BMO Real Estate Investments Ltd Net Asset Value(s)

 
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: [phone] 
Fax: [phone] 
 
Peter Lowe 
Scott Macrae 
 
BMO Investment Business Ltd 
Tel: [phone] 
Fax: [phone] 
 
 
 
END 
 

(END) Dow Jones Newswires

January 27, 2020 08:21 ET (13:21 GMT)