Part of the Merlin Prop discount comes from the risk of a tax change with the new government in Spain

Morgan Stanley | Merlin trades persistently with a discount against its counterparts while offering one of the most interesting return growth profiles (15-20% total return) among those who give a 20% discount.

We understand that part of the discount comes from the risk of a tax change with the new government (something that basically we see of limited impact for the real estate sector in general), the exposure to the retail segment (about ¼ of the total portfolio), the relatively low yield they have, the risk of overhang (22% in the hands of Santander) and the compensation structure of the management team. But this discount is now at record highs. 2020 should be a good year of selling assets that have already advanced that will begin to announce what should give more visibility and transparency and optimize the portfolio.