity method, the Group

decides whether or not an additional impairment loss needs to be recognised as regards the Group's

net investment in the associate.

5.4 Leases

At the beginning of a contract, the Group assesses whether the contract is or contains a lease. A

contract is, or contains, a lease if it conveys the right to control the use of an identified asset for a

period of time in exchange for consideration.

The group reassesses whether a contract is, or contains, a lease only if the terms of the contract

change.

5.4.1 Tenant

For a contract containing a lease component and one or more additional leases or non-leases, the

Group will distribute the consideration of the contract to each component of the lease based on the

relative price regardless of the lease component and the aggregate price independent of the

components that are non-lease components.

The relative price, independent of the lease and non-lease components, will be determined based on

the price that the landlord, or a similar supplier, would charge an entity separately for that component

or for a similar component. If there is no readily available separate observable price, the Group will

estimate the separate price, maximising the use of observable information.

The Group chose not to apply the recognition and measurement requirements indicated in IFRS 16 to

short-term leases in which the underlying asset is of low value, recognising the lease payments

associated with leases as a straight-line expense over the lease term.

Initial recognition

At the commencement date, a tenant recognises a right-of-use asset and a lease liability. At the

commencement date, a tenant will measure a right-of-use asset at cost. The cost of the right-of-use

asset includes:

a.the amount of the initial measurement of the lease liability measured at the commencement date

at the present value of the lease payments that were not paid at that date. Lease payments will be

discounted using the interest rate specified in the lease, if that rate could be easily determined. If

that rate cannot be easily determined, the tenant will use the tenant's incremental loan rate.

b.lease payments paid before or from the commencement date, less leases received;

c.the initial direct costs incurred by the tenant; and

d.an estimate of the costs incurred by the tenant when dismantling and eliminating the underlying

asset, restoring the location where it is located or restoring the underlying asset to the condition

required by the terms of the lease, unless those costs are incurred to produce inventories. The

tenant could incur obligations as a result of these costs either at the commencement date or as a

result of using the underlying asset for a specified period.

At the start date, the lease payments included in the measurement of the lease liability comprise the

following payments for the right to use the underlying asset during the lease term that are not paid at

the commencement date:

a.fixed payments, less any leases receivable;

b.variable lease payments, which depend on an index or rate, initially measured using the index or

rate at the commencement date;

c.amounts expected to be paid by the tenant as guarantees of residual value;

d.the exercise price of a call option if the tenant is reasonably confident of exercising that option;

e.late lease payments if the lease term reflects that the tenant will exercise an option to terminate

the lease.

Subsequent measurement of the right-of-use asset

After the commencement date, the Group will measure its right-of-use assets using the cost model,

unless it applies the fair value model of IAS 40 “Investment Property” to its investment property and

rights of use that meet the definition of investment property (see Note 5.1).

Subsequent measurement of lease liabilities

After the commencement date, the Group will measure a lease liability by:

a.increasing the carrying amount to reflect interest on the lease liability;

b.reducing the carrying amount to reflect the lease payments paid; and

c.re-measuring the carrying amount to reflect the new measurements or changes in the lease and

also to reflect the essentially fixed lease payments that have been revised.

5.4.2 Landlord

A landlord will classify each lease as an operating lease or a finance lease.

A lease will be classified as a finance lease when it substantially transfers all the risks and rewards

inherent to owning an underlying asset. A lease will be classified as an operating lease if it does not

substantially transfer all the risks and rewards inherent to owning an underlying asset.

Finance leases

At the commencement of the lease term, the Group recognises finance leases in the consolidated

statement of financial position at amounts equal to the fair value of the leased asset or, if lower, the

present value of the minimum lease payments. To calculate the present value of the lease payments

the interest rate stipulated in the finance lease is used.

The cost of assets acquired under finance leases is presented in the consolidated statement of

financial position based on the nature of the leased asset. These assets relate in full to investment

property and are measured in accordance with that established in Note 5.1.

Operating leases

A landlord recognises lease payments from operating leases as income on a straight-line basis or on

another systematic basis. The landlord will apply another systematic basis if it is more representative

of the structure with which the profit from the use of the asset is reduced.

The Group will recognise costs, including depreciation, incurred in earning the lease income as an

expense. It will also add the initial direct costs incurred to obtain an operating lease to the carrying

amount of the underlying asset and recognise these costs as an expense over the lease term, on the

same basis as the lease income.

5.5 Financial instruments

Financial instruments are recognised when the Group becomes a party to the contractual provisions of

the instrument. The Group classifies its financial assets in accordance with IFRS 9 “Financial

Instruments”.

The classification of financial assets will depend both on how an entity manages its financial

instruments (its business model) and on the existence and characteristics of the contractual cash

flows of the financial assets. Based on the above, an asset is measured at amortised cost, at fair value

through other comprehensive income, or at fair value through profit or loss for the period, as follows:

–If the objective of the business model is to hold a financial asset to collect contractual cash flows

and, depending on the terms of the contract, cash flows that are solely payments of principal and

interest on that principal are received on specified dates, the financial asset is measured at

amortised cost.

–If the objective of the business model is both to collect contractual cash flows and sell financial

assets and, depending on the terms of the contract, cash flows that are solely payments of

principal and interest on that principal are received on specified dates, the financial asset is

measured at fair value through other comprehensive income (equity).

Any assets not meeting the above criteria will be measured at fair value through profit or loss in the

income statement. All equity instruments (e.g. shares) are, by default, measured in this category. This

is because their contractual flows do not meet the characteristic of being only payments of principal

and interest. Financial derivatives are also classified as financial assets at fair value through profit or

loss unless they are designated as hedging instruments.

For the purposes of measurement, financial assets should be classified into one of the following

categories, with the accounting policies of each category being as follows:

1. Financial assets at amortised cost: these assets are subsequently recognised at their initial

cost amortised in accordance with the effective interest method. This amortised cost will be

reduced by any impairment loss. They are recognised in the consolidated income statement

for the period when the financial asset is de-recognised or impaired, or due to exchange

differences. Interest calculated using the effective interest method is recognised in the income

statement under the heading 'Financial income'.

2. Financial assets at fair value with profit or loss: financial assets at fair value with profit or loss

are recognised initially and subsequently at fair value, excluding transaction costs, which are

charged to the income statement. Gains or losses from changes in fair value are presented in

the income statement under the heading 'Changes in the fair value of financial instruments' in

the period in which they originated. Any dividends and interest also leads to financial results.

3. Debt instruments at fair value through other comprehensive income: These instruments are

subsequently recognised at fair value, with the changes in fair value recognised under “Other

comprehensive income”. Interest income, impairment losses and exchange differences are

recognised in the consolidated income statement. When they are sold or derecognised, the

cumulative fair value adjustments recognised under “Other comprehensive income” are

included in the income statement as other finance income / (costs).

4. Debt instruments at fair value through other comprehensive income: They are subsequently

measured at fair value. Dividends are only taken to profit or loss, unless these dividends

clearly represent a recovery of the investment cost. Other gains or losses are recognised as

'Other comprehensive income' and are never reclassified as profit or loss.

Impairment of financial assets

The Group assesses on a prospective basis the expected credit losses associated with its assets at

amortised cost and at fair value through other comprehensive income, with the main item being “Trade

and other receivables”.

The impairment methodology applied depends on whether there has been a significant increase in

credit risk. The impairment model is based on a dual measurement approach, under which there will

be an impairment provision based on expected losses over the next 12 months or based on expected

losses over the entire life of the asset. The fact that determines the transition from the first approach to

the second is that there is a significant decline in creditworthiness.

The deterioration of the Group's receivables was not significant, taking into account that the risk of

default was less than 1% of turnover and that the Group has deposits from its tenants to secure its

loans.

For trade receivables, given the composition of the Group’s portfolio, which comprises companies of

recognised prestige and proven financial solvency, and the low history of losses from trade

receivables over the last 10 years, including the years of financial crisis, the Group has estimated that

the impairment due to expected loss on these financial assets is not significant.

Financial liabilities

The main financial liabilities held by the Group companies are held-to-maturity financial liabilities,

which are measured at amortised cost. The financial liabilities held by the Group companies are

classified as:

1.Bank loans and other loans: loans from banks and other lenders are recognised by the proceeds

received, net of transaction costs.

Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net

of transaction costs) and the redemption value is recognised in the income statement over the term of

the borrowings using the effective interest method.

Financial debt is eliminated from the consolidated statement of financial position when the obligation

specified in the agreement is paid, cancelled or expired. The difference between the carrying amount

of a financial liability that has been cancelled or transferred to another party and the consideration

paid, including any transferred assets other than the cash or liabilities assumed, is recognised in profit

or loss for the year as other financial income or expenses.

Exchanges of debt instruments between the Group and the counterparty or substantial changes in the

liabilities initially recognised are accounted for as a cancellation of the original liability and the

recognition of a new financial liability, provided that the instruments have substantially different terms.

The Group considers that the terms are substantially different if the discounted present value of the

cash flows under the new terms, including any fees paid net of any fees received and discounted

using the original effective interest rate, is at least ten per cent different from the discounted present

value of the remaining cash flows of the original financial liability.

If the exchange is recognised as a cancellation of the original financial liability, the costs or fees are

recognised in the consolidated income statement as part of the consolidated income statement.

Otherwise, the modified flows are discounted at the original effective interest rate, recognising any

difference with the prior carrying amount, in profit or loss. Likewise, the costs or fees adjust the

carrying amount of the financial liability and are amortised by the amortised cost method for the

remaining life of the modified liability.

The Group recognises the difference between the carrying amount of a financial liability or the part of it

cancelled or transferred to a third party and the consideration paid, including any assets transferred

other than the cash or liabilities assumed in profit or loss.

The Group will account for exchanges of debt instruments with a lender, provided that the instruments

have substantially different conditions, such as a cancellation of the original financial liability and

subsequent recognition of a new financial liability. Similarly, a substantial change in the terms of an

existing financial liability or a part of it will be recognised as a cancellation of the original financial

liability and a subsequent recognition of a new financial liability. The difference between the carrying

amount of the cancelled financial liability and the consideration paid, which includes any transferred

assets other than cash or any liabilities assumed, will be recognised in profit or loss for the year.

If it is determined that the new terms or changes of a financial liability are not substantially different

from the existing ones and it is therefore determined that the change is not substantial, the existing

financial liability will not be derecognised. The Group will recalculate the gross carrying amount of the

financial liability and recognise a change gain or loss in profit/(loss). The gross carrying amount of the

financial liability will be recalculated as the present value of the renegotiated or modified contractual

cash flows discounted at the original effective interest rate of the financial liability.

2.Trade and other payables: trade payables are initially recognised at fair value and are

subsequently measured at amortised cost using the effective interest method.

The Group derecognises financial liabilities when the obligations giving rise to them cease to exist.

5.6 Derivative financial instruments and hedge accounting

The Group uses derivative financial instruments to hedge the risks to which its future activities,

transactions and cash flows are exposed. These risks are mainly due to changes in interest rates.

Among the various transactions, the Group uses certain financial instruments as economic hedges.

Derivatives are initially recognised at fair value on the date on which the derivative contract is signed

and are subsequently measured at fair value at each reporting date. Subsequent changes in fair value

are recognised depending on whether the derivative has been designated as a hedging instrument

and, if so, on the nature of the item being hedged.

At the beginning of the hedging relationship, the Group documents the economic relationship between

the hedging instruments and the hedged items, including whether changes in the cash flows of the

hedging instruments are expected to offset changes in the cash flows of the hedged items. The Group

documents its risk management objective and strategy to undertake its hedge transactions.

The effective part of the changes in the fair value of the derivatives that are designated and classified

as cash flow hedges is recognised in the cash flow hedge reserve under equity. The loss or gain

relating to the ineffective part is immediately recognised in the consolidated income for the year under

'Changes in the fair value of financial instruments' in the consolidated income statement.

Gains or losses relating to the effective part of the change in the intrinsic value of the option

agreements are recognised in the cash flow reserve hedge under equity. Changes in the time value of

option agreements that relate to the hedged item ('aligned time value') are recognised under other

comprehensive income in the costs of the hedge reserve in equity.

When forward contracts are used to hedge expected transactions, the Group generally designates

only the change in the fair value of the forward contract related to the cash component as the hedging

instrument. Gains or losses related to the effective part of the change in the cash component of

forward contracts are recognised in the cash flow hedge reserve under equity. The change in the

forward element of the contract related to the hedged item is recognised in other comprehensive

income on the costs of the hedge reserve under equity. In some cases, the gains or losses

corresponding to the effective part of the change in fair value of the full term contract are recognised in

the cash flow hedge reserve under equity.

–Cash flow hedges: In hedges of this nature, the portion of the gain or loss on the hedging

instrument that has been determined to be an effective hedge is recognised temporarily in equity

and is recognised in the income statement in the same period during which the hedged item

affects profit or loss, unless the hedge relates to a forecast transaction that results in the

recognition of a non-financial asset or a non-financial liability, in which case the amounts

recognised in equity are included in the initial cost of the asset or liability when it is acquired or

assumed.

–Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or

exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gains or losses

on the hedging instrument recognised in equity are retained in equity until the forecast transaction

occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss

recognised in equity is transferred to net profit or loss for the year.

Derivatives embedded in other financial instruments or other host contracts are treated as separate

derivatives when their risks and characteristics are not closely related to those of the host contracts

and provided that the host contracts are not measured at fair value by recognising changes in fair

value in the consolidated statement of comprehensive income.

The fair value of the derivative financial instruments is calculated using the valuation techniques

described in Note 5.7 below.

5.7 Valuation techniques and applicable assumptions to measure fair value

The fair value of financial assets and liabilities is calculated as followed:

–The fair value of financial assets and liabilities with standard terms and that are traded on active,

liquid markets is calculated by reference to prices quoted in the market.

–The fair value of financial assets and liabilities (except derivative instruments) is calculated in

accordance with the generally accepted valuation models based on discounted cash flows using

the prices of observable market transactions and the contributor prices of similar instruments.

–The fair value of interest rate swaps is calculated by discounting future settlements between fixed

and floating interest rates to their present value, in line with implicit market interest rates, obtained

from long-term interest rate swap curves. Implicit volatility is used to calculate the fair values of

caps and floors using option valuation models.

Likewise, in the valuation of derivative financial instruments, the risk inherent to the element or

position hedged must be effectively eliminated during the entire expected term of the hedge and there

must be adequate documentation evidencing the specific designation of the financial derivative to

hedge certain balances or transactions and how this effectiveness was intended to be achieved and

measured. Moreover, pursuant to IFRS 13 and due to the inherent risk, the credit risk of the parties to

the contract (both their own risk and that of the counterparty) must be included in the valuation of the

derivatives. The Group applied the discounted cash flow method, considering a discount rate affected

by the Merlin Group’s own credit risk.

Financial instruments measured subsequent to initial recognition at fair value are grouped into levels 1

to 3 based on the degree to which the fair value is observable:

–Level 1: those measured using quoted prices (unadjusted) in active markets for identical assets or

liabilities.

–Level 2: those measured using inputs other than quoted prices included within Level 1 that are

observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from

prices).

–Level 3: those measured using valuation techniques, including inputs for the asset or liability that

are not based on observable market data (non-observable inputs).

The Group's financial assets and liabilities measured at fair value were as follows at 31 December

2024:

2024


	Thousands of euros
	Level 1	Level 2	Level 3	Total

Derivative financial instruments (Note 14.3)	-	(20,941)	(16,407)	(37,348)
Financial instruments - assets (Note 14.3)	-	1,622	-	1,622
	-	(19,319)	(16,407)	(35,726)

2023


	Thousands of euros
	Level 1	Level 2	Level 3	Total

Derivative financial instruments (Note 14.3)	-	(9,475)	(14,828)	(24,303)
Financial instruments - assets (Note 14.3)	-	3,429	-	3,429
	-	(6,046)	(14,828)	(20,874)

No financial instruments were reclassified from one level to another during 2024 or 2023. In addition,

Note 7 includes information regarding the determination of the fair value of investment property.

5.8 Treasury shares

An equity instrument is a contract that evidences a residual interest in the assets of the Parent after

deducting all of its liabilities.

Capital instruments issued by the Parent are recognised in equity at the proceeds received, net of

issue costs.

The Parent Company's equity instruments acquired by the Group are recognised separately at cost

and deducted from equity in the consolidated statement of financial position, regardless of why they

were acquired. No gains or losses from transactions involving own equity instruments are recognised

in the consolidated income statement.

The subsequent amortisation of the equity instruments of the Parent gives rise to a capital reduction

for the nominal amount of said shares and the positive or negative difference between the acquisition

price and the nominal value of the shares is charged or credited to accounts of reserves.

The transaction costs related to own equity instruments are recognised as a decrease in equity, net of

any related tax effect.

5.9 Distributions to shareholders

Dividends are paid in cash and recognised as a reduction in equity when the pay-outs are approved

by shareholders at the Annual General Meeting.

The Parent is subject to the special regime for REITs. As established in Article 6 of Law 11/2009, of 26

October, as amended by Law 16/2012, of 27 December, and subsequent amendments, the REITs

opting to pay tax under the special tax regime are required to distribute the profit generated during the

year to shareholders in the form of dividends, once the related commercial obligations have been met.

This distribution must be approved within six months from each year-end, and the dividends paid in

the month following the date on which the payout is agreed.

Moreover, as specified in Law 11/2009, of 26 October, as amended by Law 16/2012, of 27 December,

the Parent must distribute the following as dividends:

–100% of the profit from dividends or shares in profits distributed by the entities referred to in

Article 2.1 of Law 11/2009.

– At least 50% of the profit generated from the transfer of properties, shares or investments

referred to in Article 2.1 of Law 11/2009, once the periods referred to in Article 3.2 of Law

11/2009 have elapsed, which are used to achieve the Company’s main corporate purpose.

The remainder of these profits must be reinvested in other property or investments used for

the pursuit of said activity within three years after the transfer date. Otherwise, these profits

should be distributed in full together with any profit arising in the year in which the

reinvestment period ends. If the items to be reinvested are transferred before the end of the

holding period, that profit must be distributed in full together with, if applicable, the profit

generated during the year in which the items were transferred. The obligation to distribute

profit does not apply to the portion of the profit attributable to prior years in which the

Company was not included under the special tax regime in this Act.

– At least 80% of the remaining profits obtained. When dividend distributions are charged to

reserves generated from profits in a year in which the special tax regime applied, the

distribution must necessarily be approved as set out above.

5.10 Cash and cash equivalents

The Group includes under this heading cash and short-term highly liquid investments maturing in less

than three months that are readily convertible to cash and which are subject to an insignificant risk of

changes in value. The interest income associated with these transactions is recognised as income

when accrued while unmatured interest is presented in the consolidated statement of financial position

as an addition to the balance of the above heading.

5.11 Provisions

The Group differentiates between:

– Provisions: credit balances covering present obligations arising from past events, the

settlement of which is expected to result in an outflow of resources, but that are uncertain as

to their amount and/or timing.

– Contingent liabilities: possible obligations that arise from past events and whose existence will

be confirmed only by the occurrence or non-occurrence of one or more future events not

wholly within the Group’s control.

The consolidated financial statements include all the provisions with respect to which it is likely that

the obligation will have to be settled. Contingent liabilities are not recognised in the consolidated

financial statements but rather are disclosed in the notes to the consolidated financial statements,

unless the possibility of an outflow in settlement is considered to be remote.

Provisions are measured at the present value of the best possible estimate of the amount required to

settle or transfer the obligation, taking into account the information available on the event and its

consequences. Where discounting is used, adjustments made to provisions are recognised as finance

cost on an accrual basis.

The compensation receivable from a third party on settlement of the obligation is recognised as an

asset, provided there is no doubt that the reimbursement will take place, unless there is a legal

relationship whereby a portion of the risk has been externalised, as a result of which the Group is not

liable, in which case, the compensation will be taken into account when estimating, if appropriate, the

amount of the related provision.

5.12 Revenue recognition

Revenue and expenses are recognised on an accrual basis, i.e. when the actual flow of the related

goods and services occurs, regardless of when the resulting monetary or financial flow arises. Rental

income is measured at the fair value of the consideration received, net of discounts and taxes.

Discounts (rent waivers and rebates) granted to lessees are recognised as a reduction in rental

income when it is probable that conditions precedent will be fulfilled requiring them to be granted.

Discounts are recognised by expensing the total rent waiver or rebate on a straight-line basis over the

term of the lease in force. If a lease is cancelled earlier than expected, any outstanding rent waiver or

rebate is recognised in the last period prior to the end of the agreement.

Leasing of investment property to third parties

The Group companies' principal activity comprises the acquisition and leasing of primarily offices,

shopping centers, logistics units and Data Centers. The Group's ordinary income is generated from

the leasing of this investment property to third parties.

Ordinary income from the leasing of investment property is recognised taking into account the stage of

completion of the transaction at the reporting date, provided the result of the transaction can be

reliably estimated. Income from the Group's leases is recognised by Group companies on a monthly

basis pursuant to the conditions and amounts agreed with the lessees in the various agreements. This

income is only recognised when it can be measured reliably and it is probable that the economic

benefits from the lease will be received.

Where the outcome of services rendered cannot be measured reliably, revenue is recognised to the

extent that the expenses incurred are deemed recoverable.

Service charges re-billed to lessees are recognised net of other operating expenses.

5.13 Income tax

5.13.1 General regime

Tax expense (tax income) comprises current tax expense (current tax income) and deferred tax

expense (deferred tax income).

The current income tax expense is the amount payable by the Group as a result of income tax

settlements for a given year. Tax credits and other tax benefits, excluding tax withholdings and pre-

payments, and tax loss carryforwards from prior years effectively offset in the current year reduce the

current income tax expense.

The deferred tax expense or income relates to the recognition and derecognition of deferred tax

assets and liabilities. These include temporary differences measured at the amount expected to be

payable or recoverable on differences between the carrying amounts of assets and liabilities and their

tax bases, and tax loss and tax credit carryforwards. These amounts are measured at the tax rates

that are expected to apply in the period when the asset is realised or the liability is settled.

Deferred tax liabilities are recognised for all taxable temporary differences, unless the temporary

difference arises from the initial recognition of goodwill, goodwill for which amortisation is not

deductible for tax purposes or the initial recognition of other assets and liabilities in a transaction that

affects neither accounting profit (loss) nor taxable profit (tax loss).

Deferred tax assets are recognised for temporary differences to the extent that it is considered

probable that the consolidated companies will have sufficient taxable profits in the future against which

the deferred tax asset can be utilised, and the deferred tax assets do not arise from the initial

recognition of other assets and liabilities in a transaction that affects neither accounting profit (loss)

nor taxable profit (tax loss). The other deferred tax assets (tax loss, temporary differences and tax

credit carryforwards) are only recognised if it is considered probable that the consolidated companies

will have sufficient future taxable profits against which they can be utilised.

The deferred tax assets recognised are reassessed at the end of each reporting period and the

appropriate adjustments are made to the extent that there are doubts as to their future recoverability.

Also, unrecognised deferred tax assets are reassessed at the end of each reporting period and are

recognised to the extent that it has become probable that they will be recovered through future taxable

profits.

5.13.2 REIT regime

The REIT special tax regime, as amended by Law 16/2012 of 27 December, is based on a 0%

corporate income tax rate, provided certain requirements are met. Particularly noteworthy amongst

those conditions is that at least 80% of income must come from urban real estate used for leasing

purposes and acquired in full ownership or through holdings in Spanish or foreign companies,

regardless of whether or not they are listed on organised markets, that meet the same investment and

profit distribution requirements. Likewise, the main sources of income for these entities must come

from the real estate market, either through leasing the properties, their subsequent sale after a

minimum lease period, or the income generated from holdings in entities with similar characteristics.

Nevertheless, tax is accrued in proportion to dividend distributions. Dividends received by the

shareholders are exempt, unless the recipient is a legal person subject to corporate income tax or a

permanent establishment of a foreign entity, in which case a tax credit is taken, so that these earnings

are taxed at the tax rate applicable to the shareholder. However, the other income will not be taxed as

long as it is not distributed to the shareholders.

As established in Article Nine of Spanish Law 11/2009, of 26 October, as amended by Spanish Law

16/2012, of 27 December, regulating REITs, the Company will be subject to a special tax rate of 19%

on the total dividends or shares in profit distributed to shareholders that have an ownership interest in

the Company’s share capital equal to or greater than 5%, when these dividends, in reference to the

shareholders, are exempt or are taxed at a rate less than 10%. The Group has therefore established

the procedure guaranteeing confirmation by shareholders of their tax rate, proceeding where

applicable, to withhold 19% of the dividend distributed to shareholders that do not meet the

aforementioned tax requirements.