MERLIN Properties delivers on its results and increases FY2016 dividend

MERLIN Properties closed FY2016 with revenues of € 362.8 million, recurring EBITDA of € 303.6 million, recurring FFO of € 232.7 million and net profit of € 582.6 million, in accordance with IFRS.

Announcement of an increase in complementary dividend for 2016 and guidance towards estimated shareholder distributions in 2017 of 44 cents per share (+10% versus 2016)

MERLIN announces an increase in the complementary dividend to be paid in May to 20 cents per share, which added to the 20 cents already distributed, totals 40 cents per share of distributions to shareholders in 2016, versus 36 expected (+11%). The referred complementary dividend will be paid after approval by the AGM, which is expected to take place on April 26th.

The Company guides to a shareholder distribution of at least € 207 million in FY2017. This remuneration, which will be fully paid in cash, will amount to c. 44 cents per share, distributed partly as a dividend and partly as a share premium refund, and represents an increase of 10% over 2016.

The shareholders remuneration for 2017 will be paid in two instalments, September 2017 and May 2018, after approval of the previous year’s accounts at the AGM.

Substantial increase in portfolio GAV

The integration of Metrovacesa has led to a significant hike in gross asset value of the portfolio of assets (“Gross Asset Value” or “GAV”) which, as of 31 December 2016, amounts to € 9,824 million, according to the appraisals performed by Savills and CBRE as of 31^st December 2016, versus a GAV of € 6,053 million, in 2015. The like-for-like value increase of the portfolio compared to 31^st December 2015 appraisal is 6.2%. It is worth highlighting the like-for-like increase in logistics (+10%) and shopping centers (+8%).

In accordance with EPRA standards, net asset value (“EPRA NAV”) amounts to € 5,275 million, equivalent to € 11.23 per share, representing a 14% increase over 2015 EPRA NAV per share (9.85), certifying the significant value created to shareholders after the integration of Metrovacesa.

Leadership in office, retail and logistics

2016 has consolidated MERLIN as the leading Spanish REIT and one of the most relevant in Europe. MERLIN Properties benefits from a strong positioning in the Spanish market across all asset categories. The portfolio, which spans over 3 million square meters, makes MERLIN the number 1 player in office, retail and logistics and number 2 in shopping centers. It is predominantly office focused, comprising 47% of the combined portfolio rents, followed by high street retail at 23%, shopping centers at 20% and logistics at 7%.

Intense year in asset rotation

The Company has exceeded its goals for 2016 in asset rotation. Following Metrovacesa integration, the Company achieved the deconsolidation of the rented residential portfolio. MERLIN owns a 16.1% stake in Testa Residencial, the leading company in this segment, after the completion by end of March of the capital increase on-going, which will raise the portfolio to over 8,000 units and a gross asset value of € 1,716 million.

Last December 30^th, MERLIN did also complete the sale of its hotel portfolio to Foncière des Murs for € 535 million.

Total divestments in 2016 amount to € 761 million, representing a 7.1% premium over appraisals, and capital gains of €51 million.

Remarkable value created to shareholders

MERLIN Properties has finalized 2016 consolidated financial statements with gross rental income of € 351.0 million (+64% versus 2015), recurrent EBITDA of € 303.6 million (+63% versus 2015) and consolidated net profit of € 582.6 million in accordance with IFRS (+1,087% versus 2016). These results include the integration of Metrovacesa from September 15^th to end of December. On a per share basis, the value created is significant, with FFO per share of 64 cents (versus 60 cents in 2015) and 1.59 euros EPS (versus 0.22 in 2015).

MERLIN Properties’ capital structure has been further optimized. The Company has reduced its leverage ratio to 45.5% (versus 49.8% in 2015), extending the average maturity to 6.2 years (versus 3.8) and maintaining the average cost of debt at 2.3%

The value creation to shareholders amounts to € 522 million, through a combination of dividends in the calendar year (€ 101 million) and EPRA NAV growth (€ 421 million), representing an annual shareholders return rate of 17.2%. Since IPO, the company has created value to shareholders for an amount of € 1,110 million through dividends and NAV growth

Positive outlook for 2017

In a growing market environment, the objectives for 2017 are clearly identified. MERLIN is focused on extracting value from its asset base, hence the investment pace will be more muted. Three pillars are the drivers for growth: (i) an ambitious capex program for office and shopping centers, (ii) an increase in occupancy, mainly in the assets coming from Metrovacesa, and (iii) a logistics WIP program, which will add more than half a million square meters to its stock over the next 18 months.

About MERLIN Properties

MERLIN Properties SOCIMI, S.A. (MC:MRL) is the largest real estate company trading on the Spanish Stock Exchange, with a market capitalization of approximately 5,100 million euros, specialized in the acquisition and management of commercial property in the Iberian region. MERLIN Properties mainly invests in offices, shopping centers and logistics facilities, within the Core and Core Plus segments, forming part of the benchmark IBEX-35, Euro STOXX 600, FTSE EPRA/NAREIT Global Real Estate, GPR Global Index, GPR-250 Index, and MSCI Small Caps indices.