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ii Super 60 - BMO Commercial Property

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ii Super 60 investments:
BMO Commercial Property

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UPDATE: The Board of BCPT have temporarily suspended the monthly dividend of the property trust. 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 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, with a current yield of 5.1% and a steady monthly dividend payment. It converted to a UK real estate investment trust in June 2019, which means it must pay out at least 90% of its tax-exempt income. The trust’s performance has struggled amid a 32% allocation to retail and retail warehouses, which have been hit by company administrations and store rationalisation programmes. Its shares have gone from a 5% premium in March 2017 to a 13% discount at the end of 2019. But that masks a 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 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 had 58% of its assets in London and the South East at the end of 2019.

Shares in the trust have consistently traded at a small premium, such is the demand for the steady and reliable stream of income it generates but dipped closer to net asset value in 2019.

January 2020

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UPDATE: The Board of BCPT have temporarily suspended the monthly dividend of the property trust. 

Part of their statement from 16th April 2020:

Notwithstanding the Group's strong balance sheet and its high quality and diversified portfolio, in view of the current uncertainty the impact that COVID-19 will have on future rental receipts, particularly in relation to the Group's retail and leisure tenants, the Board considers it prudent to temporarily suspend its future monthly dividend payments in order to strengthen cash reserves and protect the long-term value of the Group. The Board currently intends to re-introduce distributions when conditions improve and believe that the portfolio is well positioned to begin its recovery once the temporary restrictions surrounding COVID-19 are lifted.

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.