Texton Property Fund pledges to address structural problems

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Marcel Golding, who joined Texton’s board last year before replacing large shareholder Dempsey Naidoo as chair, said he has “no intention to delist” the company Marcel Golding, who joined Texton’s board last year before replacing large shareholder Dempsey Naidoo as chair, said he has “no intention to delist” the company

Texton Property Fund (JSE: TEX) has pledged to attend to its struggling company’s affairs, but not all investors are impressed.

The final slap in the face for investors who stuck with Texton Property Fund could be on its way if the SA and UK-invested real estate investment trust is delisted in 2019.

The fund may have a new chair in Marcel Golding and interim CEO in former Pareto head Marius Muller, but some of the directors and major shareholders in the group can’t see Texton being resuscitated. The fund’s share price has lost 62% over the past three and a half years,

Muller confirmed that a number of entities had approached shareholders and tried to convince them to support the delisting of Texton.

He said at the meeting that Texton’s fortunes could be turned around and that he had applied to be the permanent CEO of the group.

Muller said it was beyond his control to stop directors and shareholders from trying to take the stock off the JSE and all he could do was continue to get the struggling company’s affairs in order.

The takeover of Vunani Property Investment Fund to form Texton in 2013 has not created value for its investors. Vunani was listed in 2011 with a focus on SA commercial property. A consortium bought its external management contract in November 2013 and the fund was renamed Texton Property Fund in 2014. The consortium soon brought UK shopping centres into Texton and fund managers were confused as to what its strategy was.

The external management was eventually internalised in 2017 at a cost of R180m, after investors complained its interests were not aligned with those of the fund.

Comments by Bridge Fund Managers chief investment officer Ian Anderson suggest Texton has been a blight on the listed property sector.

“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 team consortiums that destroyed shareholder value and you’ve got a recipe for one of the worst property investments in the past decade,” he said.

Muller believes there is still hope for the company and that its share price can gain momentum. The price had hit R12.15 in March 2015 but was trading at R4.57 by midday on Friday.

“I think it would be a shame if Texton were delisted. I came in as an acting CEO because I thought I could help the management team here to turn this fund around. I believe there are some strong assets here and if we can sort out a few structural problems and get the directors to support our management strategy going forward, Texton can be a success,” Muller said.

Last week, his wishes were granted and he was offered the job full-time but there are concerns he is trying to steer a sinking ship.

While investors will have lost out on the chance to regain value if it is delisted, the assets themselves may be easier to sell on a piecemeal basis. This is because funds such as Arrowhead Properties, which has been acquisitive in the listed property sector in the past, has been against buying Texton because it doesn’t want to buy the offshore exposure that comes with it. Arrowhead does not have experience in investing in the UK or Europe.

Meanwhile, Golding, who joined Texton’s board last year before replacing large shareholder Dempsey Naidoo as chair, said he has “no intention to delist” the company.

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Listed Property / REITs  |  Rob Kane  |  Marius Muller  |  Ian Anderson  |  Texton Property Fund  |  Marcel Golding  |  Dempsey Naidoo