TIDMBREI 
 
To:                   Company Announcements 
Date:                26 July 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 30 June 2021. 
 
Net Asset Value ('NAV') 
 
The unaudited NAV per share of BREI as at 30 June 2021 was 102.1 pence. This 
represents an increase of 3.0 per cent from the NAV per share as at 31 March 
2021 of 99.1 pence and a NAV total return for the quarter of 3.9 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 30 June 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 March 2021 to 30 June 2021. 
 
                                                      Pence    % of 
                                                        per opening 
                                                      share     NAV 
 
Net asset value per share as at 31 March 2021          99.1 
 
Unrealised movement in valuation of property            3.0    3.0* 
portfolio (including the effect of gearing) 
 
Realised loss on sale of property (including the      (0.1)   (0.1) 
effect of gearing) 
 
Movement in revenue reserves                            0.1     0.1 
 
Net asset value per share as at 30 June 2021          102.1     3.0 
 
* The un-geared capital return of the property portfolio over the quarter to 30 
June 2021 was 2.1%. 
 
Share Price 
 
The share price was 71.0 pence per share as at 30 June 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 -3.7 per cent. 
 
Performance 
 
The property market continued to deliver positive total returns over Quarter 2 
with the continuing success of the vaccine roll-out and further relaxation of 
restrictions contributing to improving consumer, business, and investor 
sentiment. A note of caution remains around the rising Covid-19 cases, which is 
continuing to weigh on the manufacturing, retailing and hospitality sectors, 
with isolation protocols leading to staffing shortages. 
 
The Company portfolio has enjoyed a strong quarterly performance, generating a 
total return of 3.5% with capital growth of 2.2%. The capital return is after 
deducting major expenditure on the redevelopment of Luton and refurbishment of 
14 Berkeley Street, London, as well as the impact of the disposal of a further 
asset from the High Street portfolio at The Parade, Sutton Coldfield for £ 
1.5million. 
 
As in previous quarters, performance was driven primarily by the Industrial and 
Distribution sectors where the weight of investor demand is continuing to 
generate yield compression with occupational markets offering further support 
to pricing through leasing activity and rental growth. Yields across all 
Industrial sub-sectors are trending down in the context of strong occupational 
fundamentals driving record low vacancy rates and correspondingly attractive 
rental growth. The Company's portfolio now comprises 47.0% Industrial and 
Logistics properties. These assets experienced a 4.6% capital return over the 
quarter. 
 
The retail sector is showing signs of some stabilisation, with opportunistic 
investors beginning to call the bottom of the market. There is caution however 
and sentiment is fragile given the likelihood of further rental decline and 
occupier fallout as Covid support measures unwind. While the yields are no 
longer falling at the same rate, valuations remain under downward pressure. The 
traditional High Street assets, making up 7.2% of the portfolio saw capital 
performance of -1.8% over the quarter. However, Retail Warehousing performance 
remains robust with the 'Essential', DIY, bulky and convenience sub-sectors in 
particular experiencing yield compression. The Company's Retail Warehousing 
assets make up 16.6% of the portfolio and largely comprise 'essential' 
non-fashion occupiers with rent collection at 98% for the quarter and capital 
growth at 1.2% offering relative resilience. The Foodstore sub-sector continues 
to strengthen with a weight of capital chasing a limited number of quality 
opportunities. As a result, the supermarket-anchored redevelopment of Luton 
remains a key driver of performance within this part of the portfolio. 
 
While the nature of the UK's return to work and adoption of flexible working 
practices remains uncertain vacant space in the Office markets is increasingly 
being taken up and large corporate occupiers are beginning to move to acquire 
new space. However, this recovery will not be spread evenly across geographic 
regions and asset types, which is continuing to weigh on the Offices sector as 
a whole. The Company's Office assets make up 29.2% of the portfolio and saw no 
capital growth over the quarter. 
 
As at period end the portfolio had a vacancy rate of 4.1% (by ERV) and an 
average weighted unexpired lease term of 5.9 years (assuming tenant breaks 
operated). 
 
Rent Collection 
 
We summarise below our current rent collection outcome since the impact of 
Covid-19 came to bear, for Q2 2020 to Q2 2021, as well as providing an update 
on collection for Q3 of 2021. 
 
Q2 2020 to Q2 2021 collection (billed between 26 March 2020 and 1 June 2021) 
 
Overall collection over the fifteen-month period is at 96.1 per cent and the 
breakdown is detailed below: 
 
                        Rent Billed  Collected 
 
                        (£m)         (%) 
 
Quarter 2 2020          4.2          93.7 
 
Quarter 3 2020          4.1          95.2 
 
Quarter 4 2020          4.2          97.5 
 
Quarter 1 2021          4.2          96.3 
 
Quarter 2 2021          4.2          97.5 
 
Total                   20.9         96.1 
 
Collection by sector: 
 
                                Rent Billed    Collected 
 
                                (£m)           (%) 
 
Industrial, logistics and       7.8            100.0 
distribution 
 
Offices                         5.7            99.3 
 
Retail Warehouse                4.6            97.4 
 
Retail                          2.8            76.5 
 
Total                           20.9           96.1 
 
Breakdown of uncollected rent: 
 
Total Outstanding       Rent Billed 
 
                        (£m)          (%) 
 
Rent waived             0.5           2.6 
 
Unresolved / in         0.1           0.3 
discussion 
 
Bad Debts               0.2           1.0 
 
Uncollected Rent        0.8           3.9 
 
The absence of any exposure to the shopping centre, hospitality and leisure 
sectors remains an important factor in the comparatively high level of rent 
collection achieved by the Company. The Company's disposal of high street 
retail assets over the past five years and the healthy collection from the 
retail warehousing assets has also been helpful. The focus remains on ensuring 
that rental income is recovered where it is due under contract whilst 
continuing to work with our occupiers to deliver mutually beneficial outcomes, 
recognising certain occupiers are challenged in the current environment. 
 
Quarter 3 2021 Collection (to be billed between 24 June 2021 and 1 September 
2021) 
 
The Company has billed c.£3.0m of its quarter 3 rent due from 24 June to date 
and has collected 84.2 per cent of this total amount. 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 July and August. 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       1.2            83.6 
distribution 
 
Offices                         0.7            92.7 
 
Retail Warehouse                0.7            83.9 
 
Retail                          0.4            72.1 
 
Total                           3.0            84.2 
 
Breakdown of uncollected rent: 
 
Total Outstanding       Rent Billed 
 
                        (£m)          (%) 
 
Monthly payments*       0.1           4.1 
 
Rent waived             0.1           4.8 
 
Unresolved / in         0.2           6.9 
discussion 
 
Uncollected Rent        0.4           15.8 
 
*  tenants who have been billed for the quarter but are paying in monthly 
instalments. 
 
Cash and Borrowings 
 
The Company has approximately £16.6 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 30 June 2021, 
the LTV was 24.4 per cent and there was significant headroom under debt 
covenants. 
 
Dividend 
 
On 19 May 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 30 June 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  % capital 
                                                       portfolio      value 
                                                        as at 31  movement 
                                                      March 2021 in quarter 
 
Offices                                         95.0        29.2        0.0 
 
·      West End                                 27.9         8.6        0.0 
 
·      South East                               40.1        12.3        0.4 
 
·      Rest of UK                               27.0         8.3      (0.7) 
 
Industrial, logistics and distribution         153.0        47.0        4.6 
 
·      South East                              153.0        47.0        4.6 
 
Standard Retail                                 23.5         7.2      (1.8) 
 
·      West End                                  6.7         2.1      (1.5) 
 
·      Rest of London                            1.6         0.5      (5.9) 
 
·      South East                               11.5         3.5      (1.1) 
 
·      Rest of UK                                3.7         1.1      (2.9) 
 
Retail Warehouse                                54.1        16.6        1.2 
 
Total Property                                 325.6       100.0        2.2 
 
Summary Balance Sheet 
 
                                                     £m   Pence    % of 
                                                            per     Net 
                                                          share  Assets 
 
Property Portfolio per Valuation Report           325.6   135.3   132.5 
 
Adjustment for lease incentives                   (3.7) 
                                                          (1.5)   (1.5) 
 
Fair Value of Property Portfolio                  321.9   133.8   131.0 
 
Cash                                               16.6     6.9     6.8 
 
Trade and other receivables                         6.7     2.8     2.7 
 
Trade and other payables                          (9.7)   (4.1)   (4.0) 
 
Interest-bearing loans                           (89.7)  (37.3)  (36.5) 
 
Net Assets at 30 June 2021                        245.8   102.1   100.0 
 
The property portfolio will next be valued by an external valuer during 
September 2021 and the net asset value per share as at 30 September 2021 will 
be announced in October 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 
 
 
 
 
 
END 
 
 

(END) Dow Jones Newswires

July 26, 2021 02:00 ET (06:00 GMT)

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