Corporate overview

BMO REP manage assets of €7.0 billion* on behalf of a range of clients. Our portfolio is well diversified across sub-sectors and geographies.

Our sole purpose is to create and manage successful property investment portfolios. We offer a range of property investments and asset management opportunities across a wide range of real estate markets across Europe.

We have been managing property for over 50 years and investors can access our expertise through a range of structures including listed investment companies, open-ended funds, segregated mandates and single asset deals.

· Specialist – a real estate specialist offering entrepreneurial spirit blended with sophisticated structured institutional practices;

· People – highly experienced and well-regarded team maintaining strong relationships with investors, shareholders, industry contacts and occupiers – key to managing this personal asset class;

· Pipelines – extensive network of contacts, local reputation and experience ensure strong access to on and off-market transactions;

·  Active – pro-active management continually reviewing processes, future themes, opportunities and assets to generate value and create sustainable income;

·  Platform – European presence provides opportunity to expand, while delivering returns to investors.

We also believe in investing responsibly and that responsible property investing (RPI) is about managing future risks without compromising performance:

·       Occupier relationship – appealing to the modern occupier;

·       Reduced income risk – greater occupier retention;

·       Preserve capital values – resilient income enhances value;

·       Enhanced property liquidity – attractive investment with sound fundamentals.

 *Source: BMO Real Estate Partners as at 30 September 2019.

Sector forecasts

INDUSTRIAL: European industrial and logistics remains in favour with investors and with cross border transactions increasing. Yields are compressing as a result. Sentiment regarding future investment intentions remains positive across Europe, especially in France. Take-up has also been strong and vacancy rates are falling, leading to rental growth in many major markets. We expect the sector to deliver positive total returns especially over the coming two years helped by the continued shift to online sales and continued low borrowing yields.

OFFICE: The office market is likely to be a major beneficiary of the change in monetary policy to favour a prolongation of low interest rates. There has been yield compression in the sector and further inward shifts may be in prospect. Major deals from Asia, especially South Korea, have supported investment this year. The occupational market has been helped by generally low levels of new supply leading to rental growth in the majority of European centres. Co-working is growing in importance, boosting the demand for flexible office space. We anticipate that core markets and prime assets will remain in favour with both occupiers and investors, leading to a sustained period of positive total returns.

RESIDENTIAL: The residential market has been growing in popularity, most notably in the UK where “buy to rent” is supplementing the more traditional options for residential investment. There is a problem of a lack of stock and concerns about the imposition of rent controls in certain countries may act to dampen demand. However, investor sentiment is generally positive on balance regarding investment intentions with mainstream markets such as France, Germany and the Netherlands being particularly favoured.

RETAIL: Sentiment towards retail property has deteriorated beyond the US and UK to affect the European markets. The threat of growth from online retail plus subdued domestic economic growth is leading to concerns about where “true value” lies. The impact has been greatest on the middle market and secondary assets. The next two years could see some further market weakness and structural readjustment as retailers “right-size”. Top, prime locations, especially those with a luxury offer have proved more resilient. We expect this pattern to continue, with affluent centres benefiting from overseas tourism out-performing.

OTHER: Investors are looking more closely at specialist parts of the market such as student accommodation, healthcare and hotels both for yield and for length of lease and as a response to a perceived lack of prime fairly priced stock coming to the market in the traditional sectors. The sector is still relatively small and lacks the more detailed bench-marking of the other sectors. It is a disparate sector and performance can vary widely with covenant as well as country and sub-market key.

Investment principles & strategy

BMO REP’s focus is to create and manage successful property investment portfolios for our clients and properties that work for our occupiers. Our approach is underpinned by our  commitments to:

1.     Be the real estate firm that grows the good creating sustainable and productive properties

2.     Embrace the challenges of the changing environment  and promote long-term investment horizons

3.     Respect the stewardship we have of the  built environment

The systematic and explicit inclusion of ESG factors into investment analysis and investment decision making is a core principle under which we operate. The tangible nature of property assets, with their exposure to physical aspects and significance to policymakers, amplifies the importance of the ESG dimension.

Property markets can be complex. A long-term horizon and an understanding of the core real estate fundamentals within a location are required to be able to create a quality property investment underpinned by sustainable income. 

Key components of the way we invest include:

·  Sourcing expertise – access to stock on and off market

·  Buying well – understanding the micro location and macro-economic drivers of performance

·  Active management – forward looking plans for every asset

·  Key stakeholder engagement – enhanced occupier engagement and institutional governance

Strategic corporate development

BMO GAM has a long track record of responsible overlay having launched first strategy of its type.

As a Group we are looking to continually evolve through our range of income focused strategies.

BMO Real Estate Partners is a property specialist operating as part of BMO Global Asset Management. Established in 1817, our parent company – BMO Financial Group – is a diversified financial services provider based in North America. 

BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services. The Group has $830 billion total assets under management, more than 45,000 employees and offers products and services to over 12 million customers. It has the longest-running dividend pay-out record of any company in Canada, at 189 years. 

COMPLIANCE STATEMENT

2019 BMO Real Estate Partners LLP. Registered in England and Wales with number OC338377. Registered Office: 7 Seymour Street, London W1H 7JW. BMO REP Asset Management Plc is authorised and regulated by the Financial Conduct Authority. BMO Real Estate Partners LLP, BMO REP Asset Management Plc and BMO REP Property Management Limited are members of the BMO Financial Group and are subsidiaries of the Bank of Montreal.