BMO Commercial Property Trust: the ii analyst view

The Super 60 investment trust reports its annual results.

Today, BMO Commercial Property Trust (LSE:BCPT), which sits on interactive investor’s Super 60 list, reported its annual results – to 31 December 2021.

Its net asset value (NAV) total return, which reflects the performance of the underlying investments, was 15.5%, slightly below the MSCI UK Quarterly Property Index, which returned 16.3%

Its share price rebounded over the financial year and returned 37.8%, narrowing the discount widened by the pandemic to around 14% at the end of the year. 

Total income during the financial year was £180mil compared to the loss of £56mil previous year. The Company paid twelve interim dividends totalling 4.25 pence per share during the year.

Chairman, Paul Marcuse, said: “During 2021 we continued to progress the active asset management of the portfolio with some notable successes during the year, especially in the industrial and logistics sector where we completed the renewal of the company’s two largest lease expiries for the year.”

“The company has made good progress with its strategy to re-balance the portfolio and has addressed being significantly underweight to industrials.”

“We entered 2022 on a much brighter note with regard to the UK commercial property market. Greater certainty over rent collections has given the Board more confidence to raise the level of dividend, and with effect from May 2022, the monthly rate will be increased to 0.4 pence per share.”

ii view:

Tracy Zhao, Senior Fund Analyst, interactive investor, says: “The trust has been led by Richard Kirby since launch in 2005, consisting of a portfolio of prime property assets in core locations. The trust’s focus is on London and the South East of England, investing in a pool of UK commercial property with balanced exposure across a wide range of UK property sectors, including office, retail, industrial and alternatives.

“As the property market conditions have been improving, the trust is in the process of re-starting capital expenditure and reviewing a number of opportunities in the existing portfolio where there is a clear opportunity to generate value.”

“The trust continues to reposition its sector allocation to reflect the emerging trends and government’s levelling up plan, such as reducing allocation to offices and retail space and expanding its exposure to industrials, increasing to 30.6% at year end, and whilst the current investment policy allows investment in this sector of up to 40%. The exposure to Midland region has been raised to 21% by end of 2021 from previous year’s 12%. In return, the exposure to London West End was down to 25% from 35%.”

“This is one of the largest physical UK property trusts available, investing in prime UK commercial property - providing investors with exposure to a variety of commercial property, and generating rental income from the West End to Scotland. Its relative predictable dividend, which is distributed monthly, is the attraction for income seekers. The closed-ended structure of the fund is more suited to such holdings, providing trading liquidity.”