Investors await release of Texton’s turnaround plan

Texton Property Fund is set to release a strategic document in May that will detail a turnaround plan for the real estate group.

This will give the company and its recently appointed executives a chance to set the record straight about a number of concerns that the listed property sector’s investor community has had since the fund was formed out of the takeover of Vunani Property Fund at the end of 2013. Texton was trading at a historical rolled yield of 17.5% at the end of March, the highest of the 50 property funds tracked by Catalyst Fund Managers in its monthly sector snapshot.

Texton has had three CEOs in four years and investors have wanted a settled management team in place — one that can optimise the company’s property portfolios. About 60% of Texton’s assets are in SA and about 40% in the UK.

There have been concerns that CEO Nosiphiwo Balfour, who took up her role in July 2017, was given a poisoned chalice, with Texton being a takeover target. There are also concerns that she is not involved enough in many of the fund’s property decisions in the UK.

Texton last week announced it had appointed James Armstrong as asset manager to oversee its assets in the UK, effective May 1. Armstrong previously held senior positions at Dawnay Day Carpathian, Hammerson and LREC.

Texton’s management has declined to answer questions about its managerial strategy until it releases its document.

Evan Robins, the listed property manager for Old Mutual Investment Group, said that while Texton had struggled over the past couple of years, there was potential for it to perform better and the fund had taken positive steps.

“They internalised management and rebased their dividend last year so that they would be able to pay regular dividends as is common practice in the property sector. They had been paying one-off items, which made for an unsustainable dividend base,” he said.

Garreth Elston, a research analyst at Golden Section Capital, said: “The strategic plan will have to demonstrate to the market a tangible plan to either turn the company around or to find a suitable suitor or merger partner.”

Texton’s share price is down 6.25% so far in 2018, having closed at R6 on Monday.