To:
Company Announcements
Date:
23 October 2020
Company: BMO Commercial
Property Trust Limited
LEI:
213800A2B1H4ULF3K397
Subject:
Trading
update for BMO Commercial Property Trust Ltd (the
"Company”)
Headlines
- Net Asset total return of -2.7 per cent for the quarter ended
30 September 2020
- Share Price total return of 3.3 per cent for the quarter ended
30 September 2020
- Rent collection currently received to date for quarter 2 of
84.2 per cent
- Rent collection currently received to date for quarter 3 of
83.1 per cent
- Rent collection currently received to date for quarter 4 of
79.4 per cent
- Agreed terms for the extension of a £100 million loan facility
to 31 July 2022
- As at 30 September 2020, the void
rate was 3.2%, unchanged from 30 June
2020
Net Asset Value
The unaudited net asset value (‘NAV’) per share of the Company
as at 30 September 2020 was
116.9 pence. This represents a
decrease of 3.1 per cent from the unaudited NAV per share as at
30 June 2020 of 120.7 pence and a NAV total return for the
quarter of -2.7 per cent.
The NAV has been calculated under International Financial
Reporting Standards (‘IFRS’). It is based on the external valuation
of the Company’s property portfolio which has been prepared by CBRE
Limited. The valuation certificate no longer includes a ‘material
uncertainty’ clause, which has been removed in-line with RICS
guidance.
The NAV includes all income to 30
September 2020 and is calculated after deduction of all
dividends paid prior to that date. The EPRA NAV as at 30 September 2020, which is adjusted to remove
the fair value of the interest rate swap, was 116.9 pence.
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 June 2020 to 30
September 2020 (including the effect of gearing):
|
£m |
Pence per share |
% of opening NAV per
share |
NAV as at 30 June 2020 |
964.5 |
120.7 |
|
Unrealised decrease in valuation of
property portfolio |
(34.9) |
(4.4) |
(3.6) |
Movement in fair value of interest
rate swap |
0.1 |
- |
- |
Other net revenue |
8.4 |
1.1 |
0.9 |
Dividends paid |
(4.0) |
(0.5) |
(0.4) |
NAV as at 30 September
2020 |
934.1 |
116.9 |
(3.1) |
Valuation
The capital return of the Company's portfolio was -2.8 per cent
for the quarter. The retail and leisure sectors continue to be
marked down, with the London
assets at Conduit Street, St Christopher’s Place and Wimbledon
Broadway falling by 16.5 per cent, 6.4 per cent and 5.0 per cent
respectively. These decreases reflect a further outward adjustment
in yields as well as adjustments to estimated rental values.
The valuation of our office portfolio fell by 1.8 per cent over
the quarter where a downward adjustment was made on properties with
shorter lease terms.
The industrial and logistics portfolio was robust and increased
by 0.9 per cent in the quarter, reflecting the completion of a
number of asset management initiatives, in particular the deferment
of break clauses.
Share Price
As at 30 September 2020, the share
price was 64.6 pence per share, which
represented a discount of 44.7 per cent to the NAV per share. The
share price total return for the quarter to 30 September 2020 was 3.3 per cent.
Rent Collection
The Company has a diverse tenant base across the portfolio and
its Managers have continued to engage with many of them, assessing
and responding to requests for support on a case by case basis. We
summarise below our current rent collection outcome for Quarter 2
and 3 as well as providing an update on collection for Quarter
4.
Quarter 2 and 3 Collection (billed between 26 March 2020 and 1
September 2020)
To date the Company has collected 84.2 per cent of the rents due
for Quarter 2 and 83.1 per cent for Quarter 3. The combined
collection statistics for the two quarters are as follows:
Collection by sector:
|
Rent Billed |
Collected |
|
|
(£m) |
(£m) |
(%) |
Industrial |
6.6 |
6.4 |
96.4 |
Offices |
13.8 |
13.0 |
94.4 |
Retail Warehouse |
3.9 |
3.0 |
75.3 |
Retail |
6.0 |
3.4 |
57.0 |
Alternatives |
2.2 |
1.4 |
65.6 |
Total |
32.5 |
27.2 |
83.7 |
Breakdown of uncollected rent:
Total Outstanding |
Rent Billed |
|
|
(£m) |
(%) |
Agreed deferments |
1.3 |
4.0 |
Rent waived |
0.9 |
2.8 |
Monthly payments* |
0.2 |
0.5 |
Unresolved / in discussion |
2.9 |
9.0 |
Uncollected Rent |
5.3 |
16.3 |
* tenants who have been billed for the quarter but are
paying in monthly instalments.
A significant proportion of the uncollected rent is
unsurprisingly in the retail and leisure sectors comprising shops,
restaurants, a cinema and gym. £4.0m of the uncollected amount
relates to St Christopher’s Place, Wimbledon Broadway and Newbury
Retail Park. Of the £2.9m where there has yet to be a resolution,
discussions are well advanced with many tenants. There are however
a minority of retailers who should be in a position to pay who are
not engaging.
Quarter 4 Collection (billed between 29
September 2020 and 1 December
2020)
The total quarterly rental payments for Quarter 4 amount to
c.£16.5 million. The Company has billed £9.4m of its Quarter 4 rent
due from 29 September to date and has collected 79.4 per cent of
this total amount (compared to 99.7 per cent for the same period
last year and 68.5 per cent after the equivalent number of days in
Quarter 3). The balance of rent will be billed on the relevant due
dates during the course of October and November.
Collection by sector:
|
Rent Billed |
Collected |
|
|
(£m) |
(£m) |
(%) |
Industrial |
2.9 |
2.4 |
84.4 |
Offices |
3.4 |
3.2 |
92.4 |
Retail Warehouse |
0.4 |
0.2 |
56.6 |
Retail |
1.7 |
0.9 |
53.7 |
Alternatives |
1.0 |
0.7 |
74.3 |
Total |
9.4 |
7.4 |
79.4 |
Breakdown of uncollected rent:
Total Outstanding |
Rent Billed |
|
|
(£m) |
(%) |
Agreed deferments |
0.2 |
2.2 |
Rent waived |
0.1 |
0.6 |
Monthly payments* |
0.4 |
4.6 |
Outstanding |
1.3 |
13.2 |
Uncollected Rent |
2.0 |
20.6 |
* tenants who have been billed for the quarter but are
paying in monthly instalments.
Trading and Development Activity
St Christopher’s Place Estate
Footfall growth across the estate, post lock down, remained
relatively positive having hit 50 per cent or more of last year’s
levels several times in September and October. The recent
Government restrictions have now started to impact activity with a
sense that customer sentiment, at least in the short term, has
weakened.
By early October 24 retailers, who
had closed during lockdown had re-opened although trading remains
weak and is generally at no more than 40 per cent of 2019 trading
levels.
18 of the food and beverage businesses were trading. The
re-opening of the restaurants in James Street has been supported by
the temporary closure of the street to vehicles which was agreed in
conjunction with Westminster City Council and has enabled occupiers
to maximise their use of outdoor dining areas and optimise social
distancing requirements. The Eat out to Help Out scheme during
August was particularly beneficial to restaurant turnover.
A surrender of the Carluccio’s lease was completed at the end of
September simultaneously with a re-letting to San Carlo Holdings
Ltd (part of the San Carlo restaurant group) on a new 15-year lease
at rent in in excess of £400,000 pa. This will be a significant new
operator for the estate, and it is encouraging that such a
high-profile restaurateur recognises the long-term benefits and
opportunity presented at the location.
Work at 54/56 James Street is approaching completion and
terms are being negotiated for the letting of the restaurant.
Retail Parks
On the two principal retail parks, several retailers have
reported steadily increasing turnover since reopening in
June 2020.
Having completed their shop fitting within the anticipated
timeframe, Lidl opened their new 19,500 sq ft supermarket to
the public on 8th October at Newbury Retail park. Early
indications show a marked increase in vehicle numbers entering the
retail park, which can mainly be attributed to the opening of the
new Lidl store. A recent on-site inspection revealed that capacity
within the main customer car park was at approximately 85 per
cent.
At Sears Retail Park, Solihull,
the landlord’s works to construct a unit and refurbish the
shopfront of a second one should be completed by Christmas 2020.
Handover of the newly constructed unit to M&S is expected in
early January 2021 and they should be
ready to open their new flagship store after an 18-week fitting out
period.
Offices
Following the successful settlement of a dilapidations claim
with the former tenant, work to refurbish the two floors and
the reception at Watchmoor Park, Camberley is on site in readiness
for the new tenant to take occupation of the second floor prior to
Christmas. This is a letting of 7,200 sq. ft. to Muller (Milk and
More) and is at a rent of £23 psf for a term of 5 years with a
tenant option to renew for a further 10 years.
Uncommitted capital expenditure continues to be deferred for the
time being.
Cash and Borrowings
The Company had approximately £31.9 million of available cash as
at 30 September 2020. There is
long-term debt in place with L&G which does not need to be
refinanced until December 2024 and as
announced on 12 October, the Company has recently extended the
existing Barclays £50 million term loan, and the £50 million
revolving credit facility to 31 July
2022, with the option of two further one-year extensions.
This was previously due to expire on 21 June
2021. As at 30 September 2020,
the Company’s loan to value (‘LTV’) was 22.9 per cent.
Dividend
A monthly dividend was reintroduced in August 2020 at a rate of 0.25 pence per share. The distribution will
remain at this rate until further notice but will be kept under
review in light of the significant economic risks and continuing
uncertainty regarding the path of Covid-19. The Board is also
mindful that REIT status requires the Company to distribute 90 per
cent of net rental profits and compliance with this test is also a
factor which will be monitored when considering the rate of future
dividends.
Portfolio Analysis – Sector
Breakdown
|
Portfolio
Value
£m |
% of
portfolio as at
30 September 2020 |
%
like for like capital value shift (excl transactions) |
Offices |
518.9 |
42.5 |
-1.9 |
West End |
204.8 |
16.8 |
-1.7 |
South East |
75.8 |
6.2 |
-3.8 |
South West |
31.8 |
2.6 |
0.0 |
Rest of UK |
186.7 |
15.3 |
-1.9 |
City |
19.8 |
1.6 |
0.0 |
Retail |
238.0 |
19.5 |
-8.2 |
West End |
176.1 |
14.4 |
-10.4 |
South East |
31.1 |
2.6 |
-4.2 |
Rest of UK |
30.8 |
2.5 |
-0.5 |
Industrial |
220.2 |
18.0 |
0.9 |
South East |
28.9 |
2.4 |
2.3 |
Rest of UK |
191.3 |
15.6 |
0.7 |
Retail
Warehouse |
118.2 |
9.7 |
-1.1 |
Alternatives |
126.9 |
10.3 |
-0.7 |
Total Property
Portfolio |
1,222.2 |
100.0 |
-2.8 |
Portfolio Analysis – Geographic
Breakdown
|
Market
Value
£m |
% of portfolio as
at
30 September 2020 |
West End |
442.3 |
36.2 |
South East |
251.9 |
20.6 |
Scotland |
164.6 |
13.5 |
North West |
150.5 |
12.3 |
Midlands |
140.8 |
11.5 |
South West |
31.8 |
2.6 |
Eastern |
20.5 |
1.7 |
Rest of London |
19.8 |
1.6 |
Total Property Portfolio |
1,222.2 |
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 |
London SW19, Wimbledon
Broadway ** |
Mixed |
Properties valued
between £40 million and £50 million |
|
Solihull, Sears Retail
Park |
Retail
Warehouse |
Winchester, Burma
Road |
Alternative |
Properties valued
between £30 million and £40 million |
|
Manchester, 82 King
St |
Office |
Crawley, Leonardo
House, Manor Royal |
Office |
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 |
1,222.2 |
152.9 |
130.8 |
Adjustment for lease incentives |
(22.5) |
(2.8) |
(2.4) |
Fair Value of Property
Portfolio |
1,199.7 |
150.1 |
128.4 |
Trade and other receivables |
33.6 |
4.2 |
3.6 |
Cash and cash equivalents |
31.9 |
4.0 |
3.4 |
Current Liabilities |
(20.5) |
(2.6) |
(2.2) |
Total Assets (less current
liabilities) |
1,244.7 |
155.7 |
133.2 |
Non-Current liabilities |
(1.7) |
(0.2) |
(0.2) |
Interest rate swap |
(0.3) |
0.0 |
0.0 |
Interest-bearing loans |
(308.6) |
(38.6) |
(33.0) |
Net Assets at 30
September 2020 |
934.1 |
116.9 |
100.0 |
The next quarterly valuation of the property portfolio will be
conducted by CBRE Limited during December
2020 and it is expected that the unaudited NAV per share as
at 31 December 2020 will be announced
in January 2021.
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:
Richard Kirby
BMO REP Asset Management plc
Tel: 0207 499 2244
Graeme Caton
Winterflood Securities Limited
Tel: 0203 100 0268