Summary
- Merlin signed a €3.75bn unsecured sustainable financing agreement on 30 October.
- The agreement combines a €2.25bn term loan with a €1.5bn revolving facility.
- The transaction includes refinancing and general liquidity, not €3.75bn earmarked exclusively for data centres.
Merlin Properties has agreed a €3.75 billion corporate financing arrangement with Spanish and international banks, extending debt maturities and increasing its ability to fund future investment, including its data centre development programme.
The Spanish property group signed the unsecured sustainable financing agreement on 30 October 2026 and disclosed the terms to Spain’s securities regulator on 2 November.
The arrangement comprises a €2.25 billion term loan and a €1.5 billion revolving credit facility. It combines the refinancing of existing liabilities with funding flexibility for future requirements, rather than representing a dedicated €3.75 billion commitment to data centre construction.
The term loan consists of two components, both maturing on 30 April 2032. The first provides €725 million, scheduled for drawdown on 3 November, to repay an existing syndicated loan otherwise maturing in 2028.
The second component provides €1.525 billion, available for drawdown until 30 April 2027. It will support repayment of a €500 million bond due in July 2027 and the company’s future financing needs, particularly its data centre programme.
Merlin has also expanded its revolving credit facility from €740 million to €1.5 billion, increasing the funds available for general corporate liquidity and financial flexibility.
In a separate transaction, the company redeemed an €800 million bond that matured on 2 November using cash available from financing arrangements established in previous years.
Merlin reported that the combined transactions extend its average debt maturity from 3.7 years to 5.3 years and remove debt maturities over the next three years.
The new financing has an average pricing margin of 100 basis points above the applicable reference rate. The company also reported a loan-to-value ratio of 25%, which provides a measure of its leverage relative to the value of its property portfolio.
These terms are relevant to data centre investment because substantial construction costs arise before a completed facility begins generating rental income.
Site acquisition, electricity connections, substation construction, mechanical and electrical plant, building works, and commissioning all require expenditure during development. Depending on the structure of the project, those commitments can precede the start of contractual income by several years.
Projects also progress through different delivery stages. A developer may have land under its control while still awaiting planning permission, network agreements, construction contracts, or a tenant’s final technical requirements.
The availability of corporate financing can help a developer manage those overlapping commitments, particularly where several sites or phases are being advanced simultaneously.
By extending maturities, Merlin reduces the near-term refinancing obligations competing with expenditure on new developments. Its larger revolving facility provides additional liquidity that can be accessed according to future corporate requirements.
The transaction does not establish how much of that liquidity will ultimately be drawn down, which individual projects will receive investment, or when spending will take place.
Each development will continue to depend on its commercial and engineering requirements, including electricity availability, construction progress, and the timing of contracted occupancy.
Merlin’s exposure to data centres has attracted attention because its developing portfolio has a more concentrated customer base than its wider property business.
In October, DataCentral reported Merlin’s clarification of its CoreWeave exposure. The company distinguished CoreWeave’s share of total group rental income from its substantially larger share of currently leased or pre-let data centre income.
That distinction remains relevant when considering the financing arrangement. A diversified property group can possess a broad income base while newer infrastructure investments depend on a smaller number of customers.
Contracted occupancy, tenant concentration, construction costs, and access to power are therefore separate factors in determining the financial performance of the expanding portfolio.
The new credit arrangements provide Merlin with greater flexibility across those commitments without resolving the delivery requirements of individual projects.
Further investment decisions, development milestones, and customer contracts will determine how much of the company’s enlarged financing capacity is converted into completed computing infrastructure.
