JSE-listed Texton Property Fund will invest $5m (R75.5m) into acquiring multifamily assets, select industrial, office and hotel investments in the US over a three-year period.
A multifamily asset is a residential property with more than one housing unit: duplexes, townhouses and apartment complexes are good examples of these properties.
Unlike in SA where sectional title developments such as apartment blocks allows one to buy an individual apartment, a multifamily property is the whole building and these are institutional assets.
The company said on Monday it had finalised an agreement to partner with technology-enabled real estate manager Cadre Real Estate Investment, to acquire a diversified portfolio of institutional-grade assets.
New York-based Cadre has a track record of investing in the US market in multifamily, industrial, office and hospitality properties.
Texton owns industrial, office, retail and corporate assets in SA and the UK valued at R3.6bn.
The company said multifamily assets provided stable and income-generating returns, and generally had annual lease terms with a diversified base of tenants, which could be increased as leases rolled over. As inflation has quickened and is expected to continue to increase, the ability to capture these rental increases provide a strong mitigation for inflation.
“We have strong conviction in US multifamily rental investments as the sector has benefited from solid job and wage growth, increased household formation, surging home values and lack of available inventory — all of which are forcing tenants to rent longer,” said the company.
A surge in e-commerce and demand for distribution space is expected to remain strong in the US, and that bodes well for the industrial sector.
Shares in Texton tumbled the most in more than three months on the JSE on Monday, down 11.17% to R3.50, giving the company a market value of about R1.2bn.
Update: March 14 2022
This article has been updated with additional information.
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