South Africa’s Public Investment Corporation, the continent’s largest money manager, more than tripled its stake in Texton Property Fund after a black empowerment investor defaulted on a loan, the real estate investment trust (Reit) said today.
The PIC is now the largest shareholder in JSE-listed Texton, with 18.9% compared with the 5.2% it held before, according to a statement by Texton. It follows the transfer of shares formerly held by Texton Broad-Based Empowerment (RF) Proprietary Limited to the PIC, after the empowerment entity defaulted on its loan with the PIC, the property company said.
Texton held assets valued at R5.2 billion at the end of last year in offices, industrial and logistics facilities and retail properties, with 62% by value in large South African cities and 38% in UK secondary nodes, according to the company.
“The PIC is a long-standing shareholder of Texton and we look forward to continuing to work closely with them and all shareholders on our journey towards positive performance,” Texton CEO Marius Muller said in the statement. “We’re constantly challenging ourselves to find the best solutions to move Texton forward, and remain firmly committed to turning the ship around despite the economic environment being unsupportive and weak property fundamentals.”
The company’s market capitalisation is just R1.6 billion, showing how some listed South Africa Reits trade at a discount to their asset value. The shares, at R4.29 today after the statement, have fallen 49% over the past three years. However, its earnings per share swung into a positive 22.7 cents at interim results in December from a negative 33.4 cents at its full year report in June.
“We know the road ahead isn’t going to be easy given the amount of work that needs to be done around entrenching both sound business practices and critical property basics within the company,” Muller said.