Merlin Properties 1Q26 Conf.call: Confidence in the outlook

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Merlin Properties 1Q26 Conf.call: Confidence in the outlook

Vanessa M Guy AC Europe Equity Research

(44-20) 7742-4521 14 May 2026 J P M O R G A N

vanessa.guy@jpmorgan.com

Investment Thesis, Valuation and Risks

Merlin Properties (Overweight; Price Target: €18.50)

Investment Thesis

Merlin Properties is Spain's largest-listed REIT. The group owns a diversified real estate

portfolio. Its dominant sector exposure is offices, although the company also owns shopping

centres, logistics, and, following the sale of the BBVA bank branch portfolio, will invest

further in logistics development and data centres. We rate the stock OW as we see scope for

enhanced returns in data centres driven by significant demand. Overall, we believe Merlin

has a strong management team with a solid track record, exposure to assets with structural

tailwinds, and solid balance sheet metrics – 28.6% LTV.

Valuation

Our Dec-27 price target for Merlin is based on our total returns-based European valuation

model, which takes into account whether a company creates or destroys value. We argue that

companies that have a positive spread between returns and their weighted average cost of

capital (WACC) should trade at a premium to NNAV, whereas those with a negative spread

should be priced below NNAV. We apply this spread to the invested capital, discount back,

and add/subtract to our NNAV forecast to derive our price target.

Risks to Rating and Price Target

The key risks for Merlin revolve around Spain and the real estate sector. Key risks for Spain

include weaker-than-expected macro-economic performance, which includes GDP growth,

inflation outlook, unemployment and consumer confidence. The economic outlook for

Spain, Europe and the wider world can affect bond yields, which have an impact on demand