BMO Real Estate Investments Ltd Trading Update & Net Asset Value

Fecha : 20/04/2020 @ 01:00
Fuente : UK Regulatory (RNS & others)
Emisora : Bmo Real Estate Investments Limited (BREI)
Cotización : 61.8  2.4 (4.04%) @ 10:35
Bmo Real Estate Investme... Cotización de acciones Gráfica

BMO Real Estate Investments Ltd Trading Update & Net Asset Value

 
TIDMBREI 
 
To:                     Company Announcements 
Date:                  20 April 2020 
Company:          BMO Real Estate Investments Limited 
LEI:                    231801XRCB89W6XTR23 
 
Subject:             Trading Update and Net Asset Value 
 
 
Background 
 
BMO Real Estate Investments Limited ("BREI" or the "Group") provides an update 
on trading and the net asset value as at 31 March 2020 against the backdrop of 
the evolving COVID-19 pandemic, as well as the actions being undertaken by the 
Investment Manager (the "Manager"), Our priorities at this challenging time are 
the wellbeing of everyone involved with the Group, our ability to provide 
support to our tenants where it is most needed and preserving the financial 
strength of the Group for shareholders. 
 
Operations 
 
The Manager has robust business continuity plans to ensure it can maintain 
operations in these challenging times. Although a work from home policy has 
been introduced across all geographies the asset and property managers are in 
regular contact with tenants, providing support where felt necessary. They are 
also ensuring that essential services are maintained across the portfolio. 
 
The Managers will consider assistance regarding concessions or the future 
phasing of rent where appropriate. The Managers are also focused on reducing 
operational costs and service charges in addition to non-essential capital 
expenditure. Our hope is that our support, in addition to that already 
announced by the Government, will help place our tenants in a position to 
resume normal operations as swiftly as possible when conditions allow. 
 
Net Asset Value ('NAV') 
 
The unaudited NAV per share of BREI as at 31 March 2020 was 99.7 pence. This 
represents a decrease of 2.8 per cent from the NAV per share as at 31 December 
2019 of 102.6 pence and a NAV total return for the quarter of -1.6 per cent. 
 
The NAV is based on the external valuation of the Group's property portfolio 
prepared by Cushman & Wakefield. The valuation certificate includes a 'material 
uncertainty' clause in-line with RICS guidance. This clause reflects the fact 
that there is less certainty in the valuations, given the unknown future impact 
that COVID-19 might have on the real estate market. Valuers are therefore 
exercising a higher degree of caution and giving less weight to previous market 
evidence for comparison purposes. 
 
The NAV is calculated under International Financial Reporting Standards 
("IFRS"). 
 
The NAV includes all income to 31 March 2020 and is calculated after deduction 
of all dividends paid prior to that date.  Further analysis of the movement in 
the NAV and portfolio details are included at the end of this statement. 
 
Share Price 
 
The share price was 69.2 pence per share at 31 March 2020, which represented a 
discount of 30.6 per cent to the NAV per share announced above. The share price 
total return for the quarter was -15.1 per cent. The volatility of the market 
has further impacted the share price during April 2020 and as at 17 April 2020 
the shares were trading at around 50 pence per share, a discount of 50 per cent 
to the NAV as at 31 March 2020. 
 
Portfolio Composition 
 
The Company benefits from a defensive, balanced asset base allocated 42.6 per 
cent Industrial & Logistics, 29.4 per cent Offices, 16.9 per cent Retail 
Warehousing and 11.1 per cent High Street Retail. The geographical exposure to 
the wider South East region is 77 per cent across all sectors. The portfolio 
comprises 37 assets, and 122 tenants with the largest tenant representing 7.5 
per cent of the annual income. The vacancy rate by rental value is sub 3 per 
cent and the average weighted unexpired lease term is in excess of 6 years. 
 
Rent Collection 
 
The Company has a highly diverse tenant base, the vast majority of whom 
continue to trade through the lockdown. Nonetheless almost without exception UK 
businesses are experiencing unprecedented levels of disruption. The Managers 
are engaging with tenants given the challenges faced by many to meet quarterly 
rental commitments at this time. We are beginning to witness the impact of the 
trading restrictions put in place by the Government which has resulted in the 
closure of many of our retail units. The portfolio has no exposure to the 
hospitality and leisure subsectors and only two restaurant tenants, although it 
does have occupiers linked to these sectors through the supply chain. 
 
The Group has billed c.GBP3.3m of its quarter 2 rent due from 25 March to date 
and has collected 69 per cent of this amount (compared to 94 per cent for the 
same period last year). This percentage will increase as tenants with whom we 
have agreed monthly payment arrangements pay further instalments. The total 
quarterly rent amounts to c.GBP3.9 million with further contractual billing dates 
during the course of April and May. 
 
 
Cash and Borrowings 
 
The Group has approximately GBP13.5 million of available cash and an undrawn 
revolving credit facility of GBP20 million. The Group's GBP90 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 
March 2020, the Group's LTV was 25.1 per cent and there was significant 
headroom under its actual and projected debt covenants. 
 
Dividend 
 
On 11 March 2020, the Company announced its quarterly dividend payment of 1.25 
pence per ordinary share in respect of the financial year ended 30 June 2020 
which was paid to shareholders on 31 March 2020. The impact that COVID-19 will 
have on future rental receipts and the long-term sustainability of the 
quarterly dividend is under review and a further update in this regard will be 
made once the full picture has been established. 
 
 
Outlook 
 
Given the uncertainty surrounding the current trading position of some of the 
Company's tenants, the recovery of income due under existing lease contacts 
remains the immediate focus. The Company's low void rate of c3% and relatively 
high and diversified weighting to the Office and Industrial sectors should 
provide some protection against these challenges but very few areas of the 
market will offer immunity to the wider downturn induced by the pandemic and 
associated global lockdown. We therefore continue to expect to see significant 
disruption to revenues over the near term, including the next quarter's rent 
collection, even when the timetable for relaxation of lockdown measures becomes 
clearer. 
 
 
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 31 December 2019 to 31 March 
2020. 
 
                                                               Pence     % of 
                                                                 per  opening 
                                                               share      NAV 
 
Net asset value per share as at 31 December 2019               102.6 
 
Unrealised movement in valuation of property portfolio         (2.6)   (2.5)* 
(including the effect of gearing) 
 
Movement in revenue reserves                                   (0.3)    (0.3) 
 
Net asset value per share as at 31 March 2020                   99.7    (2.8) 
 
* The un-geared decrease in the valuation of the property portfolio over the 
quarter to 31 March 2020 was 1.9%. 
 
 
Portfolio Analysis                                  GBPm         % of   % capital 
                                                       portfolio as       value 
                                                        at 31 March   movement 
                                                               2020  in quarter 
 
Offices                                           94.1         29.4         0.3 
 
- West End                                        29.3          9.2       (0.3) 
 
- South East                                      37.4         11.7         1.8 
 
- Rest of UK                                      27.4          8.5       (0.9) 
 
Industrial                                       136.4         42.6       (0.2) 
 
- South East                                     136.4         42.6       (0.2) 
 
Standard Retail                                   35.5         11.1       (7.0) 
 
- West End                                         8.4          2.6       (0.9) 
 
- Rest of London                                   2.4          0.7      (12.7) 
 
- South East                                      17.8          5.6       (8.0) 
 
- Rest of UK                                       6.9          2.2       (9.2) 
 
Retail Warehouse                                  54.3         16.9       (5.9) 
 
Total Property                                   320.3        100.0       (1.9) 
 
 
Summary Balance Sheet 
 
                                                          GBPm    Pence % of Net 
                                                                  per   Assets 
                                                                share 
 
Property Portfolio per Valuation Report                320.3    133.0    133.4 
 
Adjustment for lease incentives                        (3.4)    (1.4)    (1.4) 
 
Fair Value of Property Portfolio                       316.9    131.6    132.0 
 
Cash                                                    13.4      5.6      5.6 
 
Trade and other receivables                              7.0      2.9      2.9 
 
Trade and other payables                               (7.8)    (3.2)    (3.2) 
 
Interest-bearing loans                                (89.5)   (37.2)   (37.3) 
 
Net Assets at 31 March 2020                            240.0     99.7    100.0 
 
The property portfolio will next be valued by an external valuer during June 
2020 and the net asset value per share as at 30 June 2020 will be announced in 
July 2020. 
 
 
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 
Fax: 01481 745051 
 
Peter Lowe 
Scott Macrae 
BMO Investment Business Ltd 
Tel: 0207 628 8000 
Fax: 0131 225 2375 
 
 
 
 
END 
 

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