Intermoney| The rating agency Standard & Poor’s (S&P) has raised the rating of Merlin Properties (Buy, PO €12) from BBB to BBB+ and endorses the strategy of the REIT, which involves strengthening its position in data centres and logistics in the coming years, according to Expansión newspaper.
For S&P, the REIT has maintained “solid” credit indicators despite the headwinds of the last two years thanks to its “prudent financial policy” and its ability to absorb the devaluation of assets resulting from the rise in interest rates with a leverage ratio (loan to value) of 35% at the end of 2023.
The rating agency is also confident in Merlin’s ability to improve its EBITDA as investments in data centres and logistics translate into new rentals and rents.
Assessment: Merlin also has its debt rated by Moody’s, with a rating of BBB2 with a positive outlook from mid-2023. The REIT has no relevant maturities this year, while in 2025 and 2026 these are €600 and €800 million, respectively. Overall, 98% of all gross debt, some €4.5bn at the end of 2023, had fixed interest rates, with an average cost of 2.38%, and implying 35% of GAV.
After increasing its EBITDA by +10% to €361m in 2023, we expect solid average annual growth of 7-8% in 24e-25e, thanks to inflationary rent increases and vacancy declines. In our forecasts we have not yet considered the contribution of the data centres, which we expect to be small in both years anyway.
