Intermoney | Merlin Properties (Buy, PO €12) has proceeded to execute its long-awaited capital increase after yesterday’s market close. In an accelerated placement excluding admission rights, the REIT has sold almost 94 M new shares at a price of €9.8 each, which represents a discount of less than -5% compared to yesterday’s closing price.
The new shares represent 20% of the existing shares as of yesterday, or 17% as of today. The total amount of the capital increase is therefore around €921 million, as confirmed in a press release from the National Securities Market Commission (CNMV).
The two largest shareholders, Santander (24%) and Nortia Capital (8%) have participated in the capital increase on a pro rata basis. There is a lock-up period of 90 days. Merlin reports that the new shares are expected to start trading tomorrow, Thursday 25 July.
Assessment: This move, which has been announced de facto since the end of last year, comes as no surprise and was basically confirmed by the REIT’s CEO, Ismael Clemente, last Monday in the Q1 results conference call. The truth is that the discount of the capital increase is quite satisfactory, perhaps indicating that the market was expecting it to be launched soon, and hence the weakness of the stock in recent weeks. The volume of the transaction, if anything, is somewhat below the rumoured €1 billion, but we do not believe that this is really relevant. Merlin will use these funds to cover around 50% of the investment in a new phase of development of data centres, totalling 200 MW, which implied, according to the REIT itself, an outlay of around €2.1 billion; the remaining amount is expected to be provided by debt instruments. Data centres are the REIT’s main growth vehicle, as it expects to generate more than €300 million in annual revenues by the end of this decade. To put it in reference, we expect Merlin to generate total revenues of around €520 million this year. We will adjust, where appropriate, PO and forecasts in the coming days, although we confirm our Buy recommendation.
