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Investing.com -- Merlin Properties fell more than 4% on Friday after the Spanish real estate group said permitting delays will push back part of its Madrid data-centre expansion, postponing rental stabilisation on the affected assets to 2030.
The delays affect 78MW of the 246MW included in phase two of the plan. The company now expects the revised timeline to extend rental stabilisation by a year.
The European Union has postponed its deadline for publishing a decision on the AI Gigafactory initiative to April 2026 from December 2025. Phase one of the data-centre programme is progressing in line with expectations.
Merlin reported a third-quarter update that showed steady financial performance. “Merlin reported an NAV (EPRA NTA) of €15.2 per share, up 1% the quarter and up 6% year to date,” analysts at Morgan Stanley said in a note, adding that the portfolio was not revalued in the period.
The shares trade at a 12% discount to that NAV. Recurring EPS for the first nine months reached €0.44, up 6% from a year earlier.
The company declared an interim dividend of €0.20 per share, an 11% increase, with full-year 2025 guidance at €0.40.
The brokerage described operational trends across the portfolio as solid. Rents increased 3% like for like in the first nine months of 2025. Office rents rose 4%, logistics 2% and shopping centres 4%.
Lease agreements were signed in line with previous passing rent in offices, and 6% above in logistics and 4% above in shopping centres. Occupancy was 96%, broadly stable in the quarter at 5bps, though 1.2 percentage points lower than in December 2024.
Merlin did not provide comments on its 2025 funds-from-operations guidance of €0.56, which Morgan Stanley said remains aligned with consensus. The company planned to host a conference call later that day to discuss the update.
Morgan Stanley kept its “equal-weight” rating on the stock. The brokerage said it views Merlin’s strategy as “compelling” but noted that the expansion of the data-centre pipeline will take time to show in earnings.
It added that once ongoing developments begin producing sustained cash flow, the group “could potentially require additional equity to fund its extended pipeline.”
The brokerage characterised the quarter as operationally stable while highlighting the significance of the new permitting delays and the revised EU timetable.