Texton in survival mode could be set for a takeover
Property fund had its worst financial year yet in the period to June
Texton Property Fund, which has had five CEOs in as many years, is positioning itself for a takeover, having struggled for nearly five years to turn its operations around.
CEO Marius Muller said on Thursday that he and his team were working to get the company operating at a respectable level. This included selling a number of SA properties to lower debt levels as well as disposing of Broad Street Mall in Reading, England.
Muller said once the fund was back on a sound footing, it may be best for another company to take Texton over.
The company had its worst period in the year to June with its dividend falling 20.1% from 89.31c a share to 71.37c a share.
Texton’s total property assets were valued at R4.4bn at the end of the reporting period, of which 58.5% by value was in SA and 41.5% was in the UK. The group’s assets in both markets were devalued in the period.
“This has been an incredibly tough year, the toughest in our history. The tough macroeconomics in both our markets weakened property fundamentals,” said Muller.
He said Texton’s dividend per share was expected to fall 20% again in the year to June 2020, but his management team would continue to do its best at cleaning out the company’s local and British portfolios.
Some fund managers have called for merger activity in listed SA property to create funds with more liquidity and scale amid a weak economy.
Muller said Texton could become a takeover target again as it had been in the past few years. He was not aware of any new takeover offers but he had met Rob Kane, a shareholder and former CEO of the group, who expressed interest in taking it over nearly a year ago. In the interim Texton’s management team would continue to improve the quality of its assets and its balance sheet.
“This is a young team that is working hard to get things clicking at Texton. We may not be the best management team in the country but we are doing best and what we can to get the company into a better state. There may be another team which later picks up the baton and takes Texton to a new level,” said Muller.
Head of listed property at Stanlib, Keillen Ndlovu, said Texton may not be taken over for many months given the weak positions of potential acquirers themselves.
“In an ideal environment, yes Texton would be bought out. But most property companies are focusing on their own issues, reducing debt levels, disposing of weaker properties, nursing ailing tenants and vacancies, and are not keen to take on other challenges,” he said.
Since reaching its high of R13.40 in March 2015, Texton’s share price has lost 76.9% closing 4.73% higher at R3.10 on Thursday.