Rob Kane. Picture: FINANCIAL MAIL
Rob Kane. Picture: FINANCIAL MAIL

Listed property veteran Rob Kane has a plan to wrest back control of one of the worst-performing listed real estate investments of the past few years, Texton Property Fund, and to make it function as a successful real estate investment trust (Reit), four years after he was booted out of the company during a takeover.

Kane has sent a letter to Texton’s main institutional shareholders, as he looks to garner support and make changes to the SA- and UK-invested property group’s executive management and directorship.

Kane’s plan includes replacing  acting CEO Marius Muller with Andile Mazwai, who was briefly Rebosis Property Fund’s CEO but left in early 2018. John Oliphant would replace Dempsey Naidoo as chairman. Texton’s financial director, Inge Pick, would also be replaced, with two directors, Chick Legh and Thys van Heerden.

Kane’s company, Boxwood Property Investment Fund, will gain a portion of shares which will only be saleable if the company’s share price reaches a certain level, incentivising him and the management team to turn the company around.

Texton, which owns property worth R5.4bn, was formed out of the takeover of Vunani Property Investment Fund in late 2013.

The takeover was by a consortium led by property investor and analyst Angelique de Rauville, Van Heerden and Legh. The consortium wanted Vunani to be externally managed by a vehicle called Texton Property Investments. Later Vunani was renamed Texton Property Fund. Initially Kane and De Rauville were joint CEOs but he left his role in 2014.

Since his departure Texton has disappointed the market. Vunani's share price enjoyed nine years of year-on-year growth, reaching R12.15 a share at the time of the takeover. On Friday Texton’s share price dropped 3.11% to close at R4.36.

Its management has been erratic since Kane left. De Rauville was replaced as CEO by banker Nic Morris, who was in turn replaced by Nosiphiwo Balfour. Balfour resigned unexpectedly in September.

Initially, De Rauville and her consortium including Legh and Van Heerden, took over Texton  intent on changing it from a company solely invested in SA to one with UK and SA investments. De Rauville is no longer a director of the fund.

Many shareholders have also been upset that Texton was externally managed for so long. They have argued that the external manager destroyed value while collecting fees. The external management company was internalised in 2017 at a cost of R180m, rewarding De Rauville and her partners.

About 41% of Texton’s assets by value are in the UK and 59.3% in SA. Some critics have said they felt the external management company’s interests were not fully aligned with those of Texton’s shareholders, which is why the management was brought in-house.

Chief investment officer at Bridge Fund Managers, Ian Anderson, said Texton had been an example of value destruction for pensioners’ money. “We disposed of our investment in Texton some time back because of the company’s ever-shifting strategy. The original strategy under CEO Rob Kane was focused, but after he left there has been very little focus at the company.

“The foray into the UK has not been successful and the local portfolio is now also under pressure. Add to that payments made to management teams or consortiums that destroyed shareholder value and you’ve got a recipe for one of the worst property investments in the past decade. All in all it’s been a very poor advert for the asset class and one from which other management teams can hopefully learn a few lessons,” he said.

A number of shareholders have said off the record that they will accept the takeover plan and are waiting for Kane to garner enough support.

andersona@businesslive.co.za