PRETORIA – Listed property fund Texton intends to pursue industrial properties with sound fundamentals, particularly warehousing and logistics offerings in main metropolitan nodes, in line with its newly approved investment strategy.
Texton said yesterday that its challenges in its 2018 financial year were among the toughest in its history.
“We operated in a tough political environment in South Africa and the UK, a weak macroeconomic climate in South Africa and challenging times in the property market.
“When the economy stops growing, capital growth in other sectors, including the commercial sector, also declines,” it said.
Texton, has a R5.4 billion portfolio of retail, office and industrial assets located in South Africa and the UK.
It said economic conditions, exacerbated by the technical recession in South Africa, continued to present challenges, including weak local property fundamentals.
Property owners were focusing on the income stability of their respective portfolios because of the slow economy, it said.
Texton said the high profile company voluntary arrangements (CVA) was one of the main challenges confronting the market.
“Combined with rising e-commerce, shifts in landlord rent income and increased costs have put pressure on the retail sector for both landlords and tenants. Across the spectrum, there is added pressure on tenants with increased operational and utility costs,” it said.
Texton last month announced the resignation of chief executive Nosiphiwo Balfour effective from October 31, with independent non-executive director Marius Muller appointed the fund’s interim chief executive.
It did not provide any reasons for Balfour’s resignation.
In May, the group announced the acquisition of four single tenanted A-grade industrial properties for R205.34 million.
Texton yesterday reported a 13.1 percent decline in rebased dividends a share to 89.31c in the year to June from 102.8c in the previous year, which was slightly behind its market guidance.
Vacancies increased to 7.9 percent in June from 7.0 percent in December and were expected to increase over the short term in the South African portfolio, resulting in lower net property income in its 2019 financial year.
The post year-end put option exercise by the Public Investment Corporation (PIC) in August resulted in Texton’s board having to delay the publication of the fund’s results.
Texton said it aimed to ultimately reduce its loan to value ratio to 40 percent or lower but this would take time.
Shares in Texton dropped 5.25 percent on the JSE on Monday to close at R5.20.