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ii Super 60 - BMO Commercial Property

ii Super 60 investments

ii Super 60 investments:
BMO Commercial Property

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under review This Super 60 fund is currently under formal review. Find out more

Asset Group Asset Sub-Group Investment Category
Alternatives Property Income

Selection rationale:

This trust, rebranded from F&C to BMO in 2019 following a takeover in 2014, is one of the largest in the direct property investment trust sector. 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, offering a monthly dividend payment. The monthly payment, however, was suspended on 16 April in response to uncertainty of the impact Covid-19 would have on future rental receipts.

In a trading update (on 4 August) the trust announced that monthly dividends will be reintroduced, but at 50% lower than the previous rate. From August onwards it will pay 0.25 pence per share. The board added that the level of monthly dividend will remain at this rate until further notice, but that it will be kept under review in light of the significant economic risks and continuing uncertainty regarding the path of Covid-19. Read more

The quality and diversity of the portfolio are plus points, as are various limits that help to 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-leasehold properties (with less than 60 years remaining) and the proportion of the portfolio in different sectors. The trust owns properties located throughout the country but typically has over half its portfolio in London and the South East.

August 2020

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Under formal review Under Formal Review

The BMO Commercial Property Investment Trust is included in the ii Super 60 list of rated funds as an Income option within the Property category.

In line with our stated methodology, the investment selection committee decided to put the trust under formal review on 23 July 2020 due to continued uncertainty around income payments and its persistently wide share price discount to net asset value. The investment trust suspended its monthly dividend payment in April and at the time of announcing the formal review (23 July) there had not been any official announcement as to when dividends will be resumed.

As part of the formal review process, we will conduct an in-depth appraisal of the investment process, the shape and quality of the portfolio, prospects for resumption of dividend payments, and will consider the various factors that contributed to the significant discount that the trust is trading at.

(23 July 2020)

Since putting the trust under formal review, in early August BMO Commercial Property reintroduced the dividend, but at 50% lower than the previous rate.

Update: 20 August 2020

The investment selection committee notes the recent publication of the net asset value return figures for the second quarter of 2020, in which BMO Commercial Property Trust recorded a 2.9% decline for the quarter ended 30 June. We also note that while the backdrop remains challenging for property as an asset class rent collection improved for the trust in the second quarter, at 83% versus 74% for the first quarter. We also welcome the return to paying a monthly dividend, albeit at a reduced rate, from August onwards.

Our team is actively investigating the performance, discount to net asset value and management of the trust, and will come up with further details in due course.

Risk warnings

Past performance of the underlying constituents is not a guarantee of future performance. The value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. 

Annual performance can be found on the factsheet of each fund, trust or ETF. Simply click on the asset’s name and then the performance tab. 

The information we provide in the ii Super 60 investments list is an opinion provided by ii or one of its partners on whether to buy a specific investment. Please note that none of the opinions we provide are a “personal recommendation”, which means that we have not assessed your investing knowledge and experience, your financial situation or your investment objectives. Therefore you should ensure that any investment decisions you make are suitable for your personal circumstances.

If you are unsure about the suitability of a particular investment or think that you need a personal recommendation, you should speak to a suitably qualified financial advisor. 

Any changes to the ii Super 60 investments list and the rationale behind those decisions will be communicated through the Quarterly Investment Outlook.

Details of all recommendations issued by ii during the previous 12 month period can be found here.

ii adheres to a strict code of conduct. Members of ii staff may hold shares in companies mentioned in the ii Super 60 investments list, which could create a conflict of interest. Any member of staff intending to complete some research about any financial instrument in which they have an interest are required to disclose such interest to ii. We will at all times consider whether such interest impairs the objectivity of the recommendation.

In addition, staff involved in the production of this ii Super 60 list are subject to a personal account dealing restriction. This prevents them from placing a transaction in the specified instrument(s) for five working days before and after an investment is included or amended and made public within the list. This is to avoid personal interests conflicting with the interests of the recipients of this ii Super 60 investments list.