Nosiphiwo Balfour: Surprise resignation; the fourth CEO to leave the company in three years. Picture: Freddy Mavunda
Nosiphiwo Balfour: Surprise resignation; the fourth CEO to leave the company in three years. Picture: Freddy Mavunda

Long-suffering shareholders of Texton Property Fund have been dealt another blow with the surprise resignation of Nosiphiwo Balfour, the fourth CEO to leave the company in three years.

Balfour’s resignation on September 14 sent Texton’s share price tumbling 8% to a new low of 550c. That brings the stock’s total decline over the past three-and-a-half years to more than 50% and its dividend yield to close to 20% — the highest among the JSE’s 60-odd real estate stocks.

Balfour, a former banker and Investec property analyst, departed barely a year after she took over from Nic Morris. It comes shortly after the release of the company’s June results was postponed because the auditors needed more time to reassess the accounting treatment and disclosure of the Public Investment Corp’s (PIC) recent decision to exercise a put option, which forced Texton to buy back shares held by a BEE consortium.

The latter defaulted on a loan from the PIC to buy the shares in 2015.

Back then, Texton entered into a put option agreement with the PIC as security for the loan.

However, Texton has been beset by other problems. The share price’s steady decline began when highly regarded co-founder and former CEO Rob Kane left in mid-2015, shortly after Texton’s (then known as Vunani Property Investment Fund) management company was bought by a consortium headed by Angelique de Rauville, former head of Investec’s property investments business.

At the time, Texton entered the UK, where it bought what is widely regarded as second-rate retail assets. The UK’s 2016 decision to exit the EU didn’t help matters and neither did Texton’s heavy exposure to SA’s struggling office market.

Balfour declined to expand on the reasons for leaving, except to say she had made as much of a contribution as she could in a difficult period and that it was time to hand the baton to someone else.

Analysts believe Balfour had done an admirable job in implementing the much-anticipated internalisation of Texton’s management company. There is a view that her resignation was prompted by differences with the board in terms of strategic direction.

"We believe Balfour’s resignation is illustrative of deeper issues at a board level," says one institutional shareholder who doesn’t want to be named. "The unclear strategy and management churn has been disappointing."

The board last week appointed Marius Muller as interim CEO. He is a nonexecutive director of Texton and former CEO of unlisted retail-focused property fund Pareto.

In response to questions from the FM, Texton chair Dempsey Naidoo says he understands that there is "disappointment and uncertainty" in the market, but that the board has moved swiftly in triggering its succession plan.

The board will work closely with Muller and the Texton team to restore shareholder confidence, Naidoo says.

"The process of appointing a new permanent CEO has begun and any such appointment will be done with the long-term stability of the business in mind."

That is probably cold comfort to shareholders, who have seen the value of their Texton investment more than halve since early 2015. Investors are no doubt anxious to see what, if any, effect the PIC put option will have on dividend payments when the results for the year to June are released this week.