First Read Merlin Properties 2Q26: "Mega Plan rocking", guidance raised

Research evidence excerpt

First Read Merlin Properties 2Q26: "Mega Plan rocking", guidance raised

Forecast returns

Forecast price appreciation 10.5%

Forecast dividend yield 2.6%

Forecast stock return 13.0%

Market return assumption 7.9%

Forecast excess return 5.2%

Company Description

Merlin is the largest Spanish REIT. Merlin focuses on low/medium-risk (core and core+) assets

across the Iberian Peninsula (ie, Spain and, to a lesser extent, Portugal). It sector exposure is

diversified, but led by offices, with additional exposure to retail, bank branches and logistics.

Valuation Method and Risk Statement

The real estate sector can be cyclical and faces risks at a number of levels. First the level of the

economy both macro and local can adversely affect demand and the ability of tenants to pay

rent. Excessive levels of supply can also lead to falling rents. Rising interest rates can impact

the security of the tenant base, lower development margins significantly, and reduce

investment appetite. Interest rates, bond yields and the relative attractions of other asset

classes can all impact property values. Property values can also be affected by changes in

planning, taxes, technology and lease structures. These risks can be amplified in the real

estate sector through development exposure, gearing and the rating. Merlin faces specific

risks relating to its expansion into data centers, including their high upfront build and

infrastructure costs, technology and maintenance requirements, obsolescence, high technical

complexity and concentration of market players among hyperscalers. Our PT is economic

profit-based and equates to a discount to forward EPRA NTA.

First Read: Merlin Properties 28 July 2026 ab 2