BMO Commercial Property Trust
Rated Fund 2013, 2017-20. A reliable source of eye-catching income paid monthly
This trust, rebranded from F&C to BMO in 2019 following a takeover in 2014, is the second-largest in the direct property investment trust sector, with total assets of £1.37 billion. It has one of the most experienced management teams, led by Richard Kirby, who has run the trust since its launch in 2005.
It is attractive for income investors, as its current yield is 5.2% a year, paid monthly. It converted to a UK real estate investment trust in June 2019, which means it must pay out 90% of its tax-exempt income. The trust’s performance has struggled under the weight of a 32% allocation to retail and retail warehouses, which have been hit by company bankruptcies and store rationalisation programmes. Its shares went from a 5% premium in March 2017 to a 13% discount at the end of 2019. However, that masks a fairly decent longer-term rise in net asset value, up 15% and 40% over three and five years respectively.
The quality and diversity of the portfolio are plus points, as are various limits that help maintain diversification and reduce risk. For example, no single property can account for more than 15% of gross assets at the time of acquisition, and the largest five properties must be no more than 40% of gross assets. There are also limits on the proportion of short-lease properties (those with less than 60 years remaining) and the proportion of the portfolio in different sectors. The trust owns properties around the country, but 58% of its assets were in London and the south east at the end of 2019.
Narrative and ratings content all as of 01 January 2020.See all Money Observer rated funds
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Joined BMO REP in July 2017. He is Fund Manager of the Royal Sun Alliance Shareholders Real Estate Fund which is managed by BMO REP while also supporting Richard Kirby on the management of the Company. He joined BMO REP from Hermes Investment Management where he spent the past six years. He sits on the Investment Committee of BMO REP, is a Chartered Surveyor and also holds a Certificate in Investment Management.
Data provided by Morningstar.
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