17th Sep 2019 13:03
(Alliance News) - BMO Commercial Property Trust Ltd on Tuesday reported a lower net asset value per share at the half year stage against a challenging real estate backdrop.
The company said the first six months of 2019 saw "continued uncertainty surrounding commercial property markets in the UK", with the trading environment for retailers and the potential impact of Brexit "causing particular concern".
This has been challenging for the listed real estate sector, with many large-cap companies trading at "significant" discounts to their net asset value.
Against this backdrop, BMO Commercial Property reported a net asset value total return of minus 0.4%. NAV per share stood at 136.3p at June 30, versus 139.8p at the end of December.
The total return from the underlying portfolio was 0.5%, compared with a total return of 0.9% from the MSCI Quarterly Property Universe.
Monthly interim dividends of 0.5p per share continued during the period, maintaining the annual dividend of 6.0p. The board intends to pay dividends at the same monthly rate "barring unforeseen circumstances".
Looking ahead, BMO Commercial Property said the property market is likely to see continued headwinds related to Brexit.
"Slower economic growth and political uncertainties internationally are also affecting sentiment. However, post Brexit, if there is some easing in fiscal policy and interest rates are kept low, as the market expects, then this should provide some support for property, particularly from investors seeking a higher-yielding alternative to gilts," the company said.
"Total returns are expected to be low single-digit and will be driven by income, with well-specified and well-let assets in established locations likely to out-perform."
Shares in BMO Commercial Property were flat at 115.20p in London on Tuesday.
Related Shares:
Balanced Commercial Property Trust