Spain’s largest residential rental REIT, Testa Residencial SOCIMI, S.A., achieved a remarkable increase of funds from operations (FFO1) which rose to €19.58million, 60% more than in the previous period. The gross rental income reached c. €37M, 69% more than the same semester of the previous year. This increase is due to the improvement in the occupancy rate (which rose from 89.5% to 91.8%); the growth in the number of apartments in the portfolio (currently 10,615 apartments, more than 30% growth in the last twelve months) and the improvement in annualized Gross Rental Income (GRI) of 17.5%. On a like-for-like basis, revenue growth increased 9%.
Adjusted rental EBITDA was €24.38 million, 68% more than in the same period of the previous year, and the adjusted rental EBITDA margin was at 65.9%. The net profit of the semester amounted to €8.94 million, a figure that does not adequately reflect the good performance of the business, since it has been affected by some non-recurring items.
According to the Savills valuation report, as of June 2018, Testa’s portfolio has a Gross Asset value (GAV) of €2.6 billion, 4.3% more than in December 2017 on a like-for-like basis.
On the other hand, it should be noted that, based on the latest asset valuation, the adjusted NAV amounts to 14.98 euros per share, 8% more compared to 13.86 euros per share at the end of 2017. Testa’s shares began trading on the MAB on July 26, 2018 with an initial capitalization of € 1,8 billion.
Wolfgang Beck, CEO of Testa Residencial, has expressed his satisfaction with the company’s financial performance since it confirms «the success of the operating strategy established, that consists of improving margins and profitability, always seeking an adequate balance between increasing the occupancy rate and rent increases, while controlling operating costs”.
Meanwhile, Testa Residencial continues to seek investment opportunities and in August 2018 it agreed to purchase a portfolio of 549 apartments for rent in the province of Madrid for €66.8M. The properties, which are 95% rented, are located in various towns located in the south, mainly in Pinto and Parla.