MADRID, April 19 (Reuters) - Spanish residential rental company Testa is betting on a recovery in the country’s property market as it gears up for an initial public offering, its chief executive said on Thursday.
The planned listing makes Testa the latest IPO candidate in a sector which is thriving on foreign investment, a decade after it imploded spectacularly.
Testa Chief Executive Wolfgang Beck told Reuters in an interview that the company, which owns property in Spain worth 2.275 billion euros ($2.81 billion), planned to list this spring.
“The economic environment is very favourable,” Beck told Reuters in an interview, citing rising employment and the three upgrades Spain’s creditworthiness rating has received from ratings agencies so far this year.
The Bank of Spain estimated the gross return on Spanish residential investment at 4.2 percent in 2017, almost triple the cumulative yield on 10-year government debt.
Developments in cities and coastal resorts are currently attracting the most investment. Testa’s portfolio is concentrated in the former, primarily in the capital Madrid, where 65 percent of its assets are located.
“Rents rose between 8 and 9 percent in the contracts we renewed last year,” Beck said.
Sources said in February that the company aimed to float in May, and that fellow real estate firm Haya will hit the market in the same month.
$1 = 0.8105 euros Reporting by Robert Hetz, writing by Isla Binnie. Editing by Jane Merriman