To:
Company Announcements
Date:
27 July 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 5.3 per cent for the quarter ended
30 June 2021
- Share Price total return of 29.6 per cent for the quarter ended
30 June 2021
- Combined rent collection received to date for Q2 2020 to Q2 of
2021 at 90.3 per cent
- Rent collection currently received to date for Q3 2021 of 90.5
per cent
- As at 30 June 2021, the void rate
was 1.9 per cent (2.4 per cent as at 31
March 2021)
Net Asset Value
The unaudited net asset value (‘NAV’) per share of the Company
as at 30 June 2021 was 124.8 pence. This represents an increase of 4.4
per cent from the unaudited NAV per share as at 31 March 2021 of 119.5
pence and a NAV total return for the quarter of 5.3 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 30 June
2021 and is calculated after deduction of all dividends paid
prior to that date. The EPRA Net Tangible Assets (NTA) per share as
at 30 June 2021, which is adjusted to
remove the fair value of the interest rate swap, was 124.8 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 31 March 2021 to 30 June
2021 (including the effect of gearing):
|
£m |
Pence per share |
% of opening NAV
per share |
NAV as at 31 March 2021 |
955.6 |
119.5 |
|
Unrealised increase in valuation of
property portfolio |
37.8 |
4.6 |
3.8 |
Movement in fair value of interest
rate swap |
0.1 |
- |
- |
Other net revenue |
10.8 |
1.4 |
1.2 |
Share buy-backs |
(5.5) |
0.3 |
0.3 |
Dividends paid |
(8.4) |
(1.0) |
(0.9) |
NAV as at 30 June 2021 |
990.4 |
124.8 |
4.4 |
Valuation
The capital value of the Company's portfolio increased by 3.0
per cent over the 3 months. The industrial and logistics sector of
the portfolio achieved another quarter of strong performance,
increasing by 10.7 per cent. This reflected both further yield
compression in the capital markets and the completion of two
significant asset management initiatives as highlighted below.
The retail warehouse sector recorded its third successive
quarter of increasing values with more liquidity and further
evidence of transactional activity in the capital markets.
The Retail, hospitality and leisure sectors were more resilient
this quarter as lockdown restrictions are lifted. St Christopher’s
Place fell in value by 0.6 per cent and Wimbledon Broadway was
unchanged over the period.
The valuation of the office portfolio increased during the
quarter with West End Valuations improving as overseas investors
seek to deploy capital into the sector. There were some valuation
falls in the South East and regionally on those properties with
shorter lease terms.
Share Price
As at 30 June 2021, the share
price was 90.6 pence per share, which
represented a discount of 27.4 per cent to the NAV per share. The
share price total return for the quarter to 30 June 2021 was 29.6 per cent.
Rent Collection
We summarise below our current rent collection outcome since the
impact of Covid-19 came into full force, from 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 for the fifteen-month period is at 90.3 per
cent and the breakdown is detailed below:
|
Rent Billed |
Collected |
|
(£m) |
(%) |
Quarter 2 2020 |
16.9 |
85.1 |
Quarter 3 2020 |
16.5 |
90.0 |
Quarter 4 2020 |
16.3 |
93.8 |
Quarter 1 2021 |
16.5 |
89.9 |
Quarter 2 2021 |
16.2 |
92.8 |
Total |
82.4 |
90.3 |
Collection by sector:
|
Rent Billed |
Collected |
|
|
(£m) |
(£m) |
(%) |
Industrial |
16.9 |
16.2 |
95.3 |
Offices |
35.2 |
34.3 |
97.6 |
Retail Warehouse |
9.7 |
9.2 |
95.8 |
Retail |
15.1 |
10.0 |
65.7 |
Alternatives |
5.5 |
4.8 |
85.9 |
Total |
82.4 |
74.5 |
90.3 |
Breakdown of uncollected rent:
Total Outstanding |
Rent Billed |
|
|
(£m) |
(%) |
Agreed deferments |
1.0 |
1.3 |
Rent waived |
3.2 |
3.9 |
Bad Debts |
0.2 |
0.3 |
Monthly payments* |
0.1 |
0.1 |
Unresolved / in discussion |
3.4 |
4.1 |
Uncollected Rent |
7.9 |
9.7 |
* tenants who have been billed for the quarter but are
paying in monthly instalments.
The resolution of historical rent arrears is progressing, and
conversations are ongoing with tenants to reach an equitable
conclusion. A supportive approach continues to be adopted with the
occupiers affected. As previously disclosed, the significant
proportion of uncollected rent is from the retail and leisure
tenants at St Christopher’s Place Estate and Wimbledon, who have suffered particularly
badly from the lockdown.
There is a cautious optimism, shared by new and returning
customers and occupiers re-opening for business after the long
period of enforced closure.
Q3 2021 Collection (due to be billed between 24 June 2021 and 1
September 2021)
The total quarterly rental payments for Quarter 3 amount to
c.£16.5 million. The Company has billed £9.2m of its Quarter 3 rent
due from 24 June to date and has collected 90.5 per cent of this
total amount. The balance of rent will be billed on the relevant
due dates during the course of July and August.
Collection by sector:
|
Rent Billed |
Collected |
|
|
(£m) |
(£m) |
(%) |
Industrial |
2.4 |
2.3 |
95.9 |
Offices |
3.7 |
3.6 |
96.3 |
Retail Warehouse |
0.4 |
0.4 |
92.6 |
Retail |
1.8 |
1.2 |
70.9 |
Alternatives |
0.9 |
0.8 |
89.9 |
Total |
9.2 |
8.3 |
90.5 |
Breakdown of uncollected rent:
Total Outstanding |
Rent Billed |
|
|
(£m) |
(%) |
Rent waived |
0.3 |
2.9 |
Monthly payments* |
0.1 |
1.6 |
Outstanding |
0.5 |
5.0 |
Uncollected Rent |
0.9 |
9.5 |
* tenants who have been billed for the quarter but are
paying in monthly instalments.
Trading Activity
St Christopher’s Place Estate
Footfall levels across the estate remain relatively strong
compared with those being recorded for the wider West End.
Since the first release of restrictions from the last lockdown in
April, footfall has hit 61% of average 2019 levels on the estate
(the last comparable period pre-pandemic). This is ahead of the
West End which has been averaging at around 40% but trending
slightly below the national average of 67%.
The UK moved to ‘Step 4’ of the Roadmap out of lockdown, from 19
July, lifting the majority of restrictions. Whilst this
is a positive step for businesses, a meaningful return of office
workers and international travellers is required to see
pre-pandemic levels of activity. To aid recovery the Mayor of
London has recently launched the
‘Let’s do London’ campaign, to encourage domestic visitors to enjoy
all that London has to offer.
Since the last trading update, the estate has welcomed a number
of new food and beverage outlets with Crome, Papa-dum and Sidechick
all opening on James Street. Next month, ‘Isola’ by San Carlo
will join the line-up and Emma Hyacinth will open in their new,
larger store. There has also been a high level of activity within
the estate offices with 5 new tenants or lease renewals being
signed since the start of Q2. This activity underlines tenant
demand for the estate and demonstrates how occupiers are seeing
past the pandemic.
Offices
Two significant events completed over the quarter. At Alhambra
House in Glasgow there was the
completion of a lease extension with JP Morgan until 30 June 2023. The office building extends to
c100,000 sq ft and for the period of the lease extension the
annualised rent will be £2,500,000, an uplift of £500k on the
passing rent.
At 17A Curzon Street in London
there was the completion of a letting of the 2nd floor to MA Family
Office Ltd. The new 5-year lease has a tenant break after the third
year and a rent of £130,350 pa was agreed. The letting demonstrates
the increase in occupier activity in major cities as restrictions
ease.
Retail Parks
At Newbury Retail Park the Landlords works to combine units 3
and 4, creating a new larger 20,000 sq ft unit, with upgraded shop
frontages, has completed and been handed over to the incoming
occupier T J Morris t/a Home Bargains. Following over two years of
outwards yield shifts, pricing of quality assets within the sector
has started to improve. This is underpinned by rebased rents and
resilience within this retail sub-segment which has been
demonstrated throughout the pandemic. We are now seeing increased
activity in the capital markets with UK institutions an active
buyer in this space.
Industrial and Logistics
For the second quarter in a row performance was strong and
dominated by two leasing events. Firstly, there was the completion
of a lease re-gear with Kimberly-Clark at the 360,000 sq ft
logistics facility at Revolution Park, Chorley. This was originally
due to expire in June 2021, and the
re-gear saw the tenant sign a new 12 year lease (with a break
option at the end of the 7th year), and fixed annual uplifts of 2%,
resulting in a valuation uplift of 32.3%. The second was the
settlement of the rent review at a 270,000 sq ft facility in Hams
Hall, Birmingham, Nestlé’s Purina
pet food distribution hub. The review saw a sizeable uplift in the
passing rent from £1.5million to £1.94million per annum, which in
turn resulted in a valuation increase of 11.0% over the quarter.
This had a positive capital impact upon the other two buildings
held on the distribution park.
Property Sales and Capital Receipts
In May the Company announced the disposal of a solus retail
warehouse located in East Kilbride, Scotland for a total consideration of
£19million, reflecting an increase of 7.2% over the last external
valuation at 31 March 2021. The
property is let to B&Q Limited for one of its large format
stores on a lease due to expire in November
2029.
This sale is entirely consistent with the strategy of adopting a
higher level of activity within the portfolio as the Company moves
to recycle capital and adjust sector weightings.
The Company also received a capital receipt of £2.42million from
the long leaseholder of a number of residential units at St
Christopher’s Place as a result of the completion of a statutory
lease enfranchisement process to extend the leases. This covered 24
flats located in Greengarden House subject to leases which were due
to expire 2077 at nil rent. Under a statutory process the leases
have been extended for a further 90 years until 2167.
Capital Expenditure
Having deferred uncommitted capital expenditure during the
pandemic the manager is now actively working to bring forward a
number of projects following the removal of restrictions.
Cash and Borrowings
The Company had approximately £56.2 million of available cash as
at 30 June 2021. 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 additional
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 30 June 2021, the Company’s net
loan to value (‘LTV’) was 20.4 per cent.
Dividend
The Company paid three monthly dividends at a rate of
0.35 pence per share during the
quarter. The Company expects to continue to pay monthly dividends
at this rate for the foreseeable future. There continues to be an
improving outlook and the Board will monitor rental receipts and
earnings closely and keep the dividend under review.
Share Buybacks
The Company commenced a share buyback programme during the
quarter using some of the proceeds from the East Kilbride sale. 6
million shares were purchased over the period and the programme is
ongoing.
Portfolio Analysis – Sector Breakdown
|
Portfolio
Value
£m |
% of
portfolio as at
30 June 2021 |
%
like for like capital value shift (excl transactions) |
Offices |
520.2 |
41.2 |
0.8 |
West End |
215.7 |
17.2 |
3.5 |
South East |
72.9 |
5.8 |
-1.4 |
South West |
30.5 |
2.4 |
-2.0 |
Rest of UK |
181.7 |
14.3 |
-0.7 |
City |
19.4 |
1.5 |
-0.8 |
Retail |
191.1 |
15.2 |
-1.1 |
West End |
165.0 |
13.1 |
0.3 |
South East |
26.0 |
2.1 |
-9.2 |
Industrial |
278.5 |
22.1 |
10.7 |
South East |
29.5 |
2.3 |
1.6 |
Rest of UK |
249.0 |
19.8 |
11.9 |
Retail
Warehouse |
145.1 |
11.5 |
4.9 |
Alternatives |
126.7 |
10.0 |
0.7 |
Total Property
Portfolio |
1261.6 |
100.0 |
3.0 |
Portfolio Analysis – Geographic Breakdown
|
Market
Value
£m |
% of portfolio as
at
30 June 2021 |
West End |
439.8 |
34.8 |
South East |
249.8 |
19.8 |
Midlands |
181.1 |
14.4 |
North West |
176.3 |
14.0 |
Scotland |
142.1 |
11.3 |
South West |
30.5 |
2.4 |
Eastern |
22.6 |
1.8 |
Rest of London |
19.4 |
1.5 |
Total Property Portfolio |
1,261.6 |
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 |
Chorley, Unit 6 and 8
Revolution Park |
Industrial |
Winchester, Burma
Road |
Alternative |
Properties valued
between £30 million and £40 million |
|
Manchester, 82 King
St |
Office |
Liverpool, Unit 1,
G.Park |
Industrial |
Daventry,
Site E4, DIRFT |
Industrial |
* 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 |
1,261.6 |
159.0 |
127.4 |
Adjustment for lease incentives |
(26.7) |
(3.4) |
(2.7) |
Fair Value of Property
Portfolio |
1,234.9 |
155.6 |
124.7 |
Trade and other receivables |
35.8 |
4.5 |
3.6 |
Cash and cash equivalents |
56.2 |
7.1 |
5.7 |
Current Liabilities |
(26.2) |
(3.3) |
(2.6) |
Total Assets (less current
liabilities) |
1,300.7 |
163.9 |
131.4 |
Non-Current liabilities |
(1.7) |
(0.2) |
(0.2) |
Interest-bearing loans |
(308.6) |
(38.9) |
(31.2) |
Net Assets at 30
June 2021 |
990.4 |
124.8 |
100.0 |
The next quarterly valuation of the property portfolio will be
conducted by CBRE Limited during September
2021 and it is expected that the unaudited NAV 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:
Richard Kirby
BMO REP Asset Management plc
Tel: 0207 499 2244
Graeme Caton
Winterflood Securities Limited
Tel: 0203 100 0268