Bankinter | Data centres represent a significant growth opportunity, in terms of earnings, dividends and asset valuation. We estimate an annual EPS growth of 24% between 2025 and 2030, with a dividend yield that could reach 7% from 2030 onwards (against the current 3%). We value the data centres at €10,703 million as of December 2026, significantly below their potential, which exceeds even €14,000 million, as they are still in the early stages of development and a further capital increase will be necessary, with a possible dilutive effect. All in all, we set the target price at €19.60 per share, implying upside potential of over 35%. We recommend Buy.
Strong value creation potential in data centres
Merlin Properties has positioned itself as one of the leading developers of data centres on the Iberian Peninsula. Including Phase III, it is expected to reach a total installed capacity of 730 MW by 2031, representing a total investment of around €7.8 billion and annual gross rental income in excess of €1 billion. In other words, a return of around 13% per annum, compared with levels of around 7% at which pure-play data centre companies already in operation, such as Digital Realty Trust or Equinix, are trading.
This will drive growth in earnings, dividends and asset valuations. We estimate annual net profit growth of 24% between 2025 and 2030, with the potential to reach a dividend of close to €1 per share from 2030 onwards (approx. 7% yield vs the current 3%). In terms of valuation, we are still adopting a cautious scenario as the sector is still in the development phase, valuing data centres at €10,703 million compared to the approximately €14,000 million they could be worth once operational. This implies a target price of €19.6 per share, compared to a NAV of €15.36 per share as of December 2025.
The main hurdle is financing
The company’s objective is to maintain an LTV of 35% and DFN/EBITDA <10x, which will require it to raise capital. Although the recent €768 million capital increase covers this year’s requirements, it will need to raise further capital between 2026 and 2027. However, we believe that the strong estimated value creation will more than offset the potential dilutive effect of the capital increase.
We maintain our Buy recommendation
It offers upside potential of over 35%, which will materialise as it progresses with the development of its assets and secures financing. Furthermore, it is exploring new data centre projects totalling 5.1 GW, which could act as a catalyst.
