MERLIN reports excellent business performance in all divisions driving operating profit to double-digit growth
· Operating profit exceeds € 237.0 million (equivalent to € 50 cents per share), a strong 11.5% increase year on year
· Excellent business performance, with increases in occupancy, like-for-like (“LfL”) rents and positive release spreads in all asset categories
MERLIN Properties has released its 9M 2019 consolidated financial statements with total revenues of € 398 million, EBITDA of € 317 million and FFO (EBITDA less interest) of € 237 million. The consolidated net profit in accordance with IFRS of € 316 million is not comparable YoY due to the non-recurring items recorded in 9M18 (mainly related to the extraordinary gain related to the capitalization of Testa Residencial service contract). Excluding non-recurring items, net earnings amounts to € 189.5m, a +22% increase YoY.
NAV amounted to € 7,173 million (15.27 euros per share), representing a 6.5% increase YoY. It is important to highlight that no new appraisal for the assets has been carried out this quarter as, in accordance with the Company’s policy, new appraisals of the portfolio are carried out on a semi-annual basis.
Rents have grown by 4.8% on a LfL basis, and occupancy has also increased to reach 93.2% (+27 bps versus 6M 2019), evidencing the solid fundamentals of the business.
- Business performance
Strong performance with a 7.6% LfL rent increase. Occupancy has grown to 90.7% (+31 bps versus 6M19) and the release spread has been 6.1%. Relevant leases signed in the quarter include 1,571 sqm with New Relic and Sisvel in Torre Glories, 1,689 sqm with Grupo Netco in PE Cerro de los Gamos, 1,061 sqm with Buran in Torre Chamartin, 5,311 sqm renewed with Unir in Beatriz de Bobadilla 14 and 5,228 sqm renewed with Everis in Diagonal 605.
- Landmark Plan I
Main highlights in 3Q19 are the commencement of works in Monumental and Castellana 85. Diagonal 605 is under heavy construction works and Plaza Ruiz Picasso 2 is being vacated for refurbishment.
- Business performance
Very good performance in our portfolio of shopping centers where tenant sales have grown by a remarkable 4.0% LTM, and footfall by 1.6% LTM. LfL rental growth stands at +3.0%, mainly driven by a significant hike in occupancy rate, now reaching 92.9% (vs. 90.5% as of September 2018). Main leases signed include 2,763 sqm new lease with H&M in Larios, 1,089 sqm new lease with Mango in Marineda and 653 sqm with Massimo Dutti in Artea.
- Flagship Plan
Larios full refurbishment is now finished, and X-Madrid will open on November 21st.
- Business performance
Release spread reached +4.7% and LfL rents grew by +2.1%. Occupancy stands at 97.3% after the recent lease signed with Mercadona (19,324 sqm) in Madrid-Getafe.
- Best Plan II & III
New projects have been completed and added to the stock fully let: Madrid-Pinto II B, let to Media Markt (29,473 sqm), Valencia-Ribarroja, let to Dachser (34,992 sqm) and Sevilla Zal, let to Amazon (8,798 sqm). Great progress in the construction of Azuqueca II, 98,757 sqm fully let to Carrefour, and Toledo-Seseña, partially let to Carreras.
Environmental Social and Governance
MERLIN obtained an excellent mark in the 2019 GRESB edition, with an 82/100 score, and continues progressing in the portfolio certification program, having obtained 21 new LEED/BREEAM certificates YTD.
Investment and divestment activity
Investment activity YTD has been mainly focused in Lisbon, with the acquisition of 3 office buildings (Art, TFM and Nestlé HQ), which places MERLIN as the #2 office player in the market.
In logistics, after the success of Cabanillas Park I, now a referent in the A-2 logistic market, MERLIN has secured its extension by 93,000 sqm.
In October, MERLIN acquired a 14.46% stake of Distrito Castellana Norte (“DCN”) from Grupo SANJOSE for €169 million. MERLIN also granted an €86 million long-term loan to facilitate the refinancing of the group.
As regards to divestments, MERLIN has sold YTD €48.9 million with a 6.3% premium over latest appraisal and has accepted a deposit in respect of the potential sale of a non-core office portfolio for an amount in excess of €200 million with closing expected at the end of November. This portfolio includes 26 office buildings, in Madrid and Barcelona, totaling c. 133,000 sqm.
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 6,100 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.
Please visit www.merlinproperties.com to learn more about the company.
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