To:
Company Announcements
Date:
27 April 2021
Company: BMO Real Estate
Investments Limited
LEI:
231801XRCB89W6XTR23
Subject:
Trading Update and Net Asset Value
Background
BMO Real Estate Investments Limited (“BREI” or the “Company”)
provides an update on trading and the net asset value as at
31 March 2021.
Net Asset Value (‘NAV’)
The unaudited NAV per share of BREI as at 31 March 2021 was 99.1
pence. This represents an increase of 1.0 per cent from the
NAV per share as at 31 December 2020
of 98.1 pence and a NAV total return
for the quarter of 1.9 per cent.
The NAV is based on the external valuation of the Company's
property portfolio prepared by Cushman & Wakefield.
The NAV is calculated under International Financial Reporting
Standards ("IFRS").
The NAV includes all income to 31 March
2021 and is calculated after the deduction of all dividends
paid prior to that date.
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 2020 to 31 March 2021.
|
Pence per share |
% of opening NAV |
Net asset value per share as at 31
December 2020 |
98.1 |
|
Unrealised movement in valuation of
property portfolio (including the effect of gearing) |
1.2 |
1.2* |
Realised loss on sale of property
(including the effect of gearing) |
(0.4) |
(0.4) |
Movement in revenue reserves |
0.2 |
0.2 |
Net asset value per share as at
31 March 2021 |
99.1 |
1.0 |
* The un-geared capital return of the property portfolio over
the quarter to 31 March 2021 was
0.6%.
Share Price
The share price was 74.6 pence per
share as at 31 March 2021, which
represented a discount of 24.3 per cent to the NAV per share
announced above. The share price total return for the quarter was
23.7 per cent.
Performance
The property market delivered positive total returns over the
quarter buoyed by encouraging news on the vaccine rollout and a
timetable to the reopening of parts of the economy that have
remained closed for much of the pandemic. Performance was largely
driven by a strong showing from the industrial and distribution
sector where occupational fundamentals remain attractive and
investment demand has driven sharp yield compression. There was
some improved stability in retail markets, particularly retail
warehousing, although shopping centres and high street yields
continued to soften. Sentiment has improved over the period,
however investors outside of the industrial and foodstore markets
remain cautious and transaction levels are subdued by historic
standards.
The capital return for the Company’s portfolio was 0.6 per cent
for the quarter. The return is net of expenditure on the two
development projects at Luton and Chelmsford and the impact of the
disposal of a further asset from the High Street portfolio at
High Street Winchester below the 31 December
2020 valuation.
There was a 2.5 per cent increase in the valuation of the
Industrial and Logistics properties which now comprise 45.9 per
cent of the portfolio. Notwithstanding the fact that the retail
portfolio remains fully let, there was further downward pressure on
valuations in the Company’s high street portfolio (weighting: 8.0
per cent) on account of negative sentiment towards the sector’s
falling rents, lower rental recovery, and the fear of further
tenant failures.
The retail warehouse portfolio (weighting: 16.5 per cent)
continues to offer relative resilience, being let primarily to
‘essential’ convenience, non-fashion occupiers and demonstrating 95
per cent rent collection over the full period of the pandemic. The
strength of demand for long let foodstore assets was a factor
behind the significant contribution to performance made by the
pre-let supermarket development at Enterprise Way, Luton.
Investor and occupier caution linked to the potential for
widespread adoption of flexible working practices continues to
dampen returns from the Office sector (weighting: 29.6 per
cent). There was further leasing progress on the completed
refurbishment project at County House, Chelmsford, where only one
floor remains vacant and this has contributed positively to returns
over the quarter.
As at period end the portfolio has a vacancy rate of 4.0% (by
ERV) and an average weighted unexpired lease term of 5.9 years.
Rent Collection
We summarise below our current rent collection outcome since the
impact of Covid-19 came into full force, for Q2 2020 to Q1 2021 as
well as providing an update on collection for Q2 of 2021.
Q2 2020 to Q1 2021 collection (billed between 26 March 2020 and 1 March
2021)
Overall collection over the twelve-month period is at 94.7 per
cent and the breakdown is detailed below:
|
Rent Billed |
Collected |
|
(£m) |
(%) |
Quarter 2 2020 |
4.1 |
93.3 |
Quarter 3 2020 |
4.1 |
94.5 |
Quarter 4 2020 |
4.2 |
96.8 |
Quarter 1 2021 |
4.2 |
94.2 |
Total |
16.6 |
94.7 |
Collection by sector:
|
Rent Billed |
Collected |
|
(£m) |
(%) |
Industrial, logistics and
distribution |
6.1 |
100.0 |
Offices |
4.5 |
99.5 |
Retail Warehouse |
3.7 |
94.9 |
Retail |
2.3 |
70.7 |
Total |
16.6 |
94.7 |
Breakdown of uncollected rent:
Total Outstanding |
Rent Billed |
|
|
(£m) |
(%) |
Agreed deferments |
0.0 |
0.1 |
Rent waived |
0.3 |
1.8 |
Unresolved / in discussion |
0.4 |
2.2 |
Bad Debts |
0.2 |
1.2 |
Uncollected Rent |
0.9 |
5.3 |
The absence of any exposure to the shopping centre, leisure and
hospitality sectors has been a contributory factor toward the
comparatively high level of rent collection achieved by the
Company. The focus remains on ensuring that rental income is
recovered where it is due under contract and can be paid, whilst
continuing to work with our occupiers to deliver mutually
beneficial outcomes in scenarios where tenants are under particular
trading pressures and prospects for recovery are challenged.
Quarter 2 2021 Collection (to be billed between 25 March 2021 and 1 June
2021)
The Company has billed c.£3.2m of its quarter 2 rent due from 25
March to date and has collected 82.1 per cent of this total amount
(compared to 79.0 per cent for the same number of days last
quarter). This percentage will increase as tenants with whom we
have agreed monthly payment arrangements, but have been billed
quarterly, pay further instalments. The total quarterly rent
amounts to c.£4.2 million with further contractual billing dates
during the course of April and May. Progress on collection is
consistent with previous quarters with total recovery by period end
expected to be in line with trend over the course of the
pandemic.
Collection by sector:
|
Rent Billed |
Collected |
|
(£m) |
(%) |
Industrial, logistics and
distribution |
1.3 |
94.4 |
Offices |
0.6 |
87.2 |
Retail Warehouse |
0.8 |
66.9 |
Retail |
0.5 |
64.9 |
Total |
3.2 |
82.1 |
Breakdown of uncollected rent:
Total Outstanding |
Rent Billed |
|
|
(£m) |
(%) |
Monthly payments* |
0.1 |
4.5 |
Rent waived |
0.0 |
0.3 |
Unresolved / in discussion |
0.5 |
13.1 |
Uncollected Rent |
0.6 |
17.9 |
* tenants who have been billed for the quarter but are
paying in monthly instalments.
Cash and Borrowings
The Company has approximately £15.7 million of available cash
and an undrawn revolving credit facility of £20 million. The £90
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 2021, the LTV was 25.3 per cent and
there was significant headroom under debt covenants.
Dividend
On 1 March 2021, the Company
announced a quarterly dividend payment of 0.85 pence per ordinary share in respect of the
financial year ended 30 June 2021,
which was paid to shareholders on 31 March
2021. The Board will continue to monitor rental receipts and
earnings closely and keep the future level of dividends under
review.
Portfolio Analysis |
£m |
% of portfolio as at 31
March 2021 |
% capital value
movement in quarter |
Offices |
94.4 |
29.6 |
(0.6) |
|
27.6 |
8.7 |
(1.4) |
|
39.7 |
12.4 |
0.2 |
|
27.1 |
8.5 |
(0.8) |
Industrial, logistics and
distribution |
146.2 |
45.9 |
2.5 |
|
146.2 |
45.9 |
2.5 |
Standard Retail |
25.5 |
8.0 |
(0.6) |
|
6.8 |
2.1 |
(4.2) |
|
1.7 |
0.5 |
(2.9) |
|
11.6 |
3.6 |
0.6 |
|
5.4 |
1.8 |
(3.9) |
Retail
Warehouse |
52.7 |
16.5 |
0.0 |
Total Property |
318.8 |
100.0 |
0.8 |
Summary Balance Sheet
|
£m |
Pence per
share |
% of Net
Assets |
Property Portfolio per Valuation
Report |
318.8 |
132.5 |
133.7 |
Adjustment for lease incentives |
(3.7) |
(1.5) |
(1.5) |
Fair Value of Property
Portfolio |
315.1 |
131.0 |
132.2 |
Cash |
15.7 |
6.5 |
6.5 |
Trade and other receivables |
7.2 |
3.0 |
3.0 |
Trade and other payables |
(9.7) |
(4.0) |
(4.1) |
Interest-bearing loans |
(89.7) |
(37.4) |
(37.6) |
Net Assets at 31
March 2021 |
238.6 |
99.1 |
100.0 |
The property portfolio will next be valued by an external valuer
during June 2021 and the net asset
value per share as at 30 June 2021
will be announced in July 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:
The Company Secretary
Northern Trust International Fund Administration Services
(Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
Tel: 01481 745001
Peter Lowe
Scott Macrae
BMO Investment Business Ltd
Tel: 0207 628 8000