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Share Name Share Symbol Market Type Share ISIN Share Description
Bmo Real Estate Investments Limited LSE:BREI London Ordinary Share GB00B012T521 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 76.80 76.00 77.00 77.00 76.00 76.60 485,053 16:35:10
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Real Estate Investment & Services 17.0 -8.9 -3.8 - 184

BMO Real Estate Investments Ltd Interim Results 31.12.2020

22/03/2021 7:00am

UK Regulatory (RNS & others)


 
TIDMBREI 
 
To:                   RNS 
 
Date:                22 March 2021 
 
From:               BMO Real Estate Investments Limited 
 
LEI:                  231801XRCB89W6XTR23 
 
Interim results in respect of the six-month period ended 31 December 2020 
 
  *      Net asset value total return* of 3.0 per cent 
  *      Portfolio ungeared total return* of 3.4 per cent 
  *      Annualised dividend yield* of 4.8 per cent based on the period end 
    share price 
  *      Dividend cover* of 118.9 per cent for the period 
 
* See Alternative Performance Measures 
 
The Chairman, Vikram Lall, stated: 
 
Since we issued our last Annual Report Brexit has happened with Britain leaving 
the EU, and a vaccination programme is underway to combat the Covid-19 
pandemic. However, much uncertainty remains in relation to the longer-term 
effect of Brexit, and to the time it will take for the UK economy and 
employment levels to recover from the severe downturn of 2020. Retail and 
hospitality distress continues. There is also much debate over the effects of 
working from home on future occupancy levels of UK offices. 
 
The Group's performance reflects these challenging conditions in the UK 
commercial property market with capital values decreasing by 1.1 per cent. The 
net asset value ('NAV') total return per share for the period was 3.0 per cent 
and the NAV per share at the period end was 98.1 pence. 
 
The share price increased by 8.9 per cent over the six months to 61 pence per 
share, giving a share price total 
 
return of 11.6 per cent, with the discount to NAV narrowing to 37.8 per cent at 
the period end, compared to a discount of 42.0 per cent as at 30 June 2020. The 
share price has increased significantly since the period end and at the date of 
writing is at 70p pence per share. 
 
Rent Collection 
 
It has been a difficult period for rent collection since the Covid-19 outbreak. 
However, the Group's rent collection for Quarter's 2 to 4 of 2020 is currently 
ahead of expectations at 94.5 per cent. The Group's collection statistics for 
the first quarter of 2021 are currently at 90 per cent and the expectation is 
that the final collection statistics will be at a similar level to those 
experienced in the previous three quarters. 
 
Property Market 
 
The UK commercial property market delivered a total return of 1.1 per cent in 
the six months to 31 December 2020 with capital falls of 1.1 per cent, as 
measured by the MSCI UK Quarterly Property Index ('MSCI'). The market showed 
some signs of steadying following the initial shock from the pandemic and 
related economic lockdowns, but sentiment remained cautious. 
 
The retail sector remained weak and delivered a total return of -4.0 per cent, 
with both occupier and investor sentiment depressed. Retail warehousing was 
less affected than town centre retailing. Industrials delivered an 8.6 per cent 
total return, pulling well ahead of other sectors, with the South-East 
out-performing, supported by strong occupier take-up and investor demand. The 
Office market faltered to record a -0.6 total return, as concerns about a 
reduction in office demand, due to a permanent shift to working from home, 
gained ground. Total returns for alternatives were 0.7 per cent in the 
six-month period, led by residential property. 
 
The current cycle has affected rent collection rates, especially in retail and 
leisure but with offices and industrial more resilient. Investment activity 
staged some recovery, to move above the long-term average by year-end, helped 
by overseas buying and with transactions focused on Central London offices and 
industrials. The annual income return was stable at 4.5 per cent over the 
period. 
 
Portfolio 
 
The Group's property portfolio delivered a total return of 3.4 per cent over 
the six-month period, compared with 1.1 per cent for MSCI. Both capital and 
income returns were ahead of the Index. Over the twelve months to December 2020 
the Group's property portfolio produced an ungeared total return of 1.4 per 
cent, 3.4 per cent of outperformance against MSCI which returned -2.0 per cent. 
 
At the All Property level valuations were again under pressure though there was 
much variance in subsector performance. Favourable portfolio composition led to 
capital growth of 0.9 per cent for the Company's assets over the period, 
alongside an income return of 2.6 per cent. The portfolio continues to deliver 
an above market income yield and a below market vacancy rate of 5.3 per cent, 
much of which is attributable to ongoing project work rather than structural 
void. Rent collection remains the overriding focus in the current environment 
with recovery over the period in excess of 94 per cent. Average unexpired lease 
length has remained steady at six years. 
 
The portfolio's Industrial assets were unsurprisingly the main driver for 
performance over the period, delivering 7.8 per cent as a consequence of both 
yield hardening and rental growth. This is reflective of their core South-East, 
and predominantly urban locations, which continue to experience high levels of 
occupier demand. The Industrial assets at Hemel Hempstead, Banbury and 
Bracknell, and the multi-let estate at Colnbrook, Heathrow were amongst the top 
performers over the period. The investment in this segment of the market is now 
45 per cent of assets by value. 
 
Office assets delivered a positive return of 0.6 per cent over the period, 
albeit with capital falls, and performance led by asset management initiatives 
in the south east, particularly at County House, Chelmsford. 
 
The Company's retail assets delivered a marginally negative total return of 
-0.5 per cent over the six months, outperforming the MSCI Index of -4.0 per 
cent by some margin. This relative outperformance was entirely on account of 
the strong showing of, and the relative weighting to low rented, essential, 
non-fashion and convenience led retail warehousing. Relative performance was 
improved further by the absence of shopping centres and department stores and 
underweight exposure to hospitality and leisure. 
 
The Company has reduced its exposure to retail in recent years with eleven 
sales since 2015, bringing the weighting to the High Street down to 9 per cent. 
No purchases or sales were completed over the period, with the focus very much 
on protection of the balance sheet, given the uncertainty surrounding the 
outcomes from the pandemic. Notwithstanding this, and despite the fact that the 
Company's retail property is fully let, this element of the portfolio remains 
under continual review, evidenced by the fact that the two high street units at 
Winchester have recently been sold for £2.9 million. While the Board remains 
wary of illiquidity in parts of the high street market, we have continued to 
see interest in the Company's assets which tend to be in the smaller lot sizes. 
There is the potential for continued opportunistic disposals from the sector 
over the coming months. In terms of acquisitions the existing cash balance is 
healthy with further cash availability in the form of an undrawn credit 
facility. With some comfort from rent collection trends, the Company is well 
placed to explore potential acquisitions to add to revenue. 
 
Borrowings and Cash 
 
The Group currently has borrowings of £90 million from a non-amortising term 
loan facility agreement with Canada Life Investments which expires in November 
2026. There is also a £20 million 5-year revolving credit facility agreement 
with Barclays Bank plc which is currently undrawn and is available until March 
2025. The covenants on both facilities are comfortably met. Net gearing 
represented 25.8 per cent of the investment properties of the Group as at 31 
December 2020. The weighted average interest rate (including amortisation of 
refinancing costs) on the Group's total current borrowings is 3.1 per cent. The 
Company continues to maintain a prudent attitude to gearing. 
 
The Group had £14.1 million of cash available at 31 December 2020 and the £20 
million revolving credit facility also available if required. 
 
Dividends and Dividend Cover 
 
Given the significant economic risks and continuing uncertainty regarding the 
path of Covid-19, the Board made the decision to cut the quarterly dividend by 
50 per cent in June 2020 to 0.625 pence per share. The Board was also mindful 
that the level of dividend paid in the previous financial year was 84.3 per 
cent covered by profits. 
 
As mentioned above, rent collection rates have been comparatively strong and 
the first quarterly interim dividend for the year ended 30 June 2021, paid in 
December 2020, was increased by 36 per cent to 0.85 pence per share. A second 
interim dividend of 0.85 pence per share will be paid on 31 March 2021 to 
shareholders on the register on 12 March 2021. The Board will continue to 
monitor rental receipts and earnings closely and keep the future level of 
dividends under review. 
 
Given the reduced level of dividends being paid out in the six months, the 
dividend cover was at 118.9 per cent, compared with a dividend cover of 69.6 
per cent for the equivalent period last year. 
 
Board Changes 
 
As indicated in our last Annual Report, Andrew Gulliford decided to retire as a 
director, and he did so on 10 March 2021. The board thanks Andrew for the 
significant contribution he has made to the group since its inception in 2004. 
We will miss his extensive experience of the UK commercial property market, his 
detailed knowledge of the group's portfolio and his sage advice. 
 
On 10 March 2021, Rebecca Gates was appointed to the Board. Rebecca is an 
experienced property professional who has spent the last 23 years of her career 
in a variety of roles within the real estate investment 
 
management business and is currently Head of UK Property Asset Management for 
LaSalle Investment 
 
Management. 
 
Environmental, Social and Governance ('ESG') 
 
The unprecedented conditions caused by the coronavirus pandemic has impacted 
everyone in how we go about our daily lives and collectively in the way we 
interact with each other. 
 
The Company has strived to make its contribution by engaging with its 
occupiers, and looking to support and be flexible with them as they strive to 
keep their businesses intact through the pandemic, to liaising with them in the 
development of Covid assessments and measures so they can remain operational 
whilst complying with government guidelines. These events have sharpened our 
awareness of occupiers as an important stakeholder group. 
 
Whilst the Company's focus on the social element of ESG has been strong during 
the period, this has not been at the expense of environmental aspirations. The 
Company has been actively progressing its approach to environmental risk and 
opportunity during recent months and has been working hard in preparation for 
setting and publishing its net zero carbon ambition in 2021 
 
ESG remains a key aspect of the Company's forward strategy. The unprecedented 
events of 2020 have given great insight and understanding of both the power of 
nature and of the human need, and the extent to which our communities are 
intrinsically woven into our activities. A short update on our progress is 
provided below and we will provide a further summary of progress in our Annual 
Report later this year, with a more detailed insight of our performance in our 
2021 ESG Report. 
 
Outlook 
 
In these uncertain times the diversification of the Company's asset and tenant 
base should provide relative resilience. This has been demonstrated in the 
encouraging rent collection and vacancy statistics achieved over the course of 
the pandemic thus far. We continue to expect disruption to revenues as lockdown 
and associated support eases, with the impact most meaningful for the retail 
and leisure markets, although offices will not be entirely immune. Against this 
background and despite the prolonged uncertainty, the Company has sufficient 
cash resources and a portfolio of buildings that continue to experience good 
levels of occupier demand. 
 
Environmental, Social and Governance ("ESG") 
 
Highlights for the half year period to 31 December 2020 
 
The Company has continued to advance the implementation of its ESG Strategy 
over the period with progress being made in a number of areas. The coronavirus 
pandemic has significantly impacted occupational use of some assets and as such 
made key indicators around absolute energy use and carbon emissions difficult 
to interpret. However, on a like-for-like basis, comparing landlord procured 
energy in the first half of the current reporting year with the first half of 
the previous reporting year, a 15 per cent reduction in energy use can be 
determined, equating to some 19 per cent in terms of carbon emissions. This can 
almost certainly be attributed to the lower occupation rates seen in 
multi-occupied assets on account of covid related restrictions. The impact a 
new normal return to work might have on these indicators will be interesting to 
observe. 
 
The distribution profile of Energy Performance Certificate (EPC) ratings 
remains broadly unchanged across the portfolio. The overall number of 
certificates held has increased by four on account of demise changes but 
exposure to lower F & G rated areas remains unchanged at 11 representing 5 per 
cent in terms of estimated rental value. 
 
The Company engaged WSP UK Limited to provide advice and technical expertise on 
the assessment and evaluation of physical climate risks and opportunities 
through detailed scenario modelling and analysis. Outputs from the modelling 
have now been delivered in the form of detailed property level dashboards for 
practical incorporation into individual asset business plans and to support 
disclosures under the Taskforce for Climate-related Financial Disclosures 
(TCFD) initiative. 
 
We are pleased to report that the Company submitted to the 2020 Global Real 
Estate Sustainability Benchmark (GRESB) survey and maintained its year on year 
improvement trajectory by achieving a score of 64, representing a 6.6 per cent 
increase in the previous year's result of 60. The Fund also improved its rating 
in GRESB's public disclosure analysis, achieving an A grade indicating the 
highest level of reporting and transparency. 
 
The Company is also delighted to report the achievement of a Gold Award from 
the European Public Real estate Association (EPRA) for the standard of its 
disclosures in its 2020 Annual ESG Report. 
 
These indicators confirm that good progress is being made and that the Company 
has a solid platform from which to continue making further incremental 
improvements. 
 
 
 
                      BMO Real Estate Investments Limited 
           Condensed Consolidated Statement of Comprehensive Income 
 
                                           Six months to  Six months to         Year to 
                                             31 December    31 December         30 June 
                                                    2020           2019            2020 
                                             (unaudited)    (unaudited)       (audited) 
 
                                Notes              £'000          £'000 
                                                                             £'000 
 
Revenue 
 
Rental income                                      8,283          8,305          17,011 
 
Total revenue                                      8,283          8,305          17,011 
 
 
Gains/(Losses)on investment 
properties 
 
Losses on sale of investment          6                -          (987)           (991) 
properties realised 
Unrealised gains/(losses) on                       2,795        (2,473)        (17,031) 
revaluation of investment             6 
properties 
 
Total income                                      11,078          4,845         (1,011) 
 
Expenditure 
 
Investment management fee               2          (974)        (1,318)         (2,261) 
 
Other expenses                          3        (1,323)          (884)         (2,146) 
 
Total expenditure                                (2,297)        (2,202)         (4,407) 
 
Net operating profit/(loss) before                 8,781          2,643         (5,418) 
finance costs and taxation 
 
Net finance costs 
 
Interest receivable                                    2             14              34 
 
Finance costs                                    (1,680)        (1,781)         (3,507) 
 
                                                 (1,678)        (1,767)         (3,473) 
 
Net profit/(loss) from ordinary                    7,103            876         (8,891) 
activities before taxation 
 
Taxation on profit on ordinary                      (87)          (147)           (258) 
activities 
 
Profit/(loss) for the period                       7,016            729         (9,149) 
 
Basic and diluted earnings per          5           2.9p           0.3p          (3.8p) 
share 
 
 
 
 
                      BMO Real Estate Investments Limited 
                     Condensed Consolidated Balance Sheet 
 
                                         31 December     31 December          30 June 
                                                2020            2019             2020 
                                         (unaudited)     (unaudited)        (audited) 
                              Notes            £'000           £'000            £'000 
 
Non-current assets 
 
Investment properties         6              314,368         322,405          308,734 
 
Trade and other receivables                    3,726           3,398            3,788 
 
                                             318,094         325,803          312,522 
 
Current assets 
 
Trade and other receivables                    3,113           1,714            3,437 
 
Cash and cash equivalents                     14,093          16,618           13,726 
 
                                              17,206          18,332           17,163 
 
Total assets                                 335,300         344,135          329,685 
 
Current liabilities 
 
Trade and other payables                     (8,462)         (6,552)          (6,319) 
 
Tax payable                                     (87)           (147)            (258) 
 
                                             (8,549)         (6,699)          (6,577) 
 
Total assets less current                    326,751         337,436          323,108 
liabilities 
 
Non-current liabilities 
 
Interest-bearing bank loans   7             (89,640)        (89,666)         (89,542) 
 
Trade and other payables                     (1,039)           (773)            (960) 
 
                                            (90,679)        (90,439)         (90,502) 
 
Net assets                                   236,072         246,997          232,606 
 
Represented by: 
 
Share capital                 9                2,407           2,407            2,407 
 
Special distributable reserve                177,161         177,161          177,161 
 
Capital reserve                               54,917          66,684           52,122 
 
Revenue reserve                                1,587             745              916 
 
Equity shareholders' funds                   236,072         246,997          232,606 
 
Net asset value per share     10               98.1p          102.6p            96.6p 
 
 
 
 
                      BMO Real Estate Investments Limited 
             Condensed Consolidated Statement of Changes in Equity 
 
For the period ended 31 December 2020 (unaudited) 
 
 
                                              Special 
                                        Distributable    Capital    Revenue 
                         Share Capital        Reserve    Reserve    Reserve    Total 
                                 £'000          £'000      £'000      £'000    £'000 
 
 
At 1 July 2020                   2,407        177,161     52,122        916  232,606 
 
 
Profit for the period                -              -          -      7,016    7,016 
 
Dividends paid                       -              -          -    (3,550)  (3,550) 
 
Transfer in respect of 
gains on investment                  -              -      2,795    (2,795)        - 
properties 
 
 
At 31 December 2020              2,407        177,161     54,917      1,587  236,072 
 
For the period ended 31 December 2019 (unaudited) 
 
 
                                              Special 
                                        Distributable    Capital    Revenue 
                                 Share        Reserve    Reserve    Reserve    Total 
                               Capital          £'000      £'000      £'000    £'000 
                                 £'000 
 
 
At 1 July 2019                   2,407        177,161     70,144      2,574  252,286 
 
 
Profit for the                       -              -          -        729      729 
period 
 
Dividends paid     4                 -              -          -    (6,018)  (6,018) 
 
Transfer in 
respect of losses                    -              -    (3,460)      3,460        - 
on investment 
properties 
 
 
At 31 December                   2,407        177,161     66,684        745  246,997 
2019 
 
For the year ended 30 June 2020 (audited) 
 
 
                                              Special 
                                        Distributable    Capital    Revenue 
                         Share Capital        Reserve    Reserve    Reserve     Total 
                                 £'000          £'000      £'000      £'000     £'000 
 
 
At 1 July 2019                   2,407        177,161     70,144      2,574   252,286 
 
 
Loss for the year                    -              -          -    (9,149)   (9,149) 
 
Dividends paid      4                -              -          -   (10,531)  (10,531) 
 
Transfer in respect 
of losses on                         -              -   (18,022)     18,022         - 
investment 
properties 
 
 
At 30 June 2020                  2,407        177,161     52,122        916   232,606 
 
 
 
                      BMO Real Estate Investments Limited 
                Condensed Consolidated Statement of Cash Flows 
 
                                                  Six months to Six months to   Year to 
                                                    31 December  31 December     30 June 
                                           Notes           2020          2019       2020 
                                                    (unaudited)   (unaudited)  (audited) 
 
                                                          £'000         £'000      £'000 
 
Cash flows from operating activities 
 
Net profit/(loss) for the period before                   7,103           876    (8,891) 
taxation 
 
Adjustments for: 
 
     Losses on sale of investment            6                -           987        991 
properties 
       realised                              6          (2,795)         2,473     17,031 
     Unrealised (gains)/losses on 
revaluation of 
       investment properties 
 
     Realised capital contribution           6                -          (12)       (12) 
 
     Decrease/(increase) in operating 
trade and other                                             386         1,699      (494) 
      receivables 
 
     Increase in operating trade and other                2,221           455        423 
payables 
 
     Interest received                                      (2)          (14)       (34) 
 
     Finance costs                                        1,680         1,781      3,507 
 
                                                          8,593         8,245     12,521 
 
     Taxation paid                                        (258)         (295)      (295) 
 
Net cash inflow from operating activities                 8,335         7,950     12,226 
 
Cash flows from investing activities 
 
Capital expenditure                          6          (2,839)       (1,184)    (2,070) 
 
Purchase of investment properties            6                -         (718)      (723) 
 
Sale of investment properties                6                -        15,402     15,402 
 
Interest received                                             2            14         34 
 
Net cash (outflow)/inflow from investing                (2,837)        13,514     12,643 
activities 
 
Cash flows from financing activities 
 
Dividends paid                                          (3,550)       (6,018)   (10,531) 
 
Bank loan interest paid                                 (1,581)       (1,686)    (3,470) 
 
Bank loan repaid, net of costs - Barclays                     -       (7,000)    (7,000) 
 
Net cash outflow from financing activities              (5,131)      (14,704)   (21,001) 
 
Net increase in cash and cash equivalents                   367         6,760      3,868 
 
Opening cash and cash equivalents                        13,726         9,858      9,858 
 
Closing cash and cash equivalents                        14,093        16,618     13,726 
 
 
 
                      BMO Real Estate Investments Limited 
           Notes to the Condensed Consolidated Financial Statements 
                    for the six months to 31 December 2020 
 
1.   General information 
 
The condensed consolidated financial statements have been prepared in 
accordance with the Disclosure Guidance and Transparency Rules of the United 
Kingdom Financial Conduct Authority and IAS 34 'Interim Financial Reporting'. 
The condensed consolidated financial statements do not include all of the 
information required for a complete set of IFRS financial statements and should 
be read in conjunction with the consolidated financial statements for the Group 
for the year ended 30 June 2020 which were prepared under full IFRS 
requirements. The accounting policies used in preparation of the condensed 
consolidated financial statements are consistent with those of the consolidated 
financial statements of the Group for the year ended 30 June 2020. 
 
2.   Investment management fee               Six months to  Six months to 
                                               31 December    31 December     Year to 
                                                      2020           2019     30 June 
                                                     £'000          £'000        2020 
                                                                                £'000 
 
Investment management fee - basic fee                  974          1,044       1,995 
 
Investment management fee - performance                  -            274         266 
fee 
 
                                                       974          1,318       2,261 
 
 
 
3.   Other expenses                          Six months to  Six months to 
                                               31 December    31 December     Year to 
                                                      2020           2019     30 June 
                                                     £'000          £'000  2020 £'000 
 
Direct operating expenses of let rental                358            358         647 
property 
 
Direct operating expenses of vacant                    272             14         205 
property 
 
Provision for bad debts                                209             69         413 
 
Valuation and other professional fees                  132            126         249 
 
Directors' fees                                         80             80         159 
 
Administrative fee                                      55             55         110 
 
Other expenses                                         217            182         363 
 
                                                     1.323            884       2,146 
 
 
4.   Dividends 
 
                         Six months to       Six months to      Year ended 30 June 
                        31 December 2020    31 December 2019           2020 
 
                                     Rate                 Rate                  Rate 
                          £'000   (pence)    £'000     (pence)       £'000   (pence) 
 
Property Income 
Distributions: 
 
Fourth interim for the    1,504     0.625    3,009        1.25       3,009      1.25 
prior year 
 
First interim             2,046     0.850    3,009        1.25       3,009      1.25 
 
Second interim                -         -        -           -       3,009      1.25 
 
Third interim                 -         -        -           -       1,504     0.625 
 
                          3,550     1.475    6,018        2.50      10,531     4.375 
 
A second interim dividend for the year to 30 June 2021, of 0.85 pence per 
share, will be paid on 31 March 2021 to shareholders on the register at close 
of business on 12 March 2021. 
 
5.   Earnings per share                        Six months to  Six months to     Year to 
                                                 31 December    31 December     30 June 
                                                        2020           2019        2020 
 
Net profit/(loss) attributable to ordinary 
shareholders (£'000)                                   7,016            729     (9,149) 
 
Weighted average of ordinary shares in issue 
during period                                    240,705,539    240,705,539 240,705,539 
 
Return per share                                        2.9p           0.3p      (3.8p) 
 
Earnings for the six months to 31 December 2020 should not be taken as a guide 
to the results for the year to 30 June 2021. 
 
6.   Investment properties 
 
                                        Six months to    Six months to      Year to 
                                          31 December      31 December      30 June 
                                                 2020             2019         2020 
                                                £'000            £'000        £'000 
 
Freehold and leasehold 
properties 
Opening market value                          312,285          343,550      343,550 
 
Capital expenditure                             2,839            1,184        2,070 
 
Purchase                                            -              718          723 
 
Sales    - net proceeds                             -         (15,402)     (15,402) 
             - losses on sales                      -          (9,367)      (9,372) 
 
Unrealised losses realised                          -            8,380        8,381 
during the period 
 
Unrealised gains on investment                 10,609            4,048        3,951 
properties 
Unrealised losses on investment               (7,814)          (6,521)     (20,982) 
properties 
 
Realised capital contribution                       -               12           12 
Accrued selling costs                               -                -            - 
 
Movement in lease incentive                      (94)            (877)        (646) 
receivable 
 
Closing market value                          317,825          325,725      312,285 
 
Adjustment for lease incentives               (3,457)          (3,320)      (3,551) 
 
Balance sheet carrying value                  314,368          322,405      308,734 
 
 
 
 
                                                   Six months   Six months   Year to 
                                                        to 31        to 31   30 June 
                                                     December     December      2020 
                                                         2020         2019     £'000 
                                                        £'000        £'000 
 
Losses on sale                                              -      (9,367)   (9,372) 
 
Unrealised losses realised during the year                  -        8,380     8,381 
 
Losses on sale of investment properties realised            -        (987)     (991) 
 
 
 
                                                   Six months   Six months   Year to 
                                                        to 31        to 31   30 June 
                                                     December     December      2020 
                                                         2020         2019     £'000 
                                                        £'000        £'000 
 
Unrealised gains on investment properties              10,609        4,048     3,951 
 
Unrealised losses on investment properties            (7,814)      (6,521)  (20,982) 
 
Unrealised gains/(losses) on revaluation of             2,795      (2,473)  (17,031) 
investment properties 
 
 
All the Group's investment properties were valued as at 31 December 2020 by 
qualified professional valuers working in the company of Cushman & Wakefield. 
All such valuers are chartered surveyors, being members of the Royal 
Institution of Chartered Surveyors ('RICS').  There were no significant changes 
to the valuation techniques used during the period and these valuation 
techniques are detailed in the consolidated financial statements as at and for 
the year ended 30 June 2020.  The market value of these investment properties 
amounted to £317,825,000 (31 December 2019: £325,725,000; 30 June 2020: £ 
312,285,000), however an adjustment has been made for lease incentives of £ 
3,457,000 that are already accounted for as an asset (31 December 2019: £ 
3,320,000; 30 June 2020: £3,551,000). 
 
7.   Interest-bearing bank loans 
 
As part of the restructuring of the Group's long-term financing, IRP Holdings 
Limited ("IRPH") entered into a £90 million eleven year non-amortising term 
loan facility agreement with Canada Life. 
 
Canada Life provided committed funds on 9 November 2015 and IRPH drew down the 
loan in full on 13 November 2015. Interest is payable on this loan from the 
first utilisation date, quarterly in arrears, at a fixed rate of 3.36 per cent 
per annum. The loan is secured by means of a fixed charge over specific 
properties. The loan has a maturity date of 9 November 2026. 
 
On 27 March 2020, IPT Property Holdings Limited ("IPTH") entered into a £20 
million five year revolving credit facility ("RCF") agreement with Barclays. 
The loan facility expires on 27 March 2025 and can be drawn down or repaid at 
anytime. Interest accrues on the bank loan at a variable rate, based on 3 month 
LIBOR plus margin and mandatory lending costs, and is payable quarterly. The 
margin is 1.7 per cent per annum for the duration of the loan. As at 31 
December 2020 none of the RCF was drawn down (at 30 June 2020 and 31 December 
2019, none of the RCF was drawn down). 
 
 At 31 December 2020 borrowings of £90 million were drawn down.  The balance 
sheet value is stated at an amortised cost of £89,640,000 (31 December 2019: £ 
89,666,000 and 30 June 2020: £89,542,000).  Amortised cost is calculated by 
deducting loan arrangement costs, which are amortised back over the life of the 
loan.  The fair value of the Canada Life loan is shown in note 8. 
 
8.   Fair value measurements 
 
The fair value measurements for financial assets and financial liabilities are 
categorised into different levels in the fair value hierarchy based on the 
inputs to valuation techniques used. 
 
The different levels are defined as follows: 
 
·      Level 1 - Unadjusted, fully accessible and current quoted prices in 
active markets for identical assets or liabilities.  Examples of such 
instruments would be investments listed or quoted on any recognised stock 
exchange. 
 
·      Level 2 - Quoted prices for similar assets or liabilities, or other 
directly or indirectly observable inputs which exist for the duration of the 
period of investment.  Examples of such instruments would be those for which 
the quoted price has been suspended, forward exchange rate contracts and 
certain other derivative instruments. 
 
·      Level 3 - External inputs are unobservable.  Fair value is the 
Directors' best estimate, based on advice from relevant knowledgeable experts, 
use of recognised valuation techniques and on assumptions as to what inputs 
other market participants would apply in pricing the same or similar 
instruments. 
 
All of the Group's investments in direct property are included in Level 3 as it 
involves the use of significant inputs. There were no transfers between levels 
of the fair value hierarchy during the six-month period ended 31 December 2020. 
 
Other than the fair values stated in the table below, the fair value of all 
other financial assets and liabilities is not materially different from their 
carrying value in the financial statements. 
 
 
                                 31 December     31 December    30 June 
                                        2020            2019       2020 
                                       £'000           £'000      £'000 
 
£90 million Canada Life Loan          92,584          95,676     95,913 
2026* 
 
*The fair value of the interest-bearing Canada Life Loan is based on the yield 
on the Treasury 2% 2025 which would be used as the basis for calculating the 
early repayment of such loan plus the appropriate margin. The Canada Life loan 
is classified as Level 2 under the hierarchy of fair value measurement. 
 
The Group's financial risk management objectives and policies are consistent 
with those disclosed in the consolidated financial statements as at and for the 
year ended 30 June 2020. 
 
9.   Share capital 
 
                                  31 December    31 December    30 June 
                                         2020           2019       2020 
                                        £'000          £'000      £'000 
 
Allotted, called-up and fully 
paid 
 
240,705,539 Ordinary Shares of 
1 pence each in issue                   2,407          2,407      2,407 
 
The Company issued no Ordinary Shares during the period. 
 
10. Net asset value per share 
 
                                Six months to Six months to  Year ended 
                                  31 December   31 December     30 June 
                                         2020          2019        2020 
 
 
Net asset value per ordinary            98.1p        102.6p       96.6p 
share 
 
Net assets attributable at the 
period end (£'000)                    236,072       246,997     232,606 
 
Number of ordinary shares in 
issue at the period end           240,705,539   240,705,539 240,705,539 
 
11. Going concern 
 
In assessing the going concern basis of accounting the Directors have had 
regard to the guidance issued by the Financial Reporting Council.They have 
considered the current cash position of the Group, the availability of the 
loans and compliance with their covenants, forecast rental income and other 
forecast cash flows.The Group has agreements relating to its borrowing 
facilities with which it has complied during the period.Based on this 
information the Directors believe that the Group has the ability to meet its 
financial obligations as they fall due for a period of at least twelve months 
from the date of the approval of the accounts.For this reason, they continue to 
adopt the going concern basis in preparing the accounts. 
 
12. Related party transactions 
 
The Directors of the Company, who are considered to be the Group's key 
management personnel, received fees for their services and dividends from their 
shareholdings in the Company.  No fees remained payable at the period end. 
 
13. Operating segments 
 
The Board has considered the requirements of IFRS 8 'Operating Segments'.  The 
Board is of the view that the Group is engaged in a single segment of business, 
being property investment, and in one geographical area, the United Kingdom, 
and that therefore the Group has only a single operating segment. The Board of 
Directors, as a whole, has been identified as constituting the chief operating 
decision maker of the Group. The key measure of performance used by the Board 
to assess the Group's performance is the total return of the Group's net asset 
value, as calculated under IFRS, and therefore no reconciliation is required 
between the measure of profit or loss used by the Board and that contained in 
the condensed consolidated financial statements. 
 
14. Investment in subsidiary undertakings 
 
The Group results consolidate those of IRP Holdings Limited ('IRPH') and IPT 
Property Holdings Limited ('IPTH'). IRPH and IPTH are companies incorporated in 
Guernsey whose principal business is that of a property investment company. 
These companies are 100 per cent owned by the Group's ultimate parent company, 
which is BMO Real Estate Investments Limited. 
 
15. The report and accounts for the half-year ended 31 December 2020 is 
available on the website www.bmorealestateinvestments.com 
 
Statement of Principal Risks and Uncertainties 
 
Covid-19 has had a significant effect on the commercial real estate market, and 
the duration and consequences of the situation are uncertain, which has 
resulted in a number of the residual risks increasing. The areas of increased 
risk relate to the potential for tenant defaults, the volatility of the share 
price and availability of cash resources. These areas are discussed in detail 
in the Chairman's Statement. Since the outbreak, the Board have been meeting on 
a significantly more frequent basis. 
 
The Group's assets consist of direct investments in UK commercial property. Its 
principal risks are therefore related to the UK commercial property market in 
general but also the particular circumstances of the properties in which it is 
invested and their tenants. Other risks faced by the Group include 
geopolitical, market, investment and strategic, regulatory, tax structuring and 
compliance, financial, reporting, credit, operational and environmental risks. 
The Group is also exposed to risks in relation to its financial instruments. 
These risks, and the way in which they are mitigated and managed, are described 
in more detail under the heading 'Principal Risks and Future Prospects' within 
the Business Model and Strategy in the Group's Annual Report for the year ended 
30 June 2020. The Group's principal risks and uncertainties have not changed 
materially since the date of that report and are not expected to change for the 
remainder of the Company's financial year. 
 
Statement of Directors' Responsibilities in Respect of the Interim Report 
 
We confirm that to the best of our knowledge: 
 
·      the condensed set of consolidated financial statements has been prepared 
in accordance with IAS 34 'Interim Financial Reporting' as adopted by the 
European Union; 
 
·      the Chairman's Statement constituting the Interim Management Report 
together with the Statement of Principal Risks and Uncertainties include a fair 
review of the information required by the Disclosure and Transparency Rules 
('DTR') 4.2.7R, being an indication of important events that have occurred 
during the first six months of the financial year and their impact on the 
condensed set of consolidated financial statements; and 
 
·      the Chairman's Statement together with the consolidated financial 
statements include a fair review of the information required by DTR 4.2.8R, 
being related party transactions that have taken place in the first six months 
of the current financial year and that have materially affected the financial 
position or performance of the Group during that period, and any changes in the 
related party transactions described in the last Annual Report that could do 
so. 
 
On behalf of the Board 
Vikram Lall 
Chairman 
 
19 March 2021 
 
 
Alternative Performance Measures 
 
The Company uses the following Alternative Performance Measures ('APMs'). APMs 
do not have a standard meaning prescribed by GAAP and therefore may not be 
comparable to similar measures presented by other entities. 
 
Discount or Premium - The share price of an Investment Company is derived from 
buyers and sellers trading their shares on the stock market. If the share price 
is lower than the NAV per share, the shares are trading at a discount. This 
usually indicates that there are more sellers than buyers. Shares trading at a 
price above the NAV per share, are said to be at a premium. 
 
                                  Six months to Six months to    Year to 
                                    31 December   31 December    30 June 
                                           2020          2019       2020 
                                          Pence         Pence      Pence 
 
Net Asset Value per share                  98.1         102.6       96.6 
 
Share price per share                      61.0          84.0       56.0 
 
Discount                                  37.8%         18.1%      42.0% 
 
Dividend Cover - The percentage by which profits for the year (less gains/ 
losses on investment properties) cover the dividend paid. 
 
A reconciliation of dividend cover is shown below: 
 
                                  Six months to Six months to    Year to 
                                    31 December   31 December    30 June 
                                           2020          2019       2020 
                                          £'000         £'000      £'000 
 
Profit/(loss) for the period              7,016           729    (9,149) 
 
Add back: Realised losses/(gains)             -           987        991 
                 Unrealised             (2,795)         2,473     17,031 
(gains)/losses 
 
Profit before investment gains            4,221         4,189      8,873 
and losses 
 
Dividends                                 3,550         6,018     10,531 
 
Dividend Cover percentage                118.9%         69.6%      84.3% 
 
. 
 
Dividend Yield - The annualised dividend divided by the share price at the 
period end. An analysis of dividends is contained in note 4. 
 
Net Gearing - Borrowings less net current assets divided by value of investment 
properties. 
 
                                  Six months to Six months to    Year to 
                                    31 December   31 December    30 June 
                                           2020          2019       2020 
                                          £'000         £'000      £'000 
 
Loans                                    89,640        89,666     89,542 
 
Less net current assets                 (8,657)      (11,633)   (10,586) 
 
Total                                    80,983        78,033     78,956 
 
Value of investment properties          314,368       322,405    308,734 
 
Net Gearing                               25.8%         24.2%      25.6% 
 
Portfolio (Property) Capital Return - The change in property value during the 
period after taking account of property purchases and sales and capital 
expenditure, calculated on a quarterly time-weighted basis. 
 
Portfolio (Property) Income Return - The income derived from a property during 
the period as a percentage of the property value, taking account of direct 
property expenditure, calculated on a quarterly time-weighted basis. 
 
Portfolio (Property) Total Return - Combining the Portfolio Capital Return and 
Portfolio Income Return over the period, calculated on a quarterly 
time-weighted basis. 
 
Total Return - The return to shareholders calculated on a per share basis by 
adding dividends paid in the period to the increase or decrease in the Share 
Price or NAV. The dividends are assumed to have been reinvested in the form of 
Ordinary Shares or Net Assets, respectively, on the date on which they were 
quoted ex-dividend. 
 
 
                                       Six months to Six months to     Year to 
                                         31 December   31 December     30 June 
                                                2020          2019        2020 
 
NAV per share at the start of the              96.6p        104.8p      104.8p 
period 
 
NAV per share at the end of the period         98.1p        102.6p       96.6p 
 
Change in the period                           +1.6%         -2.1%       -7.8% 
 
Impact of dividend reinvestments               +1.5%         +2.4%       +4.1% 
 
NAV total return for the period                +3.0%         +0.3%       -3.7% 
 
 
 
 
                                       Six months to Six months to     Year to 
                                         31 December   31 December     30 June 
                                                2020          2019        2020 
 
Share price per share at the start of          56.0p         80.0p       80.0p 
the period 
 
Share price per share at the end of            61.0p         84.0p       56.0p 
the period 
 
Change in the period                           +8.9%         +5.0%      -30.0% 
 
Impact of dividend reinvestments               +2.6%         +3.2%       +5.1% 
 
 
Share price total return for the              +11.6%         +8.2%      -24.9% 
period 
 
 
Enquiries to: 
 
 
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 
 
P Lowe, S Macrae 
BMO Investment Business Limited 
Tel:      0207 628 8000 
Fax:     0131 225 2375 
 
 
The full interim report for the period to 31 December 2020 will be sent to 
shareholders and will be available for inspection at Trafalgar Court, Les 
Banques, St Peter Port, Guernsey GY1 3QL, the registered office of the Company, 
and from the Company's website: www.bmorealestateinvestments.com 
 
 
 
END 
 
 

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