Texton Property Fund Limited (JSE:TEX) News - Finalisation of a capital commitment to Cadre for Investments into the United States of America

TEXTON PROPERTY FUND LIMITED
Granted REIT status by the JSE
(Incorporated in the Republic of South Africa)
(Registration number 2005/019302/06)
JSE share code: TEX ISIN: ZAE000190542
(“Texton” or the “Company”)


FINALISATION OF A CAPITAL COMMITMENT TO CADRE FOR INVESTMENTS INTO THE
UNITED STATES OF AMERICA


1. INTRODUCTION
  Texton is pleased to advise shareholders that the Company has finalised and entered into an
  Investment Advisory Agreement (“IAA”) to partner with Cadre Real Estate Management (“Cadre”).
  In accordance with the IAA, the Company has made capital committed of $5 million (R75.5 million)
  to Cadre for investments in real estate in the United States of America (“US “or “USA”). These
  investments will be targeted towards compelling assets with downside protection, specifically
  focusing on multifamily, industrial, select office, and select hospitality assets.

  The capital commitment will be deployed over a three year investment period, drawn down as and
  when transactions are identified in accordance with the investment guidelines.

2. RATIONALE
  The investments will be deployed across a diversified portfolio of institutional-grade assets with an
  overweight allocation towards multifamily assets that provide stable, income-generating returns with
  downside protection. In addition, industrial, office and hotel investments will be opportunistically
  pursued with the intention to generate alpha and upside.

  Texton has 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. Multifamily leases generally
  have annual lease terms with a diversified base of tenants which can be increased as leases roll
  over. As inflation has quickened and is expected to continue to increase, the ability to capture these
  rental increases provide a strong mitigate for inflation.

  Strong fundamentals in the US industrial sector continues to be supported by the surge in e-
  commerce. The demand for distribution space will remain strong as tenant seek faster delivery
  times. In addition, opportunity will also arise to acquire high quality office and hotel properties as
  these sectors deal with substantial change.

  Cadre is a technology-enabled, real estate manager based in New York and invests across the US
  in multifamily, industrial, office and hospitality properties. Established in 2015, the management
  team has acquired over 40 deals across 22 markets in the US and has completed over $3.5 billion
  in transaction at a historical internal rate of return (IRR) of over 17% since its inception.

  Texton is pleased to invest alongside Cadre, who meet our stated investment objective is to deploy
  capital offshore by partnering with best-in-class asset managers who have a demonstrable track
  record.
3. KEY TERMS OF THE IAA

   The objective of the IAA is to construct an investment portfolio across core-plus, value-add and
   opportunistic real estate by primarily investing in the multifamily, industrial, office and hotel sectors
   located in the US. Key terms of the IAA include:

      Target leverage                                             Average 65% LTV, non-recourse debt
      Target number of investment                                                             15 -20
      Investment period                                                                    24 months
      Target hold period                                                        8 years (maximum 10)
      Target net IRR                                                                        10 - 12%
      Target cash yield                                                     4 -7 % on stabilisations
      Commitment by Texton                                                                $5 million


4. CATEGORISATION OF THE TRANSACITON

   The capital commitment to Cadre is a category 2 transaction in terms of the JSE Listings
   Requirements and accordingly does not require approval by shareholders.




SANDTON
14 March 2022


CORPORATE ADVISER AND SPONSOR TO TEXTON
Investec Bank Limited

Date: 14-03-2022 11:32:00
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