Merlin raises 2026 earnings guidance to €0.58 per share as data centers expand
Key Facts
Merlin Properties raised its guidance for funds from operations (FFO) in fiscal 2026 to €0.58 per share, compared with the €0.55 it announced in July, citing the performance of its traditional assets and a growing contribution from data centers. The update accompanied its results for the first nine months of 2026, during which the company recorded total revenue of €466.2 million and earnings before interest, taxes, depreciation and amortization of €346.9 million. Funds from operations reached €274.5 million, up 11.9%, while net accounting profit rose 14.8% to €669.7 million. The company said in its statement that the higher guidance reflects "the performance of traditional assets and the growing contribution of data centers." The update reinforces the company’s estimate of its operating cash flow for the year, as its results combine traditional real estate activity with expansion in digital infrastructure.
Across its existing real estate assets, like-for-like rental growth was 3.4% in the nine months, and occupancy stood at 95.0%. Revenue rose 12.9% year over year to €466.2 million, while earnings before interest, taxes, depreciation and amortization increased 12.5% to €346.9 million. Merlin attributed revenue growth to data centers, alongside the performance of its traditional portfolio. Funds from operations per share were €0.44, up 1.7% year over year. The company said this increase offset the dilutive impact of the capital increase carried out in March.
The data center plan has total capacity of 704 megawatts of IT capacity, split between 64 megawatts in phase one, 254 megawatts in phase two and 386 megawatts in phase three. The company estimated total investment at about €7.671 billion, with stabilized gross rental income of €1.126 billion once the plan is complete and its phases are stabilized. Merlin expects phase one to stabilize in 2027, phase two in 2030 and phase three in 2031. These figures show the scale of the long-term capital commitment the company is making to expand its digital business. Gross data center rents rose to €46.461 million in the first nine months of 2026, compared with €19.094 million in the same period of 2025.
The project timetable has, however, been affected by delays in electrical infrastructure: Merlin moved 162 megawatts at Bilbao-Arasur 04-05, along with the redevelopment of Bilbao-Arasur 01, to its future projects list because of administrative delays in electrical infrastructure. The company said the move reflects delays to that infrastructure, while the project remains part of its broader 704-megawatt plan. Spanish authorities were reviewing a draft regulation for data centers that included a 10-megawatt threshold and requirements linked to renewable energy; at the time of reporting, the text remained a draft under review, not a final decree in force. The implementation path therefore remains tied to the availability of electrical capacity and the regulatory framework under consideration. Moving capacity to the future projects list does not change the total planned capacity announced by the company.
Work on phase one is advancing, and Merlin said it is fully equipped and fully leased at 64 megawatts. The company estimated gross rental income of about €97 million once it stabilizes in 2027. The Madrid-Getafe center began generating cash flows in November 2026, while the company estimated this phase’s revenue for 2027 at about €97 million. In Lisbon, it said the 80-megawatt VFX 01-02 project had secured permits and power, and construction had begun, with delivery expected in December 2027 and lease negotiations at an advanced stage. Construction is also under way on the 100-megawatt VFX 03-04-05 project, which is expected to be ready for service in the first half of 2029, with lease negotiations at an advanced stage.
On financing, the loan-to-value ratio was 24.9% on September 30, 2026, compared with 28.9% at the end of 2025, while the average debt maturity was 3.7 years. The lower ratio comes alongside a data center plan requiring estimated total investment of billions of euros, with phases extending through 2031. Merlin announced in July that it expected funds from operations to reach €340 million in 2026, or €0.55 per share, before raising guidance to €0.58 per share. In the same period of the year, the company reported first-half revenue of €308 million, up 11.7%, and funds from operations of €180 million, up 8.0%. It said at the time that data centers accounted for about 80% of value creation in the first half.
The board approved an interim distribution for 2026 of €0.20 per share, payable on December 10, 2026, adding a cash return for shareholders alongside the increase in annual guidance. In trading on November 13, 2026, Merlin shares closed at €1.13, according to EL7 data. The company’s next operating milestones are spread across phase one stabilization in 2027 and delivery of the Lisbon VFX 01-02 project in December of the same year. Stabilization of phases two and three is estimated for 2030 and 2031, respectively. The company places these phases within a long-term investment plan, while delays in electrical infrastructure are a direct factor in the timing of some projects.