Net Asset Value

To:                   Company Announcements

Date:                2 May 2019

Company:          BMO Real Estate Investments Limited

LEI:                  231801XRCB89W6XTR23

Subject:            Net Asset Value

Net Asset Value

The unaudited net asset value per share of BMO Real Estate Investments Limited (“BREI”) as at 31 March 2019 was 106.0 pence. The net asset value per share as at 31 December 2018 was 106.0 pence. The NAV total return for the quarter was 1.2 per cent

The net asset value is based on the external valuation of the Group's property portfolio prepared by Cushman & Wakefield.

The net asset value is calculated under International Financial Reporting Standards ("IFRS").

The net asset value includes all income to 31 March 2019 and is calculated after deduction of all dividends paid prior to that date.  It does not include a provision for the dividend for the quarter to 31 March 2019, which is expected to be paid in June 2019.

Share Price

The share price was 87.6 pence per share at 31 March 2019, which represented a discount of 17.4 per cent to the NAV per share announced above. The share price total return for the quarter was -3.7 per cent.

Breakdown of NAV movement

Set out below is a breakdown of the change to the unaudited net asset value per share calculated under IFRS over the period from 31 December 2018 to 31 March 2019.

	Pence per share	% of opening NAV
Net asset value per share as at 31 December 2018	106.0
Unrealised movement in valuation of property portfolio (including the effect of gearing)	0.3	0.3*
Realised loss on sale of property	(0.1)	(0.1)
Movement in revenue reserves	(0.2)	(0.2)
Net asset value per share as at 31 March 2019	106.0	-

* The un-geared increase in the valuation of the property portfolio over the quarter to 31 March 2019 was 0.3%.

The net gearing as at 31 March 2019 was 26.4% #

# Bank debt (less net current assets) divided by fair value of investment properties

Performance

The capital value of the portfolio increased by 0.3 per cent over the quarter, compared to the 0.8 per cent fall in the MSCI UK Monthly Property Index for standing investments over the same period.

Positive performance was attributable to the successful outcome of asset management initiatives at a number of properties, particularly leasing activity within the Rest of UK Offices subsector, the West End Office assets and the South East Industrial assets. Of particular note was the letting, post extensive refurbishment, of the office at Standard Hill, Nottingham to the College of Law on the basis of a new 15-year lease at a rent of £576,000 p.a. There has also been refurbishment work at the office property at 14 Berkeley Street, London, and following completion, the 1^st and 5^th floors were let during the quarter, delivering combined additional rental income of £271,000 p.a.

Transaction levels are low, particularly for the retail market which remains under considerable pressure, with continued stress within the occupier markets weighing on investor sentiment. The retail element of the Company’s portfolio decreased in value by 3.3 per cent over the quarter, with the impact most keenly felt across the High Street portfolio. The decrease in value of the portfolio’s retail warehouse assets of 1.9 per cent was attributable to a further downgrade to the property at Northfields, Rotherham, currently let to Homebase and subject to reduced rent under a CVA.

39.2 per cent of the portfolio comprises Industrial assets located within the south east which continue to deliver income growth. These assets experienced capital growth over the period of 2.4 per cent.

At the period end the portfolio void rate was 0.1% per cent and the average weighted unexpired lease term was 6.1 years.

Portfolio Analysis	£m	% of portfolio as at 31 March 2019	% capital value movement  in quarter
Offices	90.7	26.2	2.0
West End	28.4	8.2	0.7
South East	27.9	8.1	(0.9)
Rest of UK	34.4	9.9	5.7
Industrial	135.8	39.2	2.4
South East	135.8	39.2	2.4
Standard Retail	53.2	15.4	(5.0)
West End	8.4	2.4	-
Rest of London	3.1	0.9	(6.1)
South East	16.5	4.8	(4.9)
Rest of UK	25.2	7.3	(6.4)
Retail Warehouse	66.3	19.2	(1.9)
Rest of UK	56.5	16.4	(2.2)
Rest of London	9.8	2.8	-
Total Property	346.0	100.0	0.3

Property Purchases and Sales

During the quarter, the Group completed the sale of a retail warehouse, in Sands Road, Swalwell, Gateshead for £2.2 million in line with the Q4 2018 valuation.

There were no other sales or purchases in the quarter.

Summary Balance Sheet

	£m	Pence per share	% of Net Assets
Property Portfolio per Valuation Report	346.0	143.8	135.7
Adjustment for lease incentives	(4.2)	(1.8)	(1.7)
Fair Value of Property Portfolio	341.8	142.0	134.0
Cash	10.3	4.3	4.1
Trade and other receivables	5.7	2.4	2.2
Trade and other payables	(6.2)	(2.6)	(2.5)
Interest-bearing loans	(96.4)	(40.1)	(37.8)
Net Assets at 31 March 2019	255.2	106.0	100.0

The property portfolio will next be valued by an external valuer during June 2019 and the net asset value per share as at 30 June 2019 will be announced in July 2019.

This announcement contains inside information.

Enquiries:

The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL

Tel: [phone]
Fax: [phone]

Peter Lowe
Scott Macrae
F&C Investment Business Ltd
Tel: [phone]
Fax: [phone]