Diversified property real estate investment trust (Reit) Texton Property Fund has reported robust final results for the year ended June 30, declaring a total dividend of 103.63c a share and a 9.4% increase following the successful implementation of its geographical diversification strategy into the UK.
 
“We are encouraged by the stellar results despite some unforeseen events in our operating environment. We are not aware of any direct negative impact from Brexit on our UK tenant base given the strength of our covenants and the long-term nature of our leases,” commented CEO Angelique de Rauville.
 
“In South Africa, we will continue to actively manage the legacy portfolio, restructure the business, dispose of noncore assets and focus on fewer, larger, better quality assets with long-term leases,” she added.

The Reit further increased its total property portfolio value by 39.3% to R5.77-billion.

Meanwhile, the company acquired six properties during the year, bolstering its gross lettable area by 22.6% to 427 831 m². Two of the acquired properties are in South Africa and four in the UK, with Texton seeking to add to its portfolio.

The group is currently negotiating to acquire two property portfolios in South Africa and the UK, collectively called the blend acquisition, for a total price consideration of R378.04-million, which will be funded through a combination of debt facilities and cash generated from the proceeds of noncore property disposals.
 
Post the year-end, Texton also renegotiated the transaction to acquire two of three preferred UK assets, resulting in the blend acquisition benefiting from the stronger rand, weaker sterling and the lower cost of UK debt.

“In the long term, exposure to fewer but larger assets with long-term leases will significantly improve our risk profile, provide positive rental growth and deliver superior returns to our shareholders,” added De Rauville.  

Texton also disposed of five noncore legacy assets after the year under review, amid the headwinds currently facing the South African economy. The overall fund vacancy of 9%, up from 7.9% last year, is expected to improve to 4.5% once the remainder of the noncore assets have been sold.
 
“We are continuously achieving our goal towards a vastly improved portfolio of properties, including reduced government exposure, reduced secondary office exposure and a balanced portfolio across the UK and South Africa,” said De Rauville.