LondonMetric Property Plc (LON:LMP) SREIT, and Picton have announced that they have reached agreement on the terms of a recommended all-share offer pursuant to which LondonMetric and SREIT will acquire the entire issued and to be issued ordinary share capital of Picton. The Acquisition is to be effected by means of a scheme of arrangement under Part VIII of the Companies Law of Guernsey.
· Under the terms of the Acquisition, Picton Shareholders will be entitled to receive:
0.190 LondonMetric Shares and 0.894 SREIT Shares per Picton Share
· Based on the Closing Price of 198.0 pence per LondonMetric Share and 45.9 pence per SREIT Share on 30 July 2026, the Acquisition values each Picton Share at 78.7 pence and the entire issued and to be issued ordinary share capital of Picton at approximately £404 million, and the terms of the Acquisition represent:
o a premium of approximately 7.0 per cent. to the Closing Price per Picton Share of 73.5 pence on the Latest Practicable Date;
o a premium of approximately 9.9 per cent. to the three-month volume-weighted average price per Picton Share of 71.6 pence (being the volume-weighted average Closing Price for the three-month period ended on the Latest Practicable Date); and
o an implied EPRA NTA discount of approximately 8.2 per cent. based on the SREIT NAV and LondonMetric EPRA NTA as at 31 March 2026 and the Picton EPRA NTA as at 30 June 2026.
· Following completion of the Acquisition, Picton Shareholders are expected to hold approximately 4.0 per cent. of the enlarged issued share capital of LondonMetric and approximately 48.4 per cent. of the enlarged issued share capital of SREIT.
· LondonMetric currently owns approximately 11.1 per cent. of the voting rights of SREIT, which would reduce to approximately 5.7 per cent. on completion of the Acquisition. LondonMetric’s shareholding in SREIT will be subject to the terms of the Lock-in Agreement.
· It is intended that the Acquisition will be effected by means of a Court-sanctioned scheme of arrangement under Part VIII of the Companies Law of Guernsey.
· The portfolio valuations and sub-portfolio valuations referred to in this Announcement constitute asset valuations in accordance with Rule 29.1 of the Takeover Code. Valuation reports prepared in accordance with Rule 29 of the Takeover Code in respect of each of Picton, LondonMetric and SREIT will be published no later than the date of publication of the Scheme Document.
Highlights of the Acquisition
Following the commencement of the Strategic Review and FSP on 13 January 2026, the Consortium has undertaken an extensive review of Picton’s business and property portfolio. As a result of that process, LondonMetric and SREIT have identified segments of the Picton portfolio which are highly complementary to their existing respective property portfolios and which also reflect the existing debt structure of the Picton business. The Consortium believes that a joint offer structure demonstrates a creative and disciplined deployment of capital for each of LondonMetric and SREIT and is highly attractive for Picton Shareholders. The Acquisition will retain Picton’s good quality assets in the UK-listed arena and will result in continued exposure to those assets for Picton Shareholders, while addressing the challenges facing Picton as an independent listed company, as set out in its announcement of the Strategic Review and FSP. The Consortium believes that its offer delivers earnings and dividend improvements and is underpinned with increased liquidity and strong and visible immediate income growth.
The Consortium believes that the Acquisition provides Picton Shareholders with material upside benefits immediately from completion, with:
· implied earnings accretion of 39.4 per cent. on a pro-forma basis using full year results for the year ended 31 March 2026 for Picton, LondonMetric and SREIT †;
· a very material, immediate increase in dividend income for Picton Shareholders of 47.4 per cent. based on LondonMetric’s first quarter 2027 dividend target of 3.15 pence per LondonMetric Share, SREIT’s first quarter 2027 dividend target of 0.90 pence per SREIT Share and Picton’s fourth quarter 2026 declared dividend of 0.95 pence per Picton Share†;
· a 6.0 per cent. GAV discount based on Picton’s portfolio valuation as at 30 June 2026 (representing an implied EPRA NIY of 4.7 per cent as at 31 March 2026); and
· an 8.2 per cent. EPRA NTA discount based on Picton’s EPRA NTA as at 30 June 2026 and SREIT’s NAV and LondonMetric’s EPRA NTA as at 31 March 2026.
LondonMetric believes that, in respect of the New LondonMetric Shares received, Picton Shareholders will benefit from:
· the opportunity to remain invested in a highly liquid FTSE 100 leading UK NNN REIT, that has traded at a very narrow average discount to its NAV of 1 per cent. over the last five years;
· LondonMetric’s strong track record in delivering consistent earnings growth of 7.2 per cent. per annum over five years from FY21 to FY26, underpinning fully covered dividend growth of 7.6 per cent. per annum over the same period;
· exposure to its strong debt and balance sheet with better and cheaper access to financing, underpinned by LondonMetric’s investment grade credit rating from Fitch (BBB+);
· a highly efficient cost structure with sector-leading EPRA cost ratio benefitting from the NNN REIT model; and
· an internal management structure with strong alignment resulting from significant executive share ownership.
SREIT believes that, in respect of the New SREIT Shares received, Picton Shareholders will benefit from:
· the opportunity to remain invested in a market-leading, FTSE 250-sized REIT, benefitting from the extensive resources of Schroder Real Estate Investment Management Limited with the potential to be an active sector consolidator with increased growth capacity;
· an active asset management model, which has delivered consistent earnings growth with a six-year CAGR of 5.3 per cent. between FY20 to FY26 underpinning strong dividend growth of 4.8 per cent. per annum over the same period;
· a substantially lower EPRA cost ratio on a pro-forma basis and to a level below each of SREIT and Picton’s standalone EPRA cost ratios, and expected to be accompanied by further significant operating efficiencies through increased scale and an external management structure‡;
· exposure to a significantly larger portfolio of higher yielding assets valued at approximately £850 million, more granular income with a combined approximately 450 tenants, and embedded reversion to actively drive faster income growth and dividend progression; and
· a strong balance sheet with a low LTV, sector-leading low-cost and long-term debt, with additional flexibility through access to Picton’s revolving credit facility.
† The statements regarding earnings accretion and dividend increase are not intended as a profit forecast and should not be construed as such, and are not subject to the requirements of Rule 28 of the Takeover Code. The statements should not be interpreted to mean that the earnings per share in any future fiscal period will necessarily match or be greater than those for the relevant preceding financial period.
‡ The statement regarding synergies is not intended to be a quantified financial benefit statement and should not be construed as such and is not subject to the requirements of Rule 28 of the Takeover Code. The statement should not be interpreted to mean that operational synergies will necessarily result in a quantifiable benefit to the Enlarged SREIT Group.
Asset Allocation between LondonMetric and SREIT
The Acquisition allocates Picton’s assets between LondonMetric and SREIT such that:
· the allocation reflects Picton’s existing debt structure;
· LondonMetric will acquire 46 per cent. in value of the Picton property assets, which are held in corporate entities subject to Picton’s Canada Life debt facility;
o the Canada Life Properties were valued at £320 million as at 30 June 2026 and comprise 22 properties, split into the following subsectors: Industrial (81 per cent.), Office (12 per cent.) Retail Warehouse (3 per cent.), Retail and Other (4 per cent.) (the top 10 assets by market value as at 30 June 2026 which LondonMetric would acquire under the proposed terms are listed at paragraph 4 below);
o as at 31 March 2026, the average EPRA NIY of the assets being acquired by LondonMetric was 4.7 per cent. with an equivalent yield of 6.5 per cent.;
o net contracted rent of £16.3 million as at 30 June 2026;
· LondonMetric will also acquire the net cash assets of Picton, which are expected to be approximately £24 million in aggregate on completion; ¥
· SREIT will acquire 54 per cent. in value of the Picton property assets, which are held in corporate entities subject to Picton’s Aviva and NatWest debt facilities, as well as any uncharged assets (the “Aviva, NatWest and Uncharged Properties“). At completion, the SREIT LTV ratio, net of cash, is expected to be approximately 32 per cent., in line with the long-term target range of 25 per cent. to 35 per cent.;
o the Aviva, NatWest and Uncharged Properties were valued, in aggregate, at £382 million as at 30 June 2026 and comprise 22 properties, split across subsectors in the following proportions: Industrial (54 per cent.), Office (29 per cent.), Retail Warehouse (12 per cent.), Retail and Other (5 per cent.) (the top 10 assets by market value as at 30 June 2026 which SREIT would acquire under the proposed terms are listed at paragraph 4 below);
o as at 31 March 2026, the average EPRA NIY of the assets being acquired by SREIT was 4.5 per cent. with a reversionary yield of 8.6 per cent.;
o net contracted rent of £20.3 million as at 30 June 2026; and
o the combination is highly complementary to SREIT’s current portfolio weightings with SREIT’s pro-forma split across subsectors expected to remain largely unchanged and in the following proportions: Industrial (53 per cent.), Office (25 per cent.), Retail Warehouse (13 per cent.), Retail and Other (9 per cent.).
¥ Based on Picton and LondonMetric projections excluding transaction costs relating to the Acquisition and any true up adjustments under the Separation Term Sheet
SREIT Manager Arrangements
As part of the Acquisition, the board of directors of SREIT and the SREIT Manager have agreed to a 10-basis point reduction in the IMA fee rate across all tiers. Accordingly, shareholders of the Enlarged SREIT Group will benefit immediately from lower fees upon completion of the Acquisition, as well as further potential fee reductions thereafter, through the revised fee tiering as set out in the table below:
| NAV and market capitalisation up to £500 million: | 0.8% on 50% of NAVPlus0.8% on 50% of the lower of NAV and market capitalisation |
| NAV and market capitalisation above £500 million up to £1 billion: | 0.7% on 50% of NAVPlus0.7% on 50% of the lower of NAV and market capitalisation |
| NAV and market capitalisation above £1 billion: | 0.6% on 50% of NAVPlus0.6% on 50% of the lower of NAV and market capitalisation |
The SREIT Manager has agreed to take a one-year IMA fee waiver spread over 24 months on the share of Picton NAV allocated to SREIT immediately following completion of the Acquisition.
In recognition of the extended fee waiver and the 10-basis point reduction in the SREIT Manager management fee rate across all tiers, SREIT has agreed to a three-year fixed contract from completion, moving to a one-year notice period thereafter.
These changes to the IMA fee structure are expected to contribute to ongoing cost reductions and synergies for Picton Shareholders and SREIT Shareholders‡.
In conjunction with the board of directors of SREIT, the SREIT Manager continues to progress succession planning for Nick Montgomery, given his wider responsibilities. Nick remains fully committed to the Acquisition and will continue to lead SREIT for as long as is necessary to ensure a smooth transition. Identifying a new, market-facing, fund manager to replace Nick, with the experience and track record of successfully managing comparable strategies is a strategic priority for both the board of directors of SREIT and the SREIT Manager. Following an orderly succession process, as Global Head of Real Estate, Nick will retain oversight of SREIT, including in his role as Chair of Schroders Capital’s direct real estate investment committee. Nick remains well supported by Bradley Biggins as Co-Fund Manager, alongside a deep bench of investment, asset management, operations, and other specialist functions that will support the Enlarged SREIT Group.
‡ The statement regarding synergies is not intended to be a quantified financial benefit statement and should not be construed as such and is not subject to the requirements of Rule 28 of the Takeover Code. The statement should not be interpreted to mean that operational synergies will necessarily result in a quantifiable benefit to the Enlarged SREIT Group.
LondonMetric Lock-in
As part of the Acquisition, LondonMetric has agreed to enter into a six-month lock-in commencing upon completion of the Acquisition, restricting the disposal of its current shareholding in SREIT, subject to certain limited customary exceptions (summarised below).
Recommendation
· The Picton Directors, who have been so advised by Stifel as to the financial terms of the Acquisition, unanimously consider the terms of the Acquisition to be fair and reasonable. In providing its advice to the Picton Directors, Stifel has taken into account the commercial assessments of the Picton Directors. Stifel is providing independent financial advice to the Picton Directors for the purpose of Rule 3 of the Takeover Code.
· Accordingly, the Picton Directors intend to recommend unanimously that Picton Shareholders vote in favour of the Scheme at the Court Meeting and vote in favour of the Resolution at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer), as the Picton Directors who hold Picton Shares, have irrevocably undertaken to do so in respect of their, and their connected persons’, beneficial holdings totalling, in aggregate, 1,798,051 Picton Shares, representing approximately 0.35 per cent. of the issued share capital of Picton as at the Latest Practicable Date.
Irrevocable undertakings
· In addition to the irrevocable undertakings given by the Picton Directors as set out above, the Consortium has received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting, and in favour of the Resolution to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) from TR Property Investment Trust plc (“TR Property“) in respect of, in aggregate, 59,967,178 Picton Shares representing approximately 11.67 per cent. of Picton’s issued share capital as at the Latest Practicable Date.
· The Consortium has therefore received irrevocable undertakings from the Picton Directors and certain other Picton Shareholders in respect of, in aggregate, 61,765,229 Picton Shares representing approximately 12.02 per cent. of Picton’s issued share capital as at the Latest Practicable Date.
· Further details of the irrevocable undertakings given to the Consortium (and the circumstances in which such arrangements will cease to be binding or otherwise fall away) are set out in Appendix 3 to this Announcement.
Dividends
· Concurrent with this Announcement, Picton has today declared a first quarter dividend for the quarter ending 30 June 2026 of 0.69 pence per Picton Share (the “Picton Permitted Dividend“). On the expected dividend payment timetable only Picton Shareholders will be entitled to this dividend.
· LondonMetric expects to shortly declare a first quarter dividend for the quarter ending 30 June 2026 of 3.15 pence per LondonMetric Share. On the expected dividend payment timetable only existing LondonMetric Shareholders will be entitled to this dividend.
· SREIT expects to shortly declare a first quarter dividend for the quarter ending 30 June 2026 of 0.897 pence per SREIT Share. On the expected dividend payment timetable only existing SREIT Shareholders will be entitled to this dividend.
· Based on the expected timetable for completion of the Acquisition, the first dividends that Picton Shareholders would be entitled to receive (in their capacity as new LondonMetric and SREIT shareholders) are: (i) the LondonMetric second quarter dividend expected to be declared in November 2026; and (ii) the SREIT second quarter dividend expected to be declared in November 2026.
Timetable and conditions
· It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part VIII of the Companies Law of Guernsey. However, subject to the Panel’s consent and the terms of the Co-operation Agreement, the Consortium reserves the right to elect to implement the Acquisition by way of a Takeover Offer.
· The Acquisition will be put to Picton Shareholders at the Court Meeting and at the General Meeting. In order to become Effective, the Scheme must be approved by a majority in number of Scheme Shareholders present and voting (and are entitled to vote) at the Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of the Scheme Shares voted by Scheme Shareholders at the Court Meeting. In addition, a special resolution to approve all actions necessary for carrying the Scheme into effect and the adoption of the Amended Picton Articles must be passed by Picton Shareholders representing at least 75 per cent. of the votes cast on that resolution at the General Meeting whether in person or by proxy. It is intended that the General Meeting will be held immediately after the Court Meeting. Following the Court Meeting, the Scheme must also be sanctioned by the Court.
· The Acquisition will be implemented in accordance with the Takeover Code and on the terms and subject to the Conditions which are set out in Appendix 1 to this Announcement and on the further terms and conditions that will be set out in the Scheme Document.
· It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and the General Meeting, together with the Forms of Proxy will be published as soon as practicable and, in any event, within 28 days of this Announcement, unless Picton and the Consortium otherwise agree, and the Panel consents and, if required, the Court approves, to a later date. It is expected that the Scheme will become Effective in around early September 2026, subject to the satisfaction or waiver (as applicable) of the Conditions and the further terms set out in Appendix 1 to this Announcement and to the full terms and conditions of the Acquisition which will be set out in the Scheme Document. A timetable of expected principal events will be included in the Scheme Document.
Commenting on the Acquisition, Andrew Jones, Chief Executive of LondonMetric, said:
“The Acquisition builds upon our ambition to increase the scale of our business, leverage our efficient platform and opportunistically deploy capital to drive the quantum and quality of our earnings. It is another corporate transaction that adds high quality and reversionary assets and further consolidates our position as the UK’s leading NNN lease REIT.
It provides a compelling solution to Picton’s material and persistent share price discount, and enables their shareholders to roll into two quality listed platforms with better share liquidity, greater income granularity and material earnings and dividend accretion.”
Commenting on the Acquisition, Alastair Hughes, Chair of SREIT, said:
“This is a transformational and strategically important transaction for the company, offering a material increase in the size of the portfolio whilst maintaining the focus on the higher growth multi-let industrial and retail warehouse sectors. Shareholders will benefit from immediate earnings accretion, aided by improved cost efficiencies and a further strengthening of the balance sheet, with sector leading low-cost, long-term debt. The combined portfolio additionally provides greater diversity of income and a blended embedded reversion of over 8%, further increasing the opportunity to actively drive faster growth and dividend progression.”
Commenting on the Acquisition, Francis Salway, Chair of Picton, said:
“Following the announcement of our strategic review at the start of the year, I am pleased that this transaction delivers a very material uplift in both EPRA earnings and dividend income for our shareholders. Beyond these immediate financial benefits, it will provide enhanced liquidity and meaningful economies of scale.”
This summary should be read in conjunction with, and is subject to, the full text of this Announcement and its Appendices. The Acquisition will be subject to the Conditions and further terms set out in Appendix 1 to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. Appendix 2 to this Announcement contains the sources of information and bases of calculation of certain information contained in this Announcement. Appendix 3 to this Announcement contains a summary of the irrevocable undertakings received in relation to the Acquisition. Appendix 4 to this Announcement contains definitions of certain terms and expressions used in this summary and in this Announcement.
