JSE-listed Texton Property Fund is battening down the hatches and tightening its defensive strategy in a tough market that is only set to get tougher.
Despite increasing uncertainty facing both the South African and UK markets, the real estate investment trust (Reit) is optimistic that it can withstand the challenging macroeconomic environment.
“While the portfolio has shown resilience, the downward pressure on rentals, combined with a sluggish economy impacting tenants, will be closely monitored and efficiently managed,” noted Texton CEO Nosiphiwo Balfour on Monday.
“The fund will continue to focus on active asset management to ensure tenant retention and improved efficiencies,” she said, adding that major vacancies, which were a concern in the previous period, had been filled, leading to the vacancy rate being reduced from 9% to 4.9%.
During the year ended June 30, Texton continued to pursue its diversification strategy, geographically and sectorally, shedding its noncore assets and reducing its exposure to management-intensive assets below a R50-million threshold.
“Our current portfolio, split by value, is now 61% South Africa and 39% UK,” Balfour noted, adding that the portfolio comprised a sector split by value of 58.7% office, 25.3% retail and 16% industrial.
Texton owns a total property portfolio of R5.5-billion, comprising 54 properties.
The year under review saw the Reit dispose of five South African properties for an aggregate R163.4-million, with another nine disposals, valued at R100.8-million, under way post the year end on June 30.
The company also acquired two properties during 2017, one industrial and one office, both in the UK.
“These acquisitions emphasise Texton’s focus on investing in yield-accretive properties with long-term leases and quality tenants,” she explained.
While cognisant that attractively priced assets in the commercial sector are limited, Texton remains capitalised to take advantage of any yield-enhancing acquisitions it may come across.