BMO Real Estate Investments Ltd - Net Asset Value
PR Newswire
London, October 24
To: Company Announcements
Date:25 October 2019
Company: BMO Real Estate Investments Limited
LEI: 231801XRCB89W6XTR23
Subject: Net Asset Value
Net Asset Value
The unaudited net asset value per share of BMO Real Estate Investments Limited ("BREI") as at 30 September 2019 was 104.0 pence. This represents a decrease of 0.8 per cent from the net asset value per share as at 30 June 2019 of 104.8 pence and a NAV total return for the quarter of 0.4 per cent.
The net asset value is based on the external valuation of the Group's property portfolio prepared by Cushman & Wakefield.
The net asset value is calculated under International Financial Reporting Standards ("IFRS").
The net asset value includes all income to 30 September 2019 and is calculated after deduction of all dividends paid prior to that date. It does not include a provision for the dividend for the quarter to 30 September 2019, which is expected to be paid in December 2019.
Share Price
The share price was 81.6 pence per share at 30 September 2019, which represented a discount of 21.5 per cent to the NAV per share announced above. The share price total return for the quarter was 3.5 per cent.
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 30 June 2019 to 30 September 2019.
| Pence per share | % of opening NAV | |
| Net asset value per share as at 30 June 2019 | 104.8 | |
| Unrealised movement in valuation of property portfolio (including the effect of gearing) | (0.6) | (0.6) |
| Movement in revenue reserves | (0.2) | (0.2) |
| Net asset value per share as at 30 September 2019 | 104.0 | (0.8) |
* The un-geared decrease in the valuation of the property portfolio over the quarter to 30 September 2019 was 0.4%.
The net gearing as at 30 September 2019 was 26.5% #
# Bank debt (less net current assets) divided by fair value of investment properties
Performance
The property portfolio delivered an ungeared total return of 0.8 per cent over the quarter to September, ahead of the MSCI UK Monthly Property Index for standing investments which recorded 0.6 per cent. The capital value of the portfolio decreased by 0.4 per cent, versus a 0.7 per cent fall in the MSCI UK Monthly Property Index over the same period.
Standard retail, 14.0 per cent of the portfolio by value, was again worst hit with capital value falls of 5.5 per cent from the regional assets and 2.1 per cent from the South East holdings. Inclusive of the Company's retail warehouse assets the value of the retail portfolio fell 1.7 per cent in aggregate. Investor sentiment remains particularly negative towards this sector, with continued poor news-flow from the occupier markets and transaction volumes depressed.
The Office assets, which make up 26.8 per cent of the total portfolio increased in value by 0.5 per cent over the quarter driven by strong relative returns from the regional properties, supported by a robust return from the central London assets.
Values were flat for the Industrials which comprise just over 40 per cent of the portfolio. There are additional opportunities to enhance the income profile of the industrial portfolio and further asset management initiatives are underway.
Occupational demand for the Company's property remains encouraging with a portfolio vacancy of 2.0 per cent. The vacancy itself is largely the result of a new value-add initiative linked to the refurbishment of an office building in Chelmsford where half of the accommodation has already been pre-let to the Secretary of State. The average weighted unexpired lease term is 6 years.
| Portfolio Analysis | £m | % of portfolio as at 30 September 2019 | % capital value movement in quarter |
| Offices | 91.2 | 26.8 | 0.5 |
| - West End | 29.3 | 8.6 | 0.3 |
| - South East | 34.2 | 10.1 | (0.2) |
| - Rest of UK | 27.7 | 8.1 | 1.5 |
| Industrial | 136.3 | 40.1 | 0.0 |
| - South East | 136.3 | 40.1 | 0.0 |
| Standard Retail | 47.8 | 14.0 | (2.9) |
| - West End | 8.4 | 2.5 | 0.0 |
| - Rest of London | 3.0 | 0.9 | (2.5) |
| - South East | 20.6 | 6.0 | (2.1) |
| - Rest of UK | 15.8 | 4.6 | (5.5) |
| Retail Warehouse | 64.8 | 19.1 | (0.6) |
| Total Property | 340.1 | 100.0 | (0.4) |
Property Purchases and Sales
During the quarter, the Company disposed of a high street retail asset in Kings Heath, Birmingham for £2 million in line with the June 2019 valuation.
There were no other sales or purchases in the quarter.
Summary Balance Sheet
| £m | Pence per share | % of Net Assets | |
| Property Portfolio per Valuation Report | 340.1 | 141.3 | 135.9 |
| Adjustment for lease incentives | (4.1) | (1.7) | (1.6) |
| Fair Value of Property Portfolio | 336.0 | 139.6 | 134.3 |
| Cash | 11.4 | 4.8 | 4.6 |
| Trade and other receivables | 6.1 | 2.5 | 2.4 |
| Trade and other payables | (6.7) | (2.8) | (2.7) |
| Interest-bearing loans | (96.6) | (40.1) | (38.6) |
| Net Assets at 30 September 2019 | 250.2 | 104.0 | 100.0 |
The property portfolio will next be valued by an external valuer during December 2019 and the net asset value per share as at 31 December 2019 will be announced in January 2020.
This announcement contains inside information.
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
Fax: 01481 745051
Peter Lowe
Scott Macrae
BMO Investment Business Ltd
Tel: 0207 628 8000
Fax: 0131 225 2375
