Increase in complementary dividend
Merlin has announced an increase in its complimentary dividend payable in May up to 20 cents per share, which, together with the 20 cents on account, comes to a total of 40 cents to be allocated to every shareholder in the 2016 financial year, compared to the 36 expected by the market (+11%). This additional dividend will be given out after the approval before the Junta General, which is predicted to take place on the 26th April next.
The company similarly announced its estimation for remuneration to the shareholder funded in the 2017 financial year at a minimum of 207 million euros. This payment, which will be paid in cash, will be at a rate of more than 44 cents per share, which will be distributed in part as a dividend and in part as a share premium. This is an increase of 10% on the payment per share in 2016.
The payments due in the 2017 financial year will be paid out as previously in two stages, one in September 2017, and the other in 2018, once passing before the Junta General de Accionistas who approve the previous year’s accounts.
Growth in the value of the portfolio
The integration of Metrovacesa has brought about a very noticeable jump in the gross value of Merlin assets, which, on the 31st December 2016 rose to 9,824 million euros, according to the valuations carried out by Savills and CBRE, compared to 6,053 million a year ago. The growth in value of the LfL asset is 6.2% in respect of the valuation of 31st December 2015. Of special note has been the increase in value in comparative terms in the logistics segment (+10%) and shopping centres (8%).
Regarding the net value of shares according to EPRA recommendations, this has gone up 5,275 million euros, equivalent to 11.23 euros per share, an increase of 14% on the EPRA NAV per share in 2015 (9.85 euros), confirming the positive impact after integration with Metrovacesa.
Leaders in offices, retail and logistics
2016 was the year of consolidation for Merlin, as the real estate leader in Spain and one of the most important in Europe. The company enjoys a strong position in the Spanish market in all the areas of assets in which it operates. Today, the national portfolio comprises more than 3 million square metres, the leader in Spain for offices, retail and logistics and the second biggest operator in shopping centres. In terms of rental income, the portfolio is represented mostly by offices (47%), followed by street retail (23%), shopping centres (20%) and logistics (7%).
Asset rotation
Throughout 2016 the company brought to a conclusion an intensive policy of asset rotation. Firstly, the Metrovacesa operation allowed the deconsolidation of the residential rental portfolio, in line with its business strategy. Merlin today has a 16.1% partnership in Testa Residencial, the leading company in this segment so specialised that, after the expansion of capital that it will complete in March, it will have more than 8,000 homes for letting with a gross asset value of 1,716 million euros.
Additionally, on 30th December last, Merlin succeeded in its objective of disinvesting the other line of business in its strategy, hotels, which was sold to Foncière des Murs for 535 million euros.
The combination of disinvestments completed in 2016 comes to 761 million euros, a 7.1% premium above the previously publicised valuations, generating profits of 51 million euros.
Creation of value
Merlin Properties closed the 2016 financial year with an income from rents of 351 million euros (+64% more than 2015), a recurring EBITDA of 303.6 million euros (+63% more than 2015) and a consolidated net profit of 582.6 million euros, in accordance with the IFRS (+1.087% over 2015). The results include the integration of Metrovacesa from the 15th September to the 31st December. Per share, the creation of value has been 64 cents FFO per share (60 cents in 2015) and 1.59 euros net profit per share (0.22 in 2015).
The debt ratio was at 45.5% (compared to 49.8% in 2015), with the average terms of repayment extending to 6.2 years (3.8 the previous year) and the average type of interest continuing at 2.3%.
Perspectives for 2017
With a growing real estate sector, Merlin has clear objectives for 2017. They are based on the extraction of value within its existing portfolio, with its investment activity less intense. The extraction of value from the portfolio is based on three pillars: an ambitious plan for changes to its offices and shopping centres portfolios, an increase in the occupancy total in all assets from Metrovacesa, and a programme of logistics development which will augment the company’s stock by more than 500,000 square metres in the next 16 months.