BMO shuns London in ‘big pipeline’ of real estate deals


BMO fund manager Guy Glover is shunning “risky” central London real estate in his “big pipeline” of potential acquisitions around the UK.

Glover says he has £130m of potential investment opportunities in the market, and will deploy between £20m and £30m.

He is seeking opportunities for the £300m F&C UK Property fund in the South East, as well as Manchester, Bristol and Birmingham, as buildings in these areas provide long-term secure income without going up the risk curve

Glover says he has a “big pipeline” of potential acquisitions including properties in the retail, offices, industrial and car showroom sectors for his UK Property fund.

“We held off acquisitions before the EU referendum but we are now buying buildings, especially regional properties targeting an income of around 4 per cent,” Glover says.

The open-ended property fund sector made headlines following the UK’s shock vote to leave the European Union as investors seeking redemptions caused a liquidity mismatch.

Just this week, the Norwegian sovereign wealth fund revealed it had purchased an Oxford St property from the Aberdeen UK Property fund at a “significant discount” as the fund faced liquidity pressures.

The F&C UK Property fund was not one of the fund’s suspended following the referendum aided by 15 per cent in cash which made it possible to liquidate on request.

However, it did switch from offer to bid pricing with a price cut of 6 per cent, followed by a move to fair value pricing, whereby the value was reduced by a further 5 per cent.

From 5 August the fund switched the pricing from bid to mid-side as a result of positive inflows and increased the price by 4 per cent.

Glover says after the EU referendum vote the fund remains under review on its pricing and no decision has been made yet on whether it will change.

He says: “With the EU referendum people have been able to reassess property as an asset class. Although central London remains risky for commercial property there is still interest in the sector and the asset class will continue to generate income.”