CAPE TOWN - Texton Property Fund’s total dividend fell 20.1 percent 71.37 cents per share for the year to end June 30, 2019 and it has forecast another 20 percent decline for the 2020 financial year.
New CEO Marius Muller on Thurday described the past year as the most difficult in the company’s history, but they were confident of resolving all inherited legacy issues during the next financial year.
Muller, who has been tasked to return Texton to positive performance, has declined his contractual bonus and increase in compensation He said in a statement that difficult but necessary decisions had to be made to bring Texton back in line with shareholder and stakeholder expectations.
The diversified JSE-listed SA REIT has property assets valued at R4.4 billion, of which 58.5 percent by value is in South Africa and 41.5 percent in the UK. Its share price increased 4.73 percent to 310c on Thursday morning.
Besides facing deteriorating property fundamentals in SA and the UK, the company reconstituted its board and executive management to strengthen its leadership and stabilize management.
The lower distribution was attributed negative market factors including rental reversions, vacancies, an oversupply of space, prolonged let-up periods, lower foreign exchange gains and increased funding costs, which he described as in line with expectations.
“Rather than dwelling on factors over which we have no control, we remained focused on what we can manage. We made pleasing operational advances that place Texton on a much firmer footing for the future,” he said.
He said their focus now was to decrease gearing. Progress was not yet showing in the numbers. The loan-to-value ratio increased to 47.7 percent from 42.7 percent by year end. The aim was reduce this to 40 percent and to diversify its lending portfolio.
A program of non-core asset disposals was being stepped up to reduce debt and reposition the portfolio.
During the year in the UK, Tesco Chobe at Quorum Business Park in Newcastle, was disposed of for GBP12 million.
Proceeds would used to deleverage the Santander loans repayable in February 2020, while improving UK portfolio metrics.
In SA, Texton sold two non-core properties and allocated the proceeds to reduce debt. A further 13 properties worth R326.8 million were already held for sale.