BMO Real Estate Investments Ltd Trading Update and Net Asset Value
January 27 2021 - 01:01AM
UK Regulatory
TIDMBREI
To: Company Announcements
Date: 27 January 2021
Company: BMO Real Estate Investments Limited
LEI: 231801XRCB89W6XTR23
Subject: Trading Update and Net Asset Value
Background
BMO Real Estate Investments Limited ("BREI" or the "Company") provides an
update on trading and the net asset value as at 31 December 2020.
Net Asset Value ('NAV')
The unaudited NAV per share of BREI as at 31 December 2020 was 98.1 pence. This
represents an increase of 3.5 per cent from the NAV per share as at 30
September 2020 of 94.8 pence and a NAV total return for the quarter of 4.4 per
cent.
The NAV is based on the external valuation of the Company's property portfolio
prepared by Cushman & Wakefield.
The NAV is calculated under International Financial Reporting Standards
("IFRS").
The NAV includes all income to 31 December 2020 and is calculated after the
deduction of all dividends paid prior to that date.
Breakdown of NAV movement
Set out below is a breakdown of the change to the unaudited net asset value per
share calculated under IFRS over the period from 30 September 2020 to 31
December 2020.
Pence % of
per opening
share NAV
Net asset value per share as at 30 September 2020 94.8
Unrealised movement in valuation of property 3.1 3.3*
portfolio (including the effect of gearing)
Movement in revenue reserves 0.2 0.2
Net asset value per share as at 31 December 2020 98.1 3.5
* The un-geared increase in the valuation of the property portfolio over the
quarter to 31 December 2020 was 2.4%.
Share Price
The share price was 61.0 pence per share as at 31 December 2020, which
represented a discount of 37.8 per cent to the NAV per share announced above.
The share price total return for the quarter was 19.8 per cent.
Performance
Overall, the property market delivered positive total returns over the quarter,
largely driven by a strong performance from industrials and distribution.
Performance was polarised, with town centre retail and leisure remaining under
considerable pressure and offices faltering. Total return performance turned
positive for retail warehousing. Despite a strong end to the year for parts of
the market, buoyed by positive developments on vaccines and the resolution of
Brexit, overall sentiment is cautious, with the re-imposition of lockdown
restrictions towards the end of the period increasing uncertainty around the
path to recovery.
Capital growth for the Company's portfolio was 2.4 per cent over the period,
driven by a 44.9 per cent weighting to Industrial and logistics properties, a
sector for which investor demand strengthened still further, alongside a
continuation of good news on occupational take-up. There was further downward
pressure on valuations in the Company's high street retail portfolio
(weighting: 9.2 per cent), reflective of continued worsening sentiment towards
the sector, linked to lower rental recovery, and further high-profile tenant
failures. The retail warehouse portfolio (weighting: 16.2 per cent) continues
to be less affected, being let primarily to 'essential', convenience, and
non-fashion occupiers. Market demand for long let foodstore assets was a factor
behind the significant contribution to performance made by the development to a
supermarket at Enterprise Way, Luton over the period. Debate around the future
shape of the office market (weighting: 29.7 per cent) continues and there has
been a drop off in leasing activity, particularly in London, which has again
weighed on performance for this sector.
The portfolio remains substantially let to a highly diverse tenant base. The
allocation to Industrial, logistics and distribution assets in the south east
and the absence of any exposure to the leisure and hospitality sectors are
significant factors in the comparatively high level of the Company's rent
collection. The focus remains on ensuring that rental income is recovered where
it is due and can be paid, but also in working with our occupiers to deliver
constructive outcomes in what are immensely challenging times for many
businesses.
Rent Collection
We summarise below our current rent collection outcome for Quarter's 2 to 4 of
2020 as well as providing an update on collection to date for Quarter 1 2021.
Q2 to Q4 2020 collection (billed between 26 March 2020 and 1 December 2020)
Overall collection over the nine-month period is at 94.4 per cent and the
breakdown is detailed below:
Rent Billed Collected
(£m) (%)
Quarter 2 4.1 93.6
Quarter 3 4.0 94.1
Quarter 4 4.3 95.5
Total 12.4 94.4
Collection by sector:
Rent Billed Collected
(£m) (%)
Industrial, logistics and 4.4 100.0
distribution
Offices 3.6 100.0
Retail Warehouse 2.7 96.3
Retail 1.7 66.3
Total 12.4 94.4
Breakdown of uncollected rent:
Total Outstanding Rent Billed
(£m) (%)
Agreed deferments 0.0 0.2
Rent waived 0.3 2.2
Unresolved / in 0.3 2.1
discussion
Bad Debts 0.1 1.1
Uncollected Rent 0.7 5.6
Quarter 1 2021 Collection (to be billed between 25 December 2020 and 1 March
2021)
The Company has billed c.£3.6m of its quarter 1 rent due from 25 December to
date and has collected 82.1 per cent of this total amount (compared to 96.8 per
cent for the same period last year and 83.2 per cent after the same number of
days last quarter). This percentage will increase as tenants with whom we have
agreed monthly payment arrangements, but have been billed quarterly, pay
further instalments. The total quarterly rent amounts to c.£4.2 million with
further contractual billing dates during the course of January and February.
Given early progress, collection rates are expected to be similar to those for
the previous quarter with many of the retail occupiers paying monthly. Such
flexible payment terms have also been granted to selected occupiers within
other sectors where it continues to be appropriate to offer cashflow assistance
at this time.
Collection by sector:
Rent Billed Collected
(£m) (%)
Industrial, logistics and 1.5 93.0
distribution
Offices 0.8 94.2
Retail Warehouse 0.8 69.4
Retail 0.5 51.3
Total 3.6 82.1
Breakdown of uncollected rent:
Total Outstanding Rent Billed
(£m) (%)
Monthly payments* 0.2 6.0
Rent waived 0.0 0.2
Unresolved / in 0.4 11.7
discussion
Uncollected Rent 0.6 17.9
* tenants who have been billed for the quarter but are paying in monthly
instalments.
Cash and Borrowings
The Company has approximately £14.1 million of available cash and an undrawn
revolving credit facility of £20 million. The £90 million long-term debt with
Canada Life and the undrawn loan facility with Barclays do not need to be
refinanced until November 2026 and March 2025 respectively. As at 31 December
2020, the LTV was 25.8 per cent and there was significant headroom under debt
covenants.
Dividend
On 2 December 2020, the Company announced an increased quarterly dividend
payment of 0.85 pence per ordinary share in respect of the financial year ended
30 June 2020, which was paid to shareholders on 31 December 2020. The Board
will continue to monitor rental receipts and earnings closely and keep the
future level of dividends under review.
Portfolio Analysis £m % of % capital
portfolio value
as at 31 movement
Dec 2020 in quarter
Offices 94.3 29.7 0.5
* West End 28.0 8.8 (1.2)
* South East 39.0 12.3 2.4
* Rest of UK 27.3 8.6 (0.4)
Industrial, logistics and distribution 142.7 44.9 4.9
* South East 142.7 44.9 4.9
Standard Retail 29.3 9.2 (4.4)
* West End 7.1 2.2 (8.7)
* Rest of London 1.8 0.6 (2.8)
* South East 14.9 4.7 (2.7)
* Rest of UK 5.5 1.7 (3.9)
Retail Warehouse 51.5 16.2 3.3
Total Property 317.8 100.0 2.4
Summary Balance Sheet
£m Pence % of
per Net
share Assets
Property Portfolio per Valuation Report 317.8 132.0 134.6
Adjustment for lease incentives (3.4)
(1.4) (1.4)
Fair Value of Property Portfolio 314.4 130.6 133.2
Cash 14.1 5.9 6.0
Trade and other receivables 6.8 2.8 2.9
Trade and other payables (9.6) (4.0) (4.1)
Interest-bearing loans (89.6) (37.2) (38.0)
Net Assets at 31 December 2020 236.1 98.1 100.0
The property portfolio will next be valued by an external valuer during March
2021 and the net asset value per share as at 31 March 2021 will be announced in
April 2021.
Important information
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014. Upon the publication of this announcement via Regulatory
Information Service this inside information is now considered to be in the
public domain.
Enquiries:
The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
Tel: 01481 745001
Peter Lowe
Scott Macrae
BMO Investment Business Ltd
Tel: 0207 628 8000
END
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