Real Estate Investor Magazine South Africa April 2016 | Page 12

TOP TIPS
Africa. It plans to increase this exposure from 40%
to 50% of its property portfolio value. Ultimately, the
plan is to have its property portfolio 50% exposed to
SA and 50% in the UK.

A number of SA-focused property counters such
as Tower Property Fund, Vukile Property Fund and
Attacq limited have entered the UK and European
markets for hard currency earnings.

Early backers of Texton were
attracted by its specialised office
sector focus in what was a small
property portfolio of about R1.5
billion

Investment Philosophy and the Future

Texton has made a slew of property acquisitions. The
company has recently acquired nine properties in the
UK, the latest being two prime industrial properties
in Peterlee for £7.1 million (R155 million) and a retail
park in Camborne for £9.85 million (R215 million).
According to de Rauville, the company is planning
to de-risk the portfolio by going to the UK. “The
UK is a place we know, like and trust. And we like
the economic prospects of the region. We have the
networks for deals in the UK and we are being noticed
in the region.”

2015 was characterised by immense
change. We underwent a change
in strategy, pace and direction. We
have the courage of our convictions
and are confident these changes are
in the best interests of the company
and its shareholders
Property fundamentals in the UK are seemingly
attractive, as yields on properties are higher than
borrowing costs. In SA the opposite applies. Typical
properties in the UK have a yield of 6.5% (in pounds)
while the cost of funding is about 3.5%.
Texton is interested in properties that are well
priced and show opportunities for redevelopment. At
a forward yield of 11%, Texton is still an affordable
and attractive entry into listed property compared to
the sector’s 6%. “The company has gone through a lot
of changes and the re-rating of the stock has started
to reflect our plans,” de Rauville explains.
In recent years, SA’s listed property sector has
opened to offshore markets. Latest figures show that
about 35% of the FTSE/JSE South African property
index (Sapy) is exposed to offshore earnings. The
sector did not have offshore exposure ten years ago.
10

APRIL 2016 SA Real Estate Investor

Diversification for growth is a key investment
philosophy for de Rauville. The Texton consortium
inherited a South African secondary office portfolio
with sizable exposure to government tenants. “It
quickly became apparent that we needed to diversify
away from this in order to manage our risk more
effectively, and to continue to be able to deliver
superior distribution growth to our shareholders. We
are now a fund that has a significant component of
retail and industrial exposure and almost 50% of our
assets (by value) in the United Kingdom, which is a
territory that we know, like and trust. We also believe
in the economic prospects of the country.“
Texton’s primary goal is to convey their ambitions
and strategy to the market. “Our share price is lagging
and the market is telling us that there are some things
we can and must do better,” says de Rauville. “But my
philosophy has always been to keep your head down,
remain focussed and deliver. The share price will look
after itself so long as you at least meet - ideally exceed
- market expectations. 2015 was characterised by
immense change. We underwent a change in strategy,
pace and direction. We have the courage of our
convictions and are confident these changes are in the
best interests of the company and its shareholders.”
“We are committed to building a large, diversified
and highly successful business. We shall invest into
markets that we know and understand. We now
have the team in place to deliver on these goals. We
are all committed to making a great success of this
company and making decent returns on investment
for ourselves, our shareholders and our team.”

ANGELIQUE’S TOP
INVESTMENT TIPS

• Do your homework
• Go with your gut
• If you don’t have a feel for investments then
invest in someone who does
• Invest only in something you know and fully
understand
• If it sounds too good to be true it usually is
• There is no such thing as easy money
• Focus
• Back good management

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