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Fund Profile

Balanced Commercial Property 27 September 2022


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Balanced Commercial Property . The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

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Balanced Commercial Property (BCPT) offers diversified exposure to the income and capital growth potential in UK commercial property via a large portfolio of c. £1.4bn total assets. Richard Kirby has managed the trust since launch in 2005, with a focus on identifying high-quality properties in prime locations. The trust was known as BMO Commercial Property Trust until the management company, BMO GAM, was bought by Columbia Threadneedle last year.

Over the past year, Richard has re-focussed the portfolio on industrial and retail warehouse properties and reduced the exposure to offices and standard retail. Richard believes that supply and demand dynamics continue to favour industrials and retail warehouses, as well as some specific alternatives such as student accommodation, which often offers inflation-linked income, and hotels. As discussed under Portfolio, Richard is being cautious with new investments in the light of some weakening in the market over the summer, but he continues to look for stock-specific opportunities to add to the portfolio, taking advantage of the dislocated market.

There was £86.4m of cash in the portfolio, as at 30 June 2022, of which £18.3m is committed to income-accretive redevelopment plans. Additionally, there is an undrawn £50m revolving credit facility. We note that buybacks have been soaking up a lot of cash in recent months. Despite the repurchases, and some positive quarters of performance, the Discount remains wide at 38%.

Most of BCPT’s long-term debt doesn’t need to be rolled over until the end of 2024, providing some security in a rising interest rate environment (see Gearing).

Analyst's View

Post a strategic repositioning, BCPT looks to be in a stronger position. High dividend cover means that there is no immediate pressure to boost income, while Richard’s long experience in the market should stand him in good stead when it comes to finding value in a volatile and dislocated market.

BCPT’s portfolio has experienced several recent solid quarters of NAV growth and it is pleasing to see the flagship St Christopher’s Place property written up in Q1 and Q2 2022. That said, the economic outlook for the UK is gloomy, with most analysts expecting a recession. In such an environment, commercial property could see valuations fall. While a recession would be troubling for retail and office properties in particular, it is nothing like the challenge lockdowns were. As such, we think the current c. 38% discount offers considerable compensation for the risks and that BCPT could be an interesting contrarian buy at this level.

Additionally we note there is reasonable inflation protection offered in commercial property. Some leases have explicit RPI-linkage or contracted fixed uplifts and many others offer the ability for inflation-busting increases when re-geared or properties are re-leased. In our view, this provides an extra attraction in the current environment and is a notable advantage over bonds.


  • Offers a high yield from an asset class with some inflation protection
  • Wide discount may offer some downside protection and increase catch-up potential in economic recovery
  • Exposure to prime locations including central London which should retain appeal


  • Concentration magnifies the risks to the portfolio from individual properties
  • Office and retail exposure could be sensitive to a recession
  • Higher-yielding alternatives are available, if often with more specialisation
Continue to Portfolio

Fund History

07 May 2024 Thomas McMahon speaks on the Money Makers podcast
Thomas McMahon, Head of Investment Companies Research, appears on the Money Makers podcast to discuss three current themes in the investment trust sector: BCPT and commercial property, ASIT and split-level trusts, and the UK micro-cap sector...
07 Feb 2024 Range anxiety
We look at what context we can gain from ten years of discount analysis…
29 Nov 2023 We need to talk about discounts
Viewing investment trust discounts as a problem ignores the crucial role they play in keeping the sector on an even keel...
22 Nov 2023 Built to last
UK commercial property trusts have weathered a fierce storm, but our analysts think their fortunes may already have passed a nadir..
17 Nov 2023 Don’t Panic!
Our analysts look for value against a backdrop of bombed out investment trust discounts…
08 Nov 2023 Once more into the breach?
With yawning discounts across the board, some sectors have been hit harder than others - our analysts think there could be value there for those with the sangfroid to fight for it...
14 Nov 2023 Balanced Commercial Property and UK Commercial Property REIT
Dan Walsgrove and Will Fulton
Rewatch this webinar which is part of our November online event 'Discounted opportunities in a tough market'...
Watch Recording
07 Jul 2023 Going deep on discounters
In a cost-of-living crisis, discount retailers are falling into favour…
14 Jun 2023 Let's go round again?
Discounts have ballooned across the investment trust world, but our analysis shows we've been here before...
12 Jun 2023 Fund Analysis
BCPT: active management, strategic assets, and monthly dividends…
31 May 2023 Dazed and confused
Property discounts remain stubbornly wide. Why is that and what would make them start to narrow?
27 Sep 2022 Fund Analysis
BCPT’s discount has reached extreme levels which look attractive on a long-term view...
08 Jun 2022 Safe as warehouses
We look into the attractions of the often-overlooked commercial property sector…
02 Mar 2022 Spread 'em!
We explore how much dispersion in returns of stocks drive the differing fortunes of trusts…
23 Feb 2022 Fund Analysis
BCPT has oceans of cash to invest and looks poised for a strong recovery…
01 Dec 2021 How to protect your portfolio from inflation
We highlight trusts which could appeal in an environment where 'transient' inflation is here to stay...
26 Apr 2021 Fund Analysis
BCPT now offers a dividend yield of 5.5%, having restored 70% of its pre-crisis payment…
17 Mar 2021 After the storm
We look at the outlook for dividends in the UK commercial property sector and consider how the portfolio of the future will look after COVID…
14 Jan 2021 Get 'em while they're hot!
We review the widest discounts in the investment trust universe and look at our selection of attractively cheap trusts…
01 Sep 2020 Fund Analysis
BCPT has reintroduced a dividend at 50% of the previous rate and offers a 4.6% annualised yield, paid monthly...
06 Nov 2019 Fund Analysis
The quality tilt of the portfolio could provide defensive qualities…
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