Merlin Properties SOCIMI is a Spanish real estate company that is engaged in the acquisition and management of commercial assets in Spain and Portugal. The group is mainly focused on the office, retail, and logistics industries. Listed on the Madrid Stock Exchange, the stock is a constituent of the IBEX 35 Index, and currently has a market capitalisation of €3.4 billion.
In a Covid-19 update on 9 April, Merlin said that it has worked hard to ensure that it is in a strong and robust financial position. It advised that it had €1.1 billion in cash and that leverage remained low, with an LTV ratio of 41% at the end of 2019. It also said that it enjoys “ample headroom” on its debt covenants. Additionally, the group pointed out that its strong financial position has been reinforced by major rating agencies, with S&P giving the company a BBB rating, and Moody’s assigning the group a Baa2 rating.
Merlin Properties shares have fallen by over 40% since mid-February and we think it’s interesting that insiders have been buying a large amount of stock at the lower share prices. Since the beginning of March, we have observed over 40 purchases from insiders, including a number of purchases from CEO Ismael Clemente, who has acquired an additional 70,000 shares, and COO Miguel Ollero, who has picked up an additional 100,000 shares. We view this pattern of buying activity as bullish as it suggests that insiders believe that the company is resilient enough to survive an economic downturn and that they think the stock will rebound in the future.