Texton Property Fund Limited today announced good annual results despite a challenging year, declaring an annual dividend of 102,80 cents per share. This represents a growth of 6,0% compared to the rebased dividend reported in the prior year. Net property income improved 10,0% from R400,7 million to R440,8 million.
CEO of Texton, Nosiphiwo Balfour said “Texton today released good results despite 2017 proving to be a challenging year for both the South African and the UK economies, with more uncertainty creeping into the global financial system,”
“Our current portfolio, split by value, is now 61,0% South Africa and 39,0% United Kingdom, including our portion of Broad Street Mall. Our current portfolio has performed well and vacancies improved significantly over the year as a result of the team’s focus on our selected sectoral and geographic split as well as quality tenants.”
The Company progressed with its strategy of disposing of non-core assets in South Africa, and successfully disposed of five properties for an amount of R163,4 million during the reporting period. Further deals were agreed for nine disposals after the reporting date, valued at R100,8 million, reducing the number of properties in the portfolio by 14.
During the year two properties, one industrial and one office were acquired in the UK , further improving geographical diversification and enhancing returns in line with expectations. Mowbray House, an office building situated in Nottingham, and Heapham Road, an industrial building, were acquired at circa £16,2 million. Acquisitions were funded through debt and proceeds generated from disposal on non-core assets.
“These acquisitions emphasise Texton’s focus on investing in yield accretive properties with long-term leases and quality tenants.” said Balfour
At year end, the Fund had a loan to value ratio of 38,91% (2014: 37,20%). The calculation of loan to value was based on interest-bearing borrowings for investment property included in other financial liabilities (excluding the fair value of the interest rate swaps) of R1 926 million (2016: R1 912 million) and the value of investment property, excluding Broad Street Mall, of R4 951 million (2016: R5 135 million).
“The Fund remains capitalised to take advantage of yield-enhancing acquisitions however we are cognisant that attractively priced assets in the commercial sector are limited. With circa. 75% of our debt fixed over 4 years we are positioned to navigate the current uncertain macro-economic environment,” said Balfour.
At the end of the reporting period, Texton owned a total property portfolio of R5, 508 billion comprising 54 properties with a sectoral spread by value of 58,7% office, 25,3% retail, and 16,0% industrial.
Post year-end 30 June 2017, the Texton board of directors announced the appointment of Nosiphiwo Balfour to the position of Chief Executive Officer (CEO), effective 17 July 2017, Nic Morris having stepped down as CEO and executive director of the board but remaining employed until 30 August 2017 to facilitate a smooth transition for the new CEO. The board of directors also announced the appointment of Ms Inge Pick as Chief Financial Officer (“CFO”) and Executive Financial Director of the Company, effective 18 September 2017.
Following announcements made earlier this year and further communication to shareholders in August 2017 the Fund and Texton Property Investments have agreed to internalise the asset management function through the cancellation of the asset management agreement.
“The internalisation of the asset management function will better align the interests of the company’s management and its shareholders”.
“Whilst the portfolio has shown resilience, the downward pressure on rentals combined with a sluggish economy impacting tenants, will be closely monitored and efficiently managed”.
“The Fund will continue to focus on active asset management to ensure tenant retention and improved efficiencies and major vacancies that were a concern in the previous period have been filled which has led to the vacancy rate reducing from 9,0% to 4,9%.” concluded Balfour.