To:
Company Announcements
Date:
29 January 2021
Company: BMO Commercial
Property Trust Limited
LEI:
213800A2B1H4ULF3K397
Subject:
Trading
update and NAV release for BMO Commercial Property Trust Ltd (the
"Company”)
Headlines
· Net Asset total return of 1.2
per cent for the quarter ended 31 December
2020
· Share Price total return of 25.3
per cent for the quarter ended 31 December
2020
· Combined rent collection
received to date for quarter’s 2 to 4 of 2020 at 87.1 per cent
· Rent collection currently
received to date for quarter 1 2021 of 75.1 per cent
· As at 31
December 2020, the void rate was 2.9 per cent, reduced from
3.2% at the previous quarter end due to a letting at Watchmoor
Park, Camberley.
Net Asset Value
The unaudited net asset value (‘NAV’) per share of the Company
as at 31 December 2020 was
117.5 pence. This represents an
increase of 0.5 per cent from the unaudited NAV per share as at
30 September 2020 of 116.9 pence and a NAV total return for the
quarter of 1.2 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 NAV includes all income to 31
December 2020 and is calculated after deduction of all
dividends paid prior to that date. The EPRA NAV per share as at
31 December 2020, which is adjusted
to remove the fair value of the interest rate swap, was
117.5 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 September 2020 to 31
December 2020 (including the effect of gearing):
|
£m |
Pence per share |
% of opening NAV
per share |
NAV as at 30 September
2020 |
934.1 |
116.9 |
|
Unrealised increase in valuation of
property portfolio |
2.7 |
0.2 |
0.2 |
Movement in fair value of interest
rate swap |
0.1 |
- |
- |
Other net revenue |
9.5 |
1.2 |
1.0 |
Dividends paid |
(6.8) |
(0.8) |
(0.7) |
NAV as at 31 December
2020 |
939.6 |
117.5 |
0.5 |
Valuation
The capital return of the Company's portfolio was 0.2 per cent
for the quarter. The industrial and logistics portfolio performed
strongly, increasing by 6.7 per cent in the quarter. This not only
reflected strong evidence from the capital markets supporting
further yield compression in the sector but also the completion of
a notable lease re-gearing and substantive progress on a number of
other lease events.
The retail and leisure sectors continue to be marked down, with
the London assets at St
Christopher’s Place and Wimbledon Broadway falling by 3.6 per cent
and 6.5 per cent respectively. These decreases reflect a further
outward adjustment in yields as well as adjustments to estimated
rental values. The retail warehouse portfolio did, however,
increase in value by 3.4 per cent reflecting the completion of a
number of asset management initiatives, in particular the building
works for the new Marks and Spencer store at Solihull.
The valuation of the office portfolio fell marginally during the
quarter, with positive returns from the West End being offset by
valuation falls in the south east and regions, specifically on
properties with shorter lease terms.
Share Price
As at 31 December 2020, the share
price was 80.0 pence per share, which
represented a discount of 31.9 per cent to the NAV per share. The
share price total return for the quarter to 31 December 2020 was 25.3 per cent.
Rent Collection
We summarise below our current rent collection outcome for Q2 to
4 2020 as well as providing an update on collection for Quarter 1
of 2021.
Q2 to Q4 2020 Collection (billed between 26 March 2020 and 1
December 2020)
Overall collection for the nine-month period is at 87.1 per cent
and the breakdown is detailed below:
|
Rent Billed |
Collected |
|
(£m) |
(%) |
Quarter 2 |
16.3 |
86.5 |
Quarter 3 |
16.3 |
86.3 |
Quarter 4 |
16.5 |
88.6 |
Total |
49.1 |
87.1 |
Collection by sector:
|
Rent Billed |
Collected |
|
|
(£m) |
(£m) |
(%) |
Industrial |
10.0 |
9.9 |
99.4 |
Offices |
20.7 |
19.7 |
95.3 |
Retail Warehouse |
5.8 |
4.9 |
83.0 |
Retail |
9.2 |
5.8 |
63.1 |
Alternatives |
3.4 |
2.5 |
73.5 |
Total |
49.1 |
42.8 |
87.1 |
Breakdown of uncollected rent:
Total Outstanding |
Rent Billed |
|
|
(£m) |
(%) |
Agreed deferments |
1.2 |
2.5 |
Rent waived |
0.8 |
1.7 |
Bad Debts |
0.1 |
0.2 |
Monthly payments* |
0.1 |
0.2 |
Unresolved / in discussion |
4.1 |
8.3 |
Uncollected Rent |
6.3 |
12.9 |
* tenants who have been billed for the quarter but are
paying in monthly instalments.
There remains a significant proportion of uncollected rent in
the retail and leisure sectors of the portfolio. Since early
November, London has been placed
under varying levels of Government restrictions and non-essential
retail, restaurants and leisure at St Christopher’s Place and
Wimbledon have only been able to
open for approximately 2 weeks since then. This extended period of
closure has created an extremely challenging position for the
occupiers; losing the peak trading period and the opportunity to
begin to recover previously lost sales. These restrictions have
been extended to the rest of the UK as the country went into full
lockdown. At the present time, there is no certainty on
timings of the lifting of Government restrictions and when
non-essential retail, restaurants and leisure will be able to
re-open. It is an extremely challenging environment in which
to secure rent collection and the Managers’ continue to engage with
tenants to deliver constructive outcomes and provide support where
it is deemed appropriate.
Q1 2021 Collection (due to be billed between 25 December 2020 and 1
March 2021)
The total quarterly rental payments for Quarter 1 amount to
c.£16.5 million. The Company has billed £12.9m of its Quarter 1
rent due from 25 December to date and has collected 75.1 per cent
of this total amount (compared to 96.4 per cent for the same period
last year and 75.9 per cent after the equivalent number of days in
Quarter 4). The balance of rent will be billed on the relevant due
dates during the course of January and February.
Collection by sector:
|
Rent Billed |
Collected |
|
|
(£m) |
(£m) |
(%) |
Industrial |
3.0 |
2.6 |
86.3 |
Offices |
5.0 |
4.4 |
89.4 |
Retail Warehouse |
1.1 |
0.7 |
60.0 |
Retail |
2.9 |
1.2 |
42.8 |
Alternatives |
0.9 |
0.8 |
80.4 |
Total |
12.9 |
9.7 |
75.1 |
Breakdown of uncollected rent:
Total Outstanding |
Rent Billed |
|
|
(£m) |
(%) |
Agreed deferments |
0.1 |
0.6 |
Rent waived |
0.1 |
0.6 |
Monthly payments* |
0.8 |
6.0 |
Outstanding |
2.2 |
17.7 |
Uncollected Rent |
3.2 |
24.9 |
* tenants who have been billed for the quarter but are
paying in monthly instalments.
Trading and Development Activity
St Christopher’s Place Estate
Notwithstanding the challenges highlighted above, there has been
some successful activity centred around the repositioning of James
Street with the following leasing activity;
· 36 James St: following the
surrender of the T Burrows lease, a new letting completed to
‘Chrome’.
· Exchanged on a new letting to
‘Papa-dum’ at 20 James St, which is expected to complete by end Q1
2021.
· The contractor completed
building works at 54/56 James St and a new letting to ‘Sidechick’
has exchanged, with completion targeted by end Q1 2021. This
restaurant is a new concept from the owners of Patty and Bun, an
existing tenant on the Estate, and underwrites their support for
the location.
· Secured a new letting of office
space at 3-5 Barrett Street and completed a number of lease
renewals with office tenants.
We are encouraged by these new leases which give an indication
that some occupiers are looking beyond the short-term challenges
presented by Covid for the Estate to the opportunities that should
exist longer term.
Retail Parks
On the two principal retail parks, Sears Retail Park,
Solihull and Newbury Retail Park,
Newbury, most retailers reported a
pre-Christmas spike in turnover after re-opening following the end
of the second lockdown period. Car parks at both locations were
busy and occasionally bordering on full capacity at Solihull. Unfortunately, this was short lived
for non-essential retailers, especially at Newbury where they were forced to close again
on 20 December 2020 having been
classified in Tier 4. Those with a robust omni-channel offer
and “click and collect service” have continued to fare better.
At Sears Retail Park, Solihull,
the landlord’s works to construct the new M&S store and
refurbish the shopfront of the Food Hall unit adjoining this have
now been completed. The new M&S store was handed over to
commence shop-fitting on 19 January
2021. M&S is expected to be ready to open their new
flagship store in June 2021.
There is some new retailer interest in the vacant units at
Newbury and at Solihull. Two of the retail units at
Newbury, making up 20,000 sq. ft
of retail space, are now under offer with contracts due to exchange
imminently.
Industrial and Logistics
A reversionary lease completed with the existing tenant at G
Park, Liverpool, a 360,000 sq ft
distribution warehouse. The 10-year lease with DHL Supply Chain
Limited from March 2021 has the
benefit of a tenant break at the end of the fifth year and the rent
contracted at £5.25 sq ft reflects an uplift in excess of 10 per
cent on the current rent. DHL were granted a 6 months rent-free
period by way of 12 months at half rent. As a result, the valuation
improved by £4.475m over the quarter and the Company has de-risked
the portfolio to its second largest lease expiry in 2021. Good
progress has also been made on a number of other leasing
events.
Offices
Work to refurbish the two floors and the reception at
Watchmoor Park, Camberley completed and Muller (Milk and More)
entered into the lease of the 7,200sq ft second floor at a rent of
£23 psf for a term of 5 years with a tenant option to renew for a
further 10 years. At 2-4 King Street, London SW1, a lease re-gear with one of the
tenant’s resulted in a further 5-year term certain on two of the
floors.
Capital Expenditure
Uncommitted capital expenditure continues to be deferred for the
time being.
Cash and Borrowings
The Company had approximately £34.9 million of available cash as
at 31 December 2020. There is
long-term debt in place with L&G which does not need to be
refinanced until December 2024. The
Company also has a Barclays £50 million term loan along with an
undrawn £50 million revolving credit facility which is available
upon the satisfaction of the relevant conditions to drawdown. The
Barclays facility expires on 31 July
2022, with the option of two further one-year extensions. As
at 31 December 2020, the Company’s
net loan to value (‘LTV’) was 22.6 per cent.
Dividend
An increase in the monthly dividend was introduced from
December 2020 at a rate of
0.35 pence per share. The latest
statistics regarding the increased spread of Covd-19 and the
consequent lockdown has put additional strain on many of our
tenants and the future remains uncertain. Notwithstanding this, the
Company expects to continue to pay monthly dividends at this rate
for the foreseeable future, although the Board will monitor rental
receipts and earnings closely and keep the dividend under
review.
Portfolio Analysis – Sector
Breakdown
|
Portfolio
Value
£m |
% of
portfolio as at
31 December 2020 |
%
like for like capital value shift (excl transactions) |
Offices |
518.2 |
42.2 |
-0.1 |
West End |
206.5 |
16.8 |
0.8 |
South East |
75.3 |
6.1 |
-0.7 |
South West |
31.4 |
2.6 |
-1.2 |
Rest of UK |
185.3 |
15.1 |
-0.7 |
City |
19.7 |
1.6 |
-0.5 |
Retail |
226.7 |
18.5 |
-4.8 |
West End |
166.4 |
13.5 |
-5.7 |
South East |
29.0 |
2.4 |
-6.9 |
Rest of UK |
31.3 |
2.6 |
1.8 |
Industrial |
234.9 |
19.1 |
6.7 |
South East |
28.8 |
2.3 |
-0.4 |
Rest of UK |
206.1 |
16.8 |
7.8 |
Retail
Warehouse |
122.3 |
10.0 |
3.4 |
Alternatives |
125.8 |
10.2 |
-0.9 |
Total Property
Portfolio |
1,227.9 |
100.0 |
0.2 |
Portfolio Analysis – Geographic
Breakdown
|
Market
Value
£m |
% of portfolio as
at
31 December 2020 |
West End |
434.3 |
35.4 |
South East |
249.3 |
20.3 |
Scotland |
163.7 |
13.3 |
North West |
156.4 |
12.7 |
Midlands |
151.7 |
12.4 |
South West |
31.4 |
2.6 |
Eastern |
21.4 |
1.7 |
Rest of London |
19.7 |
1.6 |
Total Property Portfolio |
1,227.9 |
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 |
Properties valued
between £40 million and £50 million |
|
London SW19, Wimbledon
Broadway ** |
Mixed |
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 |
1,227.9 |
153.6 |
130.7 |
Adjustment for lease incentives |
(22.7) |
(2.8) |
(2.4) |
Fair Value of Property
Portfolio |
1,205.2 |
150.8 |
128.3 |
Trade and other receivables |
32.3 |
4.0 |
3.4 |
Cash and cash equivalents |
34.9 |
4.4 |
3.7 |
Current Liabilities |
(22.6) |
(2.8) |
(2.4) |
Total Assets (less current
liabilities) |
1,249.8 |
156.4 |
133.0 |
Non-Current liabilities |
(1.7) |
(0.2) |
(0.2) |
Interest rate swap |
(0.2) |
(0.1) |
0.0 |
Interest-bearing loans |
(308.3) |
(38.6) |
(32.8) |
Net Assets at 31
December 2020 |
939.6 |
117.5 |
100.0 |
The next quarterly valuation of the property portfolio will be
conducted by CBRE Limited during March
2021 and it is expected that the unaudited NAV per share as
at 31 March 2021 will be announced in
April 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