To:
Company Announcements
Date:
6 February 2020
Company: BMO Commercial
Property Trust Limited
LEI:
213800A2B1H4ULF3K397
Subject:
Net Asset Value
Net Asset Value
The unaudited net asset value (‘NAV’) per share of the Group as
at 31 December 2019 was 130.9 pence. This represents a decrease of 2.0
per cent from the unaudited NAV per share as at 30 September 2019 of 133.6
pence and a NAV total return for the quarter of -0.9 per
cent.
The NAV has been calculated under International Financial
Reporting Standards (‘IFRS’). It is based on the external valuation
of the Group’s direct property portfolio prepared by CBRE
Limited.
The NAV includes all income to 31
December 2019 and is calculated after deduction of all
dividends paid prior to that date. As at 31
December 2019, no adjustments were required to the NAV in
respect of dividends for which the share price had gone
ex-dividend.
Share Price
The share price was 115.60 pence
per share at 31 December 2019, which
represented a discount of 11.7 per cent to the NAV per share
announced above. The share price total return for the quarter was
0.4 per cent.
Analysis of Movement in NAV
The following table provides an analysis of the movement in the
unaudited NAV per share for the period from 30 September 2019 to 31
December 2019 (including the effect of gearing):
|
£m |
Pence per share |
% of opening NAV per
share |
NAV as at 30 September
2019 |
1,068.3 |
133.6 |
|
Unrealised decrease in valuation of
property portfolio * |
(19.5) |
(2.4) |
(1.8) |
Movement in fair value of interest
rate swap |
0.1 |
0.0 |
0.0 |
Other net revenue |
9.8 |
1.2 |
0.9 |
Dividends paid |
(12.0) |
(1.5) |
(1.1) |
NAV as at 31 December
2019 |
1,046.7 |
130.9 |
(2.0) |
* The ungeared decrease in the valuation of the property
portfolio over the quarter to 31 December
2019 was 1.4%, after allowing for capital expenditure.
The net gearing at 31 December
2019 was 21.3%. #
# Net gearing: (Borrowings – cash) ÷ total assets (less current
liabilities and cash).
Market
UK commercial real estate delivered a total return of 0.3 per
cent over the quarter according to the MSCI UK Monthly Index. All
property capital values fell by 1.0 per cent.
Retail properties continue to be impacted by both the distress
in the occupier markets and a re-rating of pricing. Capital values
fell by 4.4 per cent over the period. The office and industrial
sectors were reasonably solid, recording positive total returns of
1.5 per cent and 1.9 per cent respectively.
Activity in the capital markets increased post the General
Election with a flurry of deals completing prior to the year
end.
Performance
The Company’s property portfolio delivered an ungeared total
return of -0.3 per cent over the quarter to December.
The portfolio suffered a 1.4 per cent fall in capital values
with the retail properties and other commercial properties let to
retailers, suffering the largest fall in values. The most
significant falls were as follows:
- The Crescent, Wimbledon, had the estimated rental value of the
retail units reduced and the capitalisation rate moved out 60 basis
points, equating to a fall in value of 6.1 per cent.
- Capitalisation rates continued to move out in the retail
warehouse sector resulting in the Company’s two largest retail
warehouses at Newbury and Solihull falling in value by a combined
3.4 per cent.
- The value of St. Christopher’s Place fell 0.8 per cent due to
the continued re-basing of rental values along Oxford Street with
the value of the remainder of the Estate largely holding firm.
- The logistics portfolio was adversely affected by the property
at Daventry which is let to Mothercare. The property benefits from
a rental guarantee from a Mothercare company not in Administration,
but the valuers moved the yield out by 75 basis points (12 per cent
fall in capital value) to reflect the uncertainty surrounding the
covenant.
Investment Activity
There were no sales or purchases during the quarter.
Lease Activity
Of particular note post the quarter end was the completion of an
unconditional letting to Marks & Spencer at Sears Retail Park,
Solihull, significantly expanding the retailers existing presence
on the park. The lease is for a redeveloped 35,000 sq. ft store
which was formerly a Homebase. This is on a 20-year lease (breaks
year 10 and 15) at an uplift on the previous passing rent.
As part of the redevelopment, the new store will be combined
with Marks & Spencer’s adjacent Food Hall. The combined store
will create an 82,000 sq. ft. store incorporating General
Merchandise, a larger Food Hall, as well as a Marks & Spencer
Café. It is expected that the new premises will be handed over to
M&S for fit out upon completion of the redevelopment at the end
of 2020. This is a high-profile initiative which reflects Marks
& Spencer’s satisfaction with the location and supports the
ongoing appetite from selected retail brands for the right space,
in the right locations.
Construction works have started at Newbury Retail Park to create
new stores for Lidl and Deichman Shoes and it is hoped these new
lettings will attract other new retailers to the park.
The void rate on the Company’s portfolio was 4.8 per cent as at
31 December 2019, prior to the new
letting at Solihull. There are also other important lettings close
to contracting.
Portfolio Analysis – Sector
Breakdown
|
Portfolio
Value
£m |
% of
portfolio as at
31 December 2019 |
%
like for like capital value shift (incl transactions) |
Offices |
548.8 |
40.9 |
0.2 |
West End |
207.6 |
15.5 |
0.7 |
South East |
89.9 |
6.7 |
-1.2 |
South West |
33.4 |
2.5 |
0.0 |
Rest of UK |
197.2 |
14.7 |
0.3 |
City |
20.7 |
1.5 |
0.0 |
Retail |
292.5 |
21.8 |
-2.4 |
West End |
222.8 |
16.6 |
-1.5 |
South East |
38.3 |
2.9 |
-9.7 |
Rest of UK |
31.4 |
2.3 |
-0.4 |
Industrial |
236.6 |
17.5 |
-2.6 |
South East |
30.1 |
2.2 |
0.2 |
Rest of UK |
206.5 |
15.3 |
-2.9 |
Retail
Warehouse |
134.2 |
10.0 |
-3.5 |
Alternatives |
130.5 |
9.8 |
0.0 |
Total Property
Portfolio |
1,342.6 |
100.0 |
-1.4 |
Portfolio Analysis – Geographic
Breakdown
|
Market
Value
£m |
% of portfolio as
at
31 December 2019 |
West End |
490.4 |
36.5 |
South East |
289.5 |
21.6 |
Scotland |
174.0 |
13.0 |
North West |
159.6 |
11.9 |
Midlands |
149.1 |
11.1 |
South West |
33.4 |
2.5 |
Eastern |
25.9 |
1.9 |
Rest of London |
20.7 |
1.5 |
Total Property Portfolio |
1,342.6 |
100.0 |
Top Ten Investments
|
Sector |
Properties valued
in excess of £250 million |
|
London W1, St
Christopher’s Place Estate * |
Mixed |
Properties valued
between £100 million and £150 million |
|
London SW1, Cassini
House, St James’s Street |
Office |
Properties valued
between £50 million and £70 million |
|
Newbury, Newbury
Retail Park |
Retail
Warehouse |
Solihull, Sears Retail
Park |
Retail
Warehouse |
London SW19, Wimbledon
Broadway** |
Mixed |
Properties valued
between £40 million and £50 million |
|
Crawley, Leonardo
House, Manor Royal |
Office |
Winchester, Burma
Road |
Alternative |
Manchester, 82 King
St |
Office |
Properties valued
between £30 million and £40 million |
|
Aberdeen, Unit 2 Prime
Four Business Park, Kingswells |
Office |
Aberdeen, Unit 1 Prime
Four Business Park, Kingswells |
Office |
|
|
*Mixed use property of retail, office, food/beverage and
residential space.
**Mixed use property of retail, food/beverage and leisure
space.
Summary Balance Sheet
|
£m |
Pence per
share |
% of Net
Assets |
Property Portfolio |
1,342.6 |
168.0 |
128.3 |
Adjustment for lease incentives |
(22.4) |
(2.8) |
(2.1) |
Fair Value of Property
Portfolio |
1,320.2 |
165.2 |
126.2 |
Trade and other receivables |
28.5 |
3.6 |
2.6 |
Cash and cash equivalents |
25.9 |
3.2 |
2.5 |
Current Liabilities |
(17.2) |
(2.2) |
(1.6) |
Total Assets (less current
liabilities) |
1,357.4 |
169.8 |
129.7 |
Non-Current liabilities |
(2.1) |
(0.3) |
(0.2) |
Interest rate swap |
(0.2) |
0.0 |
0.0 |
Interest-bearing loans |
(308.4) |
(38.6) |
(29.5) |
Net Assets at 31
December 2019 |
1,046.7 |
130.9 |
100.0 |
Borrowings
The Group’s borrowings consist of a £260 million loan with a
term to 31 December 2024 and a fixed
interest rate of 3.32 per cent per annum. The Group also has a £50
million bank loan with a term to 21 June
2021 on which the interest rate has been fixed, through an
interest rate swap of the same notional value and duration, at
2.522 per cent per annum. There is an additional revolving credit
facility of £50 million in place over the same period, to be used
for ongoing working capital purposes and to provide the Group with
the flexibility to acquire further property should the opportunity
arise. This facility is currently undrawn.
The Group’s weighted average cost of debt is 3.3 per cent per
annum.
Key Information
This statement and further information regarding the Company,
including movements in the share price since the end of the period
and the Group’s most recent annual and interim reports, can be
found at the Company’s website bmocommercialproperty.com.
The next quarterly valuation of the property portfolio will be
conducted by CBRE Limited during March
2020 and it is expected that the unaudited NAV per share as
at 31 March 2020 will be announced in
April 2020.
This announcement contains inside information.
Enquiries:
Richard Kirby
BMO REP Asset Management plc
Tel: 0207 499 2244
Graeme Caton
Winterflood Securities Limited
Tel: 0203 100 0268