Diversified real estate investment trust Texton Property Fund has appointed Marius Muller as its permanent CEO and Marcel Golding as its new chair in an attempt to stabilise and turn around the troubled company.
The fund, with about R5.4 billion in property assets in South Africa and the UK, has had four CEOs in four years.
Leadership challenges and recent headaches around its black empowerment deal backed by the Public Investment Corporation (PIC) saw its share price drop by a third this year. In September, it posted a 13.1% decline in distributions for the year to June, impacted largely by the devaluation of its UK assets and SA’s deteriorating office market.
Texton said on Tuesday that the appointments are with immediate effect. Golding takes over as chair from Dempsey Naidoo, who together with other board members Trurman Zuma and Chick Legh, was not available for re-election at Texton’s recent AGM. Another board member, Thys van Heerden, has resigned.
The company said in a statement that while Golding is non-executive, he has a shareholding in Texton. The board’s current lead independent director John Macey will continue in this role.
Golding is noted for his role as co-founder and executive chairman of Hosken Consolidated Investments (HCI). He has more than 30 years’ experience across various sectors and industries. He currently serves on the boards of Tsogo Sun, Rex Trueform Group, African & Overseas Enterprises and Vunani.
Commenting on his appointment, Golding said: “The recent changes in leadership strengthen Texton’s board and renews its commitment to high standards of corporate governance for the business and all its stakeholders.”
Muller, a former independent non-executive director of Texton, was made interim CEO of the company in September. Following his appointment as Texton permanent CEO, he will remain on the board in this role.
Speaking to Moneyweb from Luxembourg, Muller said that his current priority is to stabilise the fund in terms of its debt and address complications around its BEE deal.
An empowerment consortium that secured a more than 13% stake in Texton through a loan from the PIC defaulted on its loan. The PIC is calling in the loan by exercising a ‘put option’, which means Texton has to buy back the shares. This led to Texton delaying its latest results in September and issuing a cautionary.
“A big focus for us until the end of this year is to deal with the ‘put option’ being exercised by the PIC,” says Muller. “We need to finalise this to put Texton on the best possible footing for 2019.”
He adds that the Texton board was due to meet on this on December 7, but with changes to the board and a new chairman being appointed, the meeting has been postponed to December 28. “While having the meeting on December 28 is not ideal, we wanted to have a resolution on this before the end of the year.”
Muller started out as a quantity surveyor and has over 25 years’ experience in the sector, including six years as CEO of Pareto. He was in charge of Pareto when its R2 billion expansion of Menlyn Park into SA’s largest shopping centre began in 2015. He left to start real estate advisory and consultancy Venator Capital in 2016 after a BEE consortium secured a multi-billion stake in Pareto.
“I’m delighted to extend my involvement with Texton and excited for this period of positive change,” he says. “Of course, more changes lie ahead. I am positive that we can achieve what is needed. We have a talented and hardworking team in place across SA and the UK, and will continue to optimise the business and its property portfolio.”
He says the group has no plans to sell its UK assets, but will consider selling property assets in SA: “Right now, besides the PIC issue, what keeps me up at night is Texton’s debt. We will consider selling property assets that we own outside SA’s three major hub cities in order to bring down debt. About 60% of our portfolio in SA is made up of office properties. Texton has vacancies of about 8%, but we have some good properties in secondary nodes of major cities. Our focus is to fill vacancies and retain tenants in a tough market.”
Nesi Chetty, head of Property Investments at Momentum, says Texton has not been a very focused fund and the market has punished it for this. “Some of the issues include lack of leadership, a manco structure that has been prohibitive to growth, poor quality assets, and a weak offshore strategy. We will have to see how the new leadership under Muller and Golding will take the company forward.”