Merlin Properties sells its stake in Testa Residencial
Good news for Merlin Properties.
With this deal, Merlin Properties obtains €321.2mn proceeds, which will be used to reduce the leverage to meet the objectives of the business plan (LTV below 45% in December 2018). According to our estimates, the LTV should decline to 43% in December, 2018e, after the sale of its stake in Testa Residencial.
In addition, it shows again the company’s capacity to create value from the non-core assets sales. It is important to remind that the company capitalized the service contract with Testa Residencial in 1Q18, increasing its stake to 17.0% from 12.7% before.
No impact in our valuation.
Our valuation of Merlin Properties included the 17% stake in Testa Residencial at the last reported NNAV (June, 2018). The deal has not any significant impact on our valuation. We maintain our target price of €12.82/share and our Buy recommendation.
Merlin Properties SOCIMI SA is a Spain-based company engaged in the operation of a real estate investment trust (REIT). The Company focuses on the acquisition, management and rental of commercial properties located in the Iberian Peninsula, primarily in Spain. The Company's activities are divided into the following segments: Office buildings, operating a portfolio of office space; High-street retail, engaged in leasing retail stores; Shopping centers, engaged in managing department stores; Logistics, operating logistics warehouses and distribution centers, and Others. The Company's other activities include property management services rendered to third parties.
Bankinter S.A. is a Spanish brokerage firm established in 1989. The company's line of business includes the provision of market research and trading services for Equity and Fixed Income products.
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