J.P. Morgan has placed Merlin Properties on Positive Catalyst Watch ahead of the Spanish REIT’s half-year results scheduled for July 30, citing a notable gap between its own funds from operations estimates and Bloomberg consensus.
The broker kept an overweight recommendation on the stock and nudged its December 2027 price target up to €19.00 from €18.50. Merlin shares were trading at €14.79 as of June 1.
FFO outlook and the consensus gap
At the center of J.P. Morgan’s note is a divergence in FY26 FFO expectations. The broker’s estimate of €0.58 per share for FY26 sits roughly 5% above the Bloomberg consensus of €0.55, implying flat year-on-year growth even after accounting for dilution from Merlin’s recent capital raise. J.P. Morgan attributes its higher FFO view to what it sees as stronger revenue progression and better cost dynamics than those baked into consensus forecasts.
The July 30 results are expected to include an update to FY26 FFO guidance, alongside further detail on a revaluation the company had flagged at its first-quarter results as a "substantial revaluation (from DCs expected in 1H26)."
Data centre pipeline and valuation assumptions
J.P. Morgan’s analysis links the revaluation to Merlin’s expanding data centre pipeline across Iberia. The broker’s work values Phase I data centre capacity at €19.3 million per megawatt compared with an estimated investment cost of €9.6 million per megawatt. In Lisbon, Merlin is progressing to 340 megawatts of planned capacity.
The bank highlights Merlin’s share of planned IT capacity in Iberia at 37%, the largest position among peers cited in Colliers and J.P. Morgan data, ahead of Edgemode at 11% and Start Campus at 8%.
Phase III of Merlin’s data centre programme alone is shown with total IT capacity of 412 megawatts, which the broker says would generate stabilized gross rental income of €656 million and require capital expenditure of €4.47 billion. Of that planned spend, €768 million in equity was raised on March 26, 2026 through an accelerated bookbuild.
J.P. Morgan also models an upside scenario for Phase III that adds 200 megawatts, bringing total Phase III capacity to 612 megawatts and lifting stabilized gross rental income to €935 million.
Portfolio mix and longer-term revenue trajectory
The broker projects a material shift in Merlin’s portfolio composition as data centres scale. Gross rental income is forecast to rise from €542 million in FY25 to €1.80 billion by 2032. Over the same horizon, data centres are modelled to grow from roughly 6% of the portfolio to roughly 65%, while offices are expected to shrink from roughly 53% to roughly 20%.
On operating performance, J.P. Morgan estimates adjusted EBITDA increasing from €399 million in FY25 to €643 million by FY28, with EBITDA margins expanding from 70.7% to 73.2% across that period. Revenue is projected to climb from €565 million in FY25 to €878 million in FY28.
Leverage and capital expenditure dynamics
J.P. Morgan’s note flags that net debt to EBITDA sits at 10.1 times in FY25, is forecast to ease to 8.5 times in FY26, and then rise again to 9.7 times by FY28 as capital expenditure ramps up to support the data centre build-out. The broker’s baseline incorporates the March 26, 2026 equity raise as part of the funding mix for the Phase III programme.
What to watch next
Investors will focus on the July 30 half-year results for the company’s updated FY26 FFO guidance and for details on the revaluation tied to data centre deployments. The magnitude and timing of capital expenditure and the evolving portfolio mix between data centres and offices will be central to how the market re-prices Merlin ahead of the broker’s December 2027 price target.
Summary
J.P. Morgan placed Merlin Properties on Positive Catalyst Watch and lifted its December 2027 price target to €19.00, citing a FY26 FFO estimate of €0.58 per share - about 5% above Bloomberg consensus - driven by stronger revenue and cost assumptions and a potentially material revaluation tied to the company’s Iberian data centre pipeline.