BMO Commercial property trust

C_Mababejive

Unfortunately for me , i currently have a holding in this commercial property trust.
https://www.bmogam.com/commercial-property-trust/bcpt-agm/

It represents a small percentage of my overall portfolio equal to about £5k but now about 50% down. The divi has been temp suspended to improve cashflow.

The current NAV  is around 124p and the price is around 62 pence. They just had an AGM in June and part of that was to review the current position. Obviously there are issues with startup of UK businesses again especially office and retail space although there doesn't seem to be any major issues with rent collection. They also have a good proportion of industrial property which is doing better.

If this trust failed in some way i wonder how much investors would get back given the NAV? Obviously there are debtors and loan facilities to consider which presumably are secured on property. 

I cant do the maths on that and wonder if current NAV minus debts = not much left for investors?

Obviously the big quesion is, should i cut and run, stand the loss and reinvest elsewhere or should i just run with it and assume that it will naturally recover?

The NAV being 124 lends some security but what about debt levels?

I guess this is yet another small lesson for PIs who dont have the time to pour over their portfolios every day to invest in widely diversified products rather than niches.

george4064

I think the case for commercial property has been in decline for a few years now, with the rise of technology (headwind for commercial office units) and internet shopping (headwind for commercial retail units). I appreciate that COVID really sped up that process of decline and potentially the nail in the coffin but shouldn't be a massive surprise really.

I would question the accuracy of the NAV figures provided, property portfolio managers in these uncertain times where there are not many (if any!) property transactions going through can only provide a a best estimate of the properties' values. Property valuation is only as accurate as the number of recent transactions that have gone through of properties with enough commonality that data can be used to apply it to other properties. Whilst this probably won't help you, I would take the NAV figures with a pinch of salt for reasons stated above.

In terms of what you should do really depends on your goals, circumstances and your appetite for risk. Personally I would probably stick it out with the trust and if I needed to rebalance my portfolio by adding new money to property I would invest that in a different property fund, either a diversified property trust (by sector) or into a global property trust.

I have been a long-term holder of Tritax Big Box REIT PLC which I think has some good tailwinds from the rise of internet shopping and hence companies looking to expand their warehouse facilities. Their tenants fortunately have not been hit by COVID-19 as much as actual commercial units but I still think the long-term case is compelling and hence I will continue to hold in-line with my target allocation.

wmb194

Oh, this is the one which used to be FCPT and was/is a rare British beast that paid a monthly dividend? It has some nice assets in the West End.
Judging by its latest interim report it doesn't appear to be in imminent danger and has enough cash to cover its current liabilities. Debt-wise it doesn't appear to be highly leveraged but of course how leveraged it really is will depend on how much you can trust the current valuation, but even if you discount them 50% it would still only approach a leverage of about 50%.
https://www.investegate.co.uk/bmo-com-pty-tst-ltd--bcpt-/prn/trading-update--amp--net-asset-value/20200416070000P8048/

ColdIron

Another factor you might consider, especially if you hold for income, is that as the monthly payouts have been uncovered by earnings for a few years the dividend, when it is resumed, is likely to be cut from 6 pence per share pa, which it has maintained for a decade or so,  to under 5p based on the level of dividend cover in 2019

I disposed of BCPT from my GIA earlier in the year as since its conversion to a UK REIT its distributions are now Property Income Distributions (PIDs) taxed at 20% rather than dividends at 7.5%. I have retained it in my SIPP

There do appear to be some some problems regarding rent collection

https://quoteddata.com/2020/04/bmo-commercial-property-trust-reports-hit-nav-due-covid19/

C_Mababejive

My relatively small holding is also in a SIPP. I feel on balance that ill stick with it as i dont need the money or the income. I have had divi reinvest switched on for a while and hopefully it wont be too long before the divi restarts.

takesyourchances

Any thoughts on topping up for the long term with likes of BMO Commericial Property and Standard Life Investments Property Income Trust? I have about 2.5K invested in each just and I have no need to think of selling and they can sit and I just collect whatever dividends comes from them. BMO started their dividend again at a lower rate.

I am thinking to start to top them up a little drip feeding, I feel it is speculative but maybe worth adding to a bit more with the kicking they have had lately. Any other holders of these adding yet?

C_Mababejive

im currently just reinvesting the dividends but then if its still a sound investment, one should consider buying something thats cheap?

Thrugelmir

Investors should always be prepared to bite the bullet and cut their losses if better opportunities lie elsewhere.  A big mistake made by many investors to hold poorly performing investments in the hope of a miraculous recovery.  Never be sentimental about investments made. Got it wrong, so what, move on.