MERLIN weathers the Covid-19 impact with resilience
– Total revenues: € 259.4 million (-2.2% YoY)
– EBITDA: € 184.1 million (-12.5% YoY)
– Operating profit (“FFO”): € 134.3 million (-14.6% YoY)
– NAV per share: €15.68 (+3.8% YoY)
- With no changes in the perimeter after the sale of assets, gross rents increase 2.7% LfL.
- The Company launched a Covid-19 commercial policy to grant rent relief to retail tenants. We have recorded these incentives as a one-off expense amounting to € 27.8m in the period.
- Operating profit reaches € 134.3 million (equivalent to € 29 cents per share), despite the smaller perimeter and the incentives granted. Without these two effects, it would also have exceeded last year’s operating profit.
- Valuations in line with FY19, with an increase in both offices and logistics and a decrease in shopping centers. EPRA NAV per share standing at € 15.68, with a 3.8% growth YoY.
Madrid, 29 July- MERLIN Properties has released its 6M20 consolidated financial statements with total revenues of € 259.4 million, EBITDA of € 184.1 million and FFO of € 134.3 million. Consolidated net earnings in accordance with IFRS of € 70.9 million, not comparable YoY due to the non-recurring items recorded in 6M19 (assets sold and a lower revaluation of assets). Excluding non-recurring items, net earnings amounts to €87.2 million, a 30% decrease YoY (€124.3 million in 6M19). The occupancy in the portfolio bears the Covid-19 effect and remains at the same level as before the pandemic outbreak, reaching 93.9%, proving its quality and the robustness of its tenants.
The gross asset value (GAV) of the portfolio amounts to €12,755 million, which remains flat (+0.2%) as compared to December 2019. By asset category, the valuations in offices and logistics continues to grow due to higher rents, whereas net leases remains equal and shopping centers declines 4.7%. EPRA NAV amounts to € 7,365 million or € 15.68 per share, up 3.8% during the last year.
MERLIN Properties continues to actively manage their balance sheet: the recent issuance and repayment of the bonds has resulted in a 40.5% LTV ratio (40.6% in FY19), a liquidity position above €1.2 bn and with no debt maturities until May 2022. The average maturity is now at 6.5 years, with no floating rate risk.
Good performance in the semester with a 4.0% like-for-like rent increase. 187,330 sqm have been signed, of which 147,909 sqm have been signed during the second quarter, amidst the difficult post Covid situation. Contracts with new tenants have been signed above market rents and renewals have also been signed at higher prices, reaching a 2.7% release spread. Occupancy stands at 90.9%, in line with the one obtained before the Covid impact (91.4% in March). The uncollected rate has been irrelevant, 0.8% during the second quarter.
Landmark Plan I
Worth highlighting are the contracts signed in two of our most emblematic projects, Castellana 85 in Madrid and Monumental in Lisboa, both of them under full refurbishment and with expected delivery dates in the first quarter of 2021. Castellana 85 will be the HQ of a top tier consulting firm and a Spanish leading engineering company and Monumental will be the HQ of BPI (Caixabank group).
The Company implemented a commercial policy that offered 100% rent relief to all tenants affected by the compulsory shutdown set forth in the state of alarm. Furthermore, an additional commercial policy was approved that will last from June to the 31st of December 2020 (progressive from 60% to 10%). The policy has been accepted by 92% of our tenants. In return, the tenants have extended their contracts until 2022, securing our occupancy in the portfolio during 2020 and 2021, uncollected rents totaled only 2.6% during the period.
The occupancy rate has closed at 94.1% (same as before Covid) and the incentives granted to tenants amount to €27.8 million. Shopping centers have suffered due to the limited mobility, especially in tourist areas. Since reopening, footfall has shown week over week improvement ending the first half of July at a 29% decrease when compared to the same period in 2019. Sales have decreased by a lesser amount, showing an 18% decrease for the month of June again in comparison to the same period in the prior year.
Porto Pi in Mallorca and Saler in Valencia continue to progress in their works. Expected delivery date for both Saler and Porto Pi during the first quarter of 2021, after which, all works in the Flagship Plan will be finalized.
The push towards e-commerce in the post Covid environment drives the growth in this segment. MERLIN achieves a solid rental growth, both in like-for-like (+2.9%) and in release spread (+6.7%). Occupancy rate increases to 96.8% (+38 basis points compared to 1Q20). Only 0.9% of rents were not collected.
Best Plan II & III
Good semester in terms of pre-commercialization of the assets included in Best II & III. In Zal Port Barcelona, more than 150,000 sqm have been delivered to UPS, Damm and Caprabo, amongst others. In Zal Sevilla, two warehouses have been delivered to Carbó Collbatallé and 4Gasa. Moreover, a turnkey project of 11,412 sqm has been signed with DSV in Zaragoza-Plaza II (Best II) and 22,930 sqm signed with Damm in Madrid-San Fernando II.
Future impact of Covid-19 in the business
MERLIN Properties has assessed the Covid-19 impact on their 2020 operating profit, for a maximum of €60 million, giving the market an FFO guidance for 2020 of €250 million (€ 53 cents per share). The Company envisages the rest of the year and 2021 cautiously and prudently but faces the short and medium term with a strong balance sheet. Only 12% of contracts mature in 2021 and MERLIN will benefit fromd €20 million of additional rents arising from the new contracts signed in Landmark and Best II & III, which will come into stock next year.
About MERLIN Properties
MERLIN Properties SOCIMI, S.A. (MC:MRL) is the largest real estate company trading on the Spanish Stock Exchange. 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.
For further information please contact:
Nuria Salas, email@example.com, +34 629 56 84 71
Sarah Estébanez, firstname.lastname@example.org, +34 636 62 80 41