MERLIN Properties SOCIMI (MRL) Q3 2024 TU earnings summary

Executive summary

• Delivered strong results for the nine-month period, with total revenues up 5.0% to €383.6m and significant progress in the data center business plan.

• FFO increased 6.7% year-over-year, with robust organic growth and overall occupancy at 95.6%, improving across all asset classes.

• Major €921m capital increase executed to fund data center development, impacting per-share metrics but expected to recover part of the dilution in 2024.

• Faced market volatility due to political uncertainty over the potential elimination of the SOCIMI regime, causing a sharp share price drop.

• Moody’s and S&P upgraded debt ratings, reflecting improved leverage and cash flow.

Financial highlights

• Net earnings reached €225.4m, up from €12.5m in 9M23, driven by higher rents and positive fair value adjustments.

• FFO per share declined 11.1% to €0.41 due to share dilution; EPRA NTA per share down 7.3% to €14.35.

• Executed a 20% capital increase in July, resulting in FFO and NPA per share declines of 11% and 7%, respectively, but outperforming the 17% theoretical dilution.

• Announced a dividend of €0.18 per share, payable December 10, 2024.

• LTV reduced to 27.4% from 35.0% at FY23, with liquidity position at €2.5bn.

Outlook and guidance

• FFO guidance for the year set at a minimum of €0.54 per share, reflecting the new share count.

• Dividend guidance for the year is around €0.40 per share, compared to €0.44 last year.

• Expect continued organic performance to offset dilution from the capital increase.

• Occupancy rates in logistics and offices expected to further improve, with logistics targeting ~99% by year-end.

• Data center pipeline to drive future growth, with significant GRI uplift expected from new leases in 2025.