Texton mulls new distribution policy


Texton mulls new distribution policy

Published Date: 2020-09-25 | Source: Stephen Gunnion | Author: Stephen Gunnion

Texton mulls new distribution policy

The property fund says it will take advantage of a two-month extension before deciding on its final payout for the past year.

Texton Property Fund is reconsidering its distribution policy after deferring a decision on a final dividend for the year. The retail estate investment trust (REIT) says it is taking advantage of a two-month extension granted by the Financial Sector Conduct Authority, which means it only has to pay its dividend within six months of its year-end due to the impact of Covid-19.

Texton owns 53 properties in SA and the UK, with just over half of the R4.48 billion portfolio's value weighted to SA. Its SA assets are mostly office properties, with some industrial and retail, while the UK portfolio is weighted towards retail and industrial assets. Vacancies increased to 11% by the end of June from 9.2% a year earlier, with SA vacancies rising to 12.7%.

Texton said its portfolio was defensively positioned during the pandemic, with collections of 90% in SA and 97% in the UK. The sale of non-core assets over the year, the low interest rate environment and the strength of its core portfolio had provided a suitable foundation, it said.

Property revenue fell 6.5% to R522 million for the year to end-June and net property income decreased by 15% to R308 million. Distributable earnings declined by 53% to R125 million. It swung to a headline loss of 23.35c per share from earnings of 55.62c previously. Its net asset value declined by 4.8% to 584.27c per share.

Texton said ongoing challenges included constrained electricity supply and rates rising in excess of inflation. Tenants were leveraging the soft rental market to their advantage by occupying better space at lower rentals. In the UK, the government's generous support, in particular the job retention scheme, held the economy together during the hard lockdown. However, it said the UK economy was in the midst of a severe economic downturn, with GDP forecast to contract by 7.2% this year.

Texton's shares rose 11% to 89c on Wednesday.

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