Texton Property Fund Limited has released its results for the six months ended on the 31st of December 2020 declaring a distributable income of R98.0 million (31st of December 2019: R112.4 million) – a 12.8% decrease.
Texton made news this past November as the first local REIT to announce that it could not pay a dividend at all for 2020.
During the past six months, the REIT has disposed of R139 million (30th June 2020: R213 million) of non-core assets to streamline its operations and to make funds available to pay down debt. Its loan-to-value (LTV) profile continues to improve, falling from 46.2% to 42.9% due to its focused approach to balance sheet management.
The company de-risked its balance sheet by converting £7.5 million of its debt secured against its South African portfolio into Rand, further reducing cross-currency interest rate swap exposure by £7.5 million. By reducing long-term debt by R190 million, the entities remain within interest cover and LTV covenants with R13 million cash on hand, excluding cash available in debt facilities.
During a challenging economic climate, exacerbated by increased load shedding and the resurgence of Covid-19, Texton maintained core vacancy levels at 9.5% following a concerted effort to sell underperforming assets and by targeting the letting of its vacant properties across its portfolio.
With a healthy rental collection rate of 98% until the 31st of December 2020 and 97% after year-end, the fund re-let 86% of its expiring gross lettable area (GLA) while transferring six of the twelve properties held available for sale in South Africa at the 30th of June 2020, to the value of R139 million. Post period-end, two of its properties totalling R42 million were transferred, bringing the total value of properties sold locally to R180 million. However, there have been significant delays in obtaining municipal clearances resulting in the sales process being delayed.
While the UK’s economy remains contracted, Texton remains hopeful, following the roll out of vaccines, that recovery will follow. It maintained its collection rate on its wholly owned properties at 97%. It also concluded the sale of its Poundland property post year-end for £3.7 million, further reducing its exposure to retail assets and improving the weighted average lease expiry (WALE) and income profile of its remaining UK portfolio. Its wholly owned property portfolio now sitting at 100% occupation with a WALE of c.8.7 years.
In addition to agreeing on the sale of the DHL Bawtry distribution warehouse subject to shareholder approval for £22.7 million, a transformation project is underway to reposition its Broad Street Mall, a diversified mixed-use property in Reading. The asset has achieved resilient collections of 81% during the period under review which reinforces the defensive community nature of the mall.
Texton’s board elected not to declare an interim dividend, deferring its interim dividend decision to year-end.