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Richard Kirby - Fund Manager

 

 

Any investment involves risk as market conditions and trends fluctuate. Accordingly, investment values may fall as well as rise and investors may receive back less than originally invested.

BMO Commercial Property Trust

 

Objectives

 

The Company’s investment objective is to provide ordinary shareholders with an attractive level of income together with the potential for capital and income growth from investing in a diversified UK commercial property portfolio. 

 

Investment Policy

 

The Company’s policy is to hold a diversified portfolio of freehold and long leasehold (over 60 years remaining at the time of acquisition) UK commercial properties. It invests principally in three commercial property sectors: office, retail and industrial. It also has an exposure to the alternative sector, including leisure, residential property and student housing.

 

The Company invests in properties which the Board, on the advice of the Managers, believes will generate a combination of long-term growth in income and capital for shareholders. Investment decisions are based on an analysis of, amongst other things, prospects for future income and capital growth, sector and geographic prospects, tenant covenant strength, lease length, and initial and equivalent yields.

 

Investment risks are spread by investing across different geographical areas and sectors and by letting properties to lower risk tenants. The Company has not set any maximum geographic exposures, but the maximum weightings in the principal property sectors at any time (states as a percentage of total assets) are: office: 50 per cent; retail: 65 per cent; and industrial: 40 per cent. No single property may exceed 15 per cent of total assets and the five largest properties (excluding indirect property funds) may not exceed 40 per cent of total assets (in each case at the time of acquisition). Short leasehold properties (with less than 60 years remaining) may not exceed 10 per cent of total assets at the time of acquisition.

 

The Company is permitted to invest up to 15 per cent, at the time of acquisition, of its total assets in indirect property funds (including listed property companies) which invest principally in UK property, but these investments may not exceed 20 per cent of total assets at any subsequent date. the Company is permitted to invest cash, held by it for working capital purposes and awaiting investment, in cash deposits, gilts and money market funds.

 

The Company uses gearing throughout the Group to enhance returns over the long-term which are subject to covenant tests set, all of which are comfortably met. Gearing, represented by borrowings as a percentage of total assets, may not exceed 50 per cent. However, the Board’s present intention is that borrowings of the Group will be limited to a maximum of 35 per cent of total assets at the time of borrowing.


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