BMO REAL ESTATE INVESTMENTS LIMITED

Description

BMO Real Estate Investment Limited is a Guernsey based closed-ended investment company with focus on a diversified UK commercial property portfolio. The company was formerly known as F&C UK Estate Investments Limited. The company’s shares are listed on the official list of the UK listing Authority and are traded on the Main Market segment of the London Stock Exchange as LON: BREI since June 2004.

The company’s investment objective is to deliver high and attractive income together with the potential for income and capital growth to its ordinary shareholders by investing in a diversified UK commercial property portfolio. At the end of FY2020, the company’s commercial property portfolio included London W1, Colnbrook, Bunbury, Eastleigh, Hemel Hempstead, Bracknell, Theale, Chelmsford, Luton and Edinburgh.

The company’s board has appointed BMO Investment Business Limited as its investment manager and BMO REP Property Management Limited as its property manager. Both these companies are subsidiary of BMO Asset Management (Holding) Plc, which is a wholly owned by Bank of Montreal and is also a subsidiary of the BMO Global Asset Management group of companies.

To diversify its portfolio risk and generate attractive income and capital growth the company’s board has imposed some restrictions and limits on its portfolio. Its portfolio is diversified across three commercial property sector: office, retail and industrial. Its portfolio holds UK commercial properties with predominantly long leasehold of over 60 years remaining at the time of acquisition.  It only invests in income producing properties that are decided on the basis of analysis of its prospect for future income and capital growth, lease length, sector and geographic prospects, initial and equivalent yield, tenant covenant strength and the potential for development or redevelopment of the property.

The company tries to diversify its risk by investing in a range of sectors across UK. It has not set any maximum geographic exposure, but has set the maximum waiting for the sector it invest in. The company can invest 60% of its portfolio in Office and Retail properties and 50% in industrial properties. Further, in a single property investment can’t exceed more than 15% of its total assets and the five largest properties should consist of maximum 45% of total assets.

The income generated from a tenant or tenants within the same group in any financial year can be up to 20% of the total rental income of the company in that particular financial year and minimum 90% by value of properties in the portfolio should be in the form of freehold or long leasehold. To maximise return and diversify risk the company may use gearing of maximum 60% of its total assets. However, the board has decided that borrowing will be limited to up to 45% of its total assets. Its borrowings are represented by £90-million term loan with Canada Life, which will expire in November 2026, and a £20-million revolving credit facility with Barclays, which will expire in March 2025.