Johannesburg - Texton Property Fund has acquired two property portfolios comprising a total of nine properties in South Africa and the UK for a total of R863.4 million to improve the fund’s geographical diversity.
The local portfolio comprises six properties acquired from the Blend Property Group for a total of R363m and the UK portfolio has two office buildings and an industrial building acquired from various vendors for a total of £21.98m (R504.40m).
Read: Texton looks for retail and industrial sites
The transaction is to be funded through a combination of debt and the issue of new Texton ordinary shares. The expected effective date of the acquisitions is October 1.
Texton chief executive Angelique de Rauville said that overall the deal would enhance earnings and increase the fund’s total gross asset value to R6.8 billion, of which the UK would account for £132m or R3bn.
De Rauville said that the acquisitions would by value move the geographical split of the portfolio to 55 percent South Africa and 45 percent in the UK. She said the UK portfolio increased the total number of properties owned by Texton in the UK to 12.
De Rauville said it was prudent from a risk management perspective to get some balance between the South African and UK portfolios. She said she expected Texton to have an equal balance by value between its South African and UK portfolios by the end of this calendar year but that this would not be achieved through acquisitions.
“We have a disposal strategy and have identified 20 non-core properties for disposal. We have received offers on every one of these non-core properties and certainly during this calendar year will dispose of them,” she said.
Local acquisition
The South African portfolio that was acquired comprises Edenburg Terraces, consisting of six free-standing buildings on Rivonia Boulevard in Johannesburg; MBD House, a multi-storey office block in Hyde Park in Johannesburg; and a portfolio of properties in Bedfordview in Johannesburg, including 18 Skeen Boulevard, 16 Skeen Boulevard, Whirlpool Building and the Babcock Building.
Texton said all of the properties had high-profile tenants, the remaining leases were characterised by contractual above-inflation escalations, were recently refurbished and were favourably located.
The UK portfolio comprises Heapham Road, an industrial warehouse located in the Heapham Road Industrial Estate in Gainsborough; Mowbray House, a multi-storey office building in Castle Meadow Road in Nottingham; and Chatham Building in the Chatham Dockyard precinct in the south-east of England.
Texton said all these properties were single-tenanted by strong tenants, had no vacancies, long lease expiry profiles and were a geographic diversification to Texton’s UK property portfolio. De Rauville said the rationale for the transaction was that the acquired portfolios complemented Texton’s existing portfolio. But she said finding good assets in both the UK and South Africa was difficult at the moment.
Nobody was doing any transactions in the UK because of the possibility of Britain leaving the EU, while transactions in South Africa had been suppressed by economic and political uncertainty, she said.
He said Texton’s South Africa portfolio was an office dominated one, with the exception of a bit of retail, while the UK portfolio had some industrial and office assets.
Texton shares rose 1.31 percent on Friday to R8.50.
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