BMO Real Estate Investments Ltd Net Asset Value(s)
January 27 2020 - 7:21AM
UK Regulatory
TIDMBREI
To: Company Announcements
Date: 27 January 2020
Company: BMO Real Estate Investments Limited
LEI: 231801XRCB89W6XTR23
Subject: Net Asset Value
Net Asset Value
The unaudited net asset value per share of BMO Real Estate Investments Limited
("BREI") as at 31 December 2019 was 102.6 pence. This represents a decrease of
1.3 per cent from the net asset value per share as at 30 September 2019 of
104.0 pence and a NAV total return for the quarter of -0.1 per cent.
The net asset value is based on the external valuation of the Group's property
portfolio prepared by Cushman & Wakefield.
The net asset value is calculated under International Financial Reporting
Standards ("IFRS").
The net asset value includes all income to 31 December 2019 and is calculated
after deduction of all dividends paid prior to that date. It does not include
a provision for the dividend for the quarter to 31 December 2019, which is
expected to be paid in March 2020.
Share Price
The share price was 84.0 pence per share at 31 December 2019, which represented
a discount of 18.1 per cent to the NAV per share announced above. The share
price total return for the quarter was 4.5 per cent.
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 2019 to 31
December 2019.
Pence % of
per opening
share NAV
Net asset value per share as at 30 September 2019 104.0
Unrealised movement in valuation of property (0.7) (0.6)*
portfolio (including the effect of gearing)
Realised losses on sale of properties (0.2) (0.2)
Movement in revenue reserves (0.5) (0.5)
Net asset value per share as at 31 December 2019 102.6 (1.3)
* The un-geared decrease in the valuation of the property portfolio over the
quarter to 31 December 2019 was 0.7%.
The net gearing as at 31 December 2019 was 24.2% #
# Bank debt (less net current assets) divided by fair value of investment
properties
Performance
The Company's property portfolio delivered an ungeared total return of 0.5 per
cent over the quarter to December, outperforming the MSCI UK Monthly Property
Index which delivered 0.3 per cent over the same period. The capital returns on
the portfolio were -0.8 per cent, versus a 1.0 per cent fall in the MSCI UK
Monthly Property Index for standing investments. Income of 1.3 per cent remains
the key driver of returns.
Occupational demand for the Company's property remains resilient and the
portfolio has a void rate of 2 per cent at the calendar year end, with the
vacancy being entirely on account of the refurbishment of an office property
where a pre-let to the government on part of the property has already been
contractually agreed. The average weighted unexpired lease term remains c.6
years.
Office and Industrial continue to deliver positive returns, with the offices
returning 2.8 per cent over the quarter and industrial returning 1.4 per cent.
Both segments of the portfolio recorded capital value growth as a result of
positive sentiment for those markets and underlying asset management
initiatives. Office assets make up 29 per cent of the total portfolio with the
Industrials (all located in the South East) now 42 per cent of the portfolio by
value.
Standard Retail, 11.7 per cent of the portfolio by value at December suffered
capital value falls of 5.0 per cent with the Company's retail warehouse assets,
17.7 per cent of assets by value, falling 3 per cent. Despite recent
transactional evidence supporting at least some liquidity for retail assets,
sentiment remains particularly negative towards this sector, with continued
uncertainty from the occupier markets and overall transaction volumes
depressed.
Property Sales
During the quarter, the Company successfully completed the disposal of two
retail assets for GBP13.65 million, against a backdrop of challenging market
conditions for the sector.
The first, a multi-let high street block on the Parade and Warwick Street in
Leamington Spa was sold for GBP6.9 million in November 2019. The asset comprises
12 retail units occupied by tenants including McDonalds, Tiger and Savers, with
an average lease term of 2.8 years to break.
The second, a retail warehouse in Rotherham, was sold for GBP6.75 million in
December 2019 to an owner occupier. The unit was occupied by Homebase under the
terms of their August 2018 CVA.
In aggregate these sales were secured at 1 per cent below the Q3 2019 market
valuation.
The conclusion of these disposals continues the good progress that has been
made in prudently down-weighting exposure to the retail sector. Proceeds will
be used to fund asset management initiatives, opportunistic acquisitions and
the reduction of borrowings.
Portfolio Analysis GBPm % of % capital
portfolio value
as at 31 movement
December in quarter
2019
Offices 93.3 28.6 1.5
* West End 29.5 9.0 0.5
* South East 36.2 11.1 3.6
* Rest of UK 27.6 8.5 (0.2)
Industrial 136.6 42.0 0.3
* South East 136.6 42.0 0.3
Standard Retail 38.2 11.7 (5.3)
* West End 8.4 2.6 0.0
* Rest of London 2.8 0.8 (6.8)
* South East 19.4 6.0 (6.4)
* Rest of UK 7.6 2.3 (7.3)
Retail Warehouse 57.6 17.7 (3.2)
Total Property 325.7 100.0 (0.7)
Summary Balance Sheet
GBPm Pence % of
per Net
share Assets
Property Portfolio per Valuation Report 325.7 135.3 131.9
Adjustment for lease incentives (3.3)
(1.4) (1.4)
Fair Value of Property Portfolio 322.4 133.9 130.5
Cash 16.6 6.9 6.7
Trade and other receivables 5.0 2.1 2.1
Trade and other payables (7.4) (3.1) (3.0)
Interest-bearing loans (89.6) (37.2) (36.3)
Net Assets at 31 December 2019 247.0 102.6 100.0
The property portfolio will next be valued by an external valuer during March
2020 and the net asset value per share as at 31 March 2020 will be announced in
April 2020.
This announcement contains inside information.
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
Fax: 01481 745051
Peter Lowe
Scott Macrae
BMO Investment Business Ltd
Tel: 0207 628 8000
Fax: 0131 225 2375
END
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