Londonmetric Property Plc (LON:LMP) has provided an update on the proposed offer for Picton, setting out the expected financial and portfolio implications for the consortium.
Progress Update
Since the announcement of the Proposed Offer, the Consortium has progressed confirmatory due diligence, which is advancing well, and is finalising the relevant transaction documentation with a view to announcing a firm intention to make an offer pursuant to Rule 2.7 of the Code.
The Proposed Offer
As announced on 12 May 2026, under the terms of the Proposed Offer, Picton Shareholders would receive:
0.190 LondonMetric Shares and 0.881 SREIT Shares per Picton Share
Based on the closing share prices of LondonMetric of 185.2 pence and SREIT of 47.3 pence on 15 June 2026 (being the latest practicable date prior to this announcement), the Proposed Offer values the entire issued and to be issued share capital of Picton at £396 million and implies a value of 76.9 pence per Picton Share, of which 46 per cent. relates to LondonMetric Shares and 54 per cent. relates to SREIT Shares, reflecting the respective interests of each of LondonMetric and SREIT in the underlying assets of Picton.
Andrew Jones, Chief Executive of LondonMetric, and Nick Montgomery, Global Head of Real Estate, Schroders Capital, and Fund Manager at SREIT, said:
“Since announcing our proposal on 12th of May, we have made steady progress and are advancing towards a Rule 2.7 announcement. The transaction is expected to deliver a material and immediate uplift in dividend income for Picton shareholders, while allocating assets to the platforms that we believe are best positioned to unlock their full value and providing exposure to two enlarged, more liquid and complementary UK-listed REITs.”
Highlights of the Proposed Offer
o implied earnings accretion of 37.7 per cent. on a pro-forma basis using full year results for the year ended 31 March 2026 for Picton and LondonMetric, and the last twelve months ended 31 December 2025 for SREIT (see “Sources and bases” further below in this announcement);†
o a very material, immediate increase in dividend income for Picton Shareholders of 46.2 per cent. based on the LondonMetric Q1 2027 dividend target of 3.15 pence per LondonMetric Share, SREIT’s Q4 2026 declared dividend of 0.90 pence per SREIT Share and Picton’s Q4 2026 declared dividend of 0.95 pence per Picton Share;†
o a 5.8 per cent. GAV discount, based on Picton’s portfolio valuation as at 31 March 2026, reflecting an EPRA NIY of 4.7 per cent.;
o an 8.6 per cent. EPRA NTA discount based on Picton’s EPRA NTA per Picton Share as at 31 March 2026, SREIT’s NAV per SREIT Share as at 31 December 2025 and LondonMetric’s EPRA NTA per LondonMetric Share as at 31 March 2026; and
o an implied market value of 76.9 pence per Picton share based on the closing share prices of SREIT and LondonMetric on 15 June 2026, being the latest practicable date prior to this announcement. The implied market value represents a premium of 9.0 per cent. to the closing Picton’s share price on 15 June 2026, being the latest practicable date prior to this announcement.
• Demonstrates a creative and highly disciplined deployment of capital which is expected to result in:
o an asset mix which is highly complementary to each of SREIT and LondonMetric, reflective of their existing respective portfolio mix;
o Picton Shareholders retain exposure to Picton’s assets and debt structures;
o increased scale, granularity and diversification across the respective businesses of SREIT and LondonMetric; and
o marginal earnings accretion for LondonMetric and earnings accretion for SREIT in the first full year and complementary thereafter, reinforcing the financial viability and rationale of the offer.†
• For Picton Shareholders, delivers re-investment and future upside in two enlarged, high quality UK-listed REITs with:
o strong track records of income growth:
§ the SREIT team has delivered consistent earnings growth, representing a CAGR of 7.0 per cent. per annum over 5 years from FY20 to FY25, underpinning fully covered dividend growth of 5.2 per cent. per annum over the same period;
§ the LondonMetric team has delivered consistent earnings growth of 7.2 per cent. per annum over 5 years from FY21 to FY26, underpinning fully covered dividend growth of 7.6 per cent. per annum over the same period;
o benefits of scale immediately being passed to enlarged SREIT Shareholders on an EPRA basis, with SREIT’s EPRA cost ratio expected to be lower on a pro-forma basis and to a level below each of SREIT and Picton’s standalone EPRA cost ratios, driven by lower newly negotiated management fee tiering, anticipated operating efficiencies, and a one-year IMA fee waiver on the share of Picton NAV to be taken by SREIT;
o in relation to both the enlarged SREIT and LondonMetric, superior debt profiles with access to cheaper cost of financing; and
o the Proposed Offer provides the opportunity for Picton Shareholders to remain invested in:
• a highly liquid leading FTSE 100 REIT that has traded at a very narrow average discount to its NAV of 1 per cent. over the last five years; and
• a market leading FTSE 250-sized REIT, benefitting from the extensive resources of Schroders Capital including access to distribution and marketing platforms, and that has the potential to be an active sector consolidator with increased growth capacity.
† 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 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 proposed Consortium structure allocates Picton’s assets between LondonMetric and SREIT such that:
• the structure is aligned with Picton’s debt profile;
• 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 (the “Canada Life Properties”);
• the Canada Life Properties were valued at £320 million as at 31 March 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 31 March 2026 which LondonMetric would acquire under the proposed terms are listed below:
• Parkbury Industrial Estate, Handley Page Way, Radlett
• Datapoint, Cody Road, London
• Sundon Business Park, Dencora Way, Luton
• The Business Centre, Molly Millars Lane, Wokingham
• Nonsuch Industrial Estate, 1-25 Kiln Lane, Epsom, Surrey
• Vigo 250, Birtley Road, Washington, Tyne and Wear
• 401 Grafton Gate East, Milton Keynes
• Units 1 & 2, Kettlestring Lane, York
• Swiftbox, Haynes Way, Rugby
• Metro, Salford Quays, Manchester
• as at 31 March 2026, the average net initial yield of the assets being acquired by LondonMetric was 4.7 per cent.;
• LondonMetric will also acquire the net cash assets of Picton, which is expected to be approximately £24 million in aggregate on completion, based on Picton financial results for the year ended 31 March 2026 and adjusting for the ordinary course Q4 dividend of 0.95 pence per Picton Share for the period ending 31 March 2026; and
• as announced on 12 May 2026, if the transaction completes, and if any further dividend payments made prior to completion are uncovered by cash earnings, the Consortium reserves the right to reduce the exchange ratios.
• 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 net loan to value ratio will be approximately 32 per cent., in line with the long-term target range of 25 per cent. to 35 per cent.;
• the Aviva, NatWest and Uncharged Properties were valued, in aggregate, at £380 million as at 31 March 2026 and comprise 22 properties†, split across subsectors in the following proportions: Industrial (55 per cent.), Office (29 per cent.), Retail Warehouse (12 per cent.), Retail and Other (4 per cent.).The top 10 assets by market value as at 31 March 2026 which SREIT would acquire under the proposed terms are listed below:
• River Way Industrial Estate, River Way, Harlow
• Express Business Park, Shipton Way, Rushden
• Madleaze Trading Estate and Mill Place, Gloucester
• Lyon Business Park, River Road, Barking
• 50 Farringdon Road, London EC1
• Tower Wharf, Cheese Lane, Bristol
• Trent Road, Grantham
• Queens Road, Sheffield
• Colchester Business Park, The Crescent, Colchester
• Parc Tawe, North Retail Park, Link Road, Swansea
• as at 31 March 2026, the average net initial yield of the assets being acquired by SREIT was 4.7 per cent; and
• the combination complements 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.).
† Excludes the disposal of the residual Cardiff asset, which was completed post financial year ended 31 March 2026.
Further information on SREIT Manager Arrangements
Following completion of the transaction, SREIT would immediately pass the benefits of scale to SREIT Shareholders through an IMA fee reduction of 10 basis points across all tiers with the revised fee tiering based 50 per cent. on NAV and 50 per cent. on the lower of NAV and market capitalisation. Schroder Real Estate Investment Management Limited, the investment manager of SREIT, has also agreed to take a one-year IMA fee waiver spread over 24 months on the share of Picton NAV to be taken by SREIT immediately following completion of the transaction.
In conjunction with the Board of SREIT, Schroders continues to progress succession planning for Nick Montgomery, given his wider responsibilities. Nick remains fully committed to the Proposed Offer 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 SREIT Board and Schroders. 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’ 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 are supporting the ongoing due diligence process in relation to the Proposed Offer.
As part of the organisational integration process, SREIT and LondonMetric will continue to closely assess employee retention opportunities in the interim period to support the integration and over the long-term, including undertaking a talent review of Picton’s existing staff members to determine where there is a strong fit and opportunity to deliver incremental value.
Shareholder Support
The Consortium has received a letter of intent from Picton’s largest shareholder, TR Property Investment Trust plc (“TR Property”) to vote in favour of all relevant resolutions to effect a scheme of arrangement in respect of the Proposed Offer or, in the event that the Proposed Offer is implemented by way of a takeover offer, to accept or procure the acceptance of the takeover offer (the “TR Letter of Intent”). The TR Letter of Intent is in respect of TR Property’s entire beneficial interest in Picton shares amounting to 58,430,209 Picton Shares, representing approximately 11.4 per cent. of the voting rights of Picton as at 11 May 2026 (being the latest practicable date prior to the Possible Offer announcement made on 12 May 2026). The Consortium notes that, in the announcement of its final results on 10 June 2026, TR Property confirmed its support for the Proposed Offer.
Lender Support
The Consortium and Picton have been in discussions with Canada Life and Aviva who have indicated preliminary support for the transaction and willingness to provide a pre-emptive change of control waiver in respect of the £129.0 million Canada Life facility and £79.0 million Aviva facility respectively, subject to agreement, credit approval and finalisation of requisite documentation. These waivers would satisfy one of the pre-conditions to a firm offer announcement as set out further below in this announcement.
Dividends
If a firm offer is made in accordance with the joint announcement made by the Consortium and Picton on 12 May 2026, and Picton Shareholders approve the transaction, Picton Shareholders will be permitted to receive and retain an ordinary course quarterly dividend of 0.95 pence per Picton Share for the period ending 31 March 2026 (the “Permitted Picton May Dividend”). In addition to the Permitted Picton May Dividend, Picton Shareholders will be permitted to receive and retain other future ordinary course dividends (in line with recent historical practice as to timing and amount), but only to the extent that they are covered by cash earnings for the period to which the dividend relates (“Permitted Future Cash Covered Dividends”). If Picton declares, makes or pays any dividend or distribution or other return of value or payment to its shareholders in excess of the Permitted Picton May Dividend and / or the Permitted Future Cash Covered Dividends, the Consortium reserves the right to make a reduction to the Proposed Consideration equivalent to that excess dividend or distribution or other return of value or pay an equalisation dividend to their respective shareholders to a common date.
Pre-conditions to a Firm Offer Announcement
As outlined in the announcement made on 12 May 2026, the announcement of any firm offer for Picton by the Consortium is subject to and conditional upon the prior satisfaction of certain pre-conditions. These pre-conditions include:
- the completion of confirmatory due diligence to the satisfaction of the Consortium;
- the provision of certain consents, waivers and approvals by each of Picton’s lenders;
- approvals from the Boards of LondonMetric and SREIT; and
- in the event that a firm offer is made by the Consortium on the terms of the Proposed Offer, receipt by the Consortium of confirmation by the Picton Board of its intention to provide its unanimous recommendation of the Proposed Offer to Picton Shareholders supported by its financial adviser for the purposes of Rule 3 of the Code as to the financial terms of the Proposed Offer.
The Consortium reserves the right to waive any or all of these pre-conditions in its sole discretion. Even in the event that these pre-conditions are satisfied or waived, there can be no certainty that any firm offer will be made.
In accordance with Rule 2.5(a) of the Code, the Consortium also reserves the following rights:
(1) to introduce other forms of consideration and/or to vary the composition of the consideration as described in this announcement; and
(2) to make an offer for Picton at a lower value or on less favourable terms than the Proposed Offer:
i. with the agreement or recommendation of the Board of Picton;
ii. if a third party announces a firm intention to make an offer for Picton which, at that date, is of a value less than the value of the Proposed Offer; or
iii. following the announcement by Picton of a Rule 9 waiver transaction pursuant to Appendix 1 of the Code or a reverse takeover (as defined in the Code).
There can be no certainty that any firm offer for Picton will be made by the Consortium. A further announcement will be made as and when appropriate.
As previously announced by Picton, the Panel on Takeovers and Mergers (the “Panel”) has granted a dispensation from the requirements of Rule 2.6(a) of the Code in relation to Picton’s formal sale process, such that potential offerors are not subject to the 28 day deadline referred to in Rule 2.6(a) of the Code, for so long as they are participating in that process. Accordingly, so long as LondonMetric and SREIT continue to participate in the formal sale process, the Consortium will not be subject to the 28 day deadline referred to in Rule 2.6(a) of the Code.
The Proposed Offer is expected to be implemented by way of a Court-sanctioned scheme of arrangement under Part VIII of the Companies (Guernsey) Law, 2008 (as amended). However, the Consortium reserves the right to implement the Proposed Offer, if made, by way of a contractual offer.
To the extent the Proposed Offer is implemented by way of a scheme of arrangement, it will require approval by Picton Shareholders at (i) a Picton Shareholder meeting convened by the Court to approve the scheme of arrangement and (ii) a general meeting of Picton.
Approvals will not be required from LondonMetric or SREIT Shareholders to seek authority for the issuance of new LondonMetric or SREIT shares.
The sources and bases for certain information contained in this announcement are set out below. This announcement has been made with the consent of LondonMetric and SREIT.
Capitalised terms used in this announcement are defined below.
Sources and Bases
In this announcement, unless otherwise stated or the context otherwise requires, the following bases and sources have been used.
• The value of the Proposed Offer is calculated by reference to the closing share prices (being the closing middle market prices derived from the London Stock Exchange Daily Official List) for LondonMetric and SREIT as at 15 June 2026, being the latest practicable date prior to this announcement.
• The discount implied by the Proposed Offer to Picton’s Gross Asset Value is calculated by comparing the Consortium’s views on the value attributable to Picton’s GAV, being £660 million, against Picton’s last reported GAV of £701 million as at 31 March 2026 as stated in Picton’s full year results dated 12 June 2026.
• The fair value of the disposed residual Cardiff asset as at 31 March 2026 is implied to be approximately £0.93 million, based on the achieved disposal price of £1.2 million, representing a 30 per cent. premium to the 31 March 2026 portfolio valuation.
• Picton’s EPRA NTA per Picton Share of 101.2 pence on a fully diluted basis is based on Picton net assets of £522 million as at 31 March 2026 in Picton’s full year results dated 12 June 2026, divided by Picton’s fully diluted share count (see below).
• SREIT’s NAV per SREIT Share of 61.7 pence as at 31 December 2025 is as stated in SREIT’s NAV update announcement dated 26 February 2026.
• LondonMetric’s EPRA NTA per LondonMetric share of 200.6 pence as at 31 March 2026 is as stated in LondonMetric’s final results announcement dated 21 May 2026.
• The parties have agreed with the Takeover Panel that, if a firm offer is announced for Picton, Rule 29 valuation reports in respect of any net asset value or portfolio valuation previously published by Picton, LondonMetric or SREIT will be published in due course and, in any event, no later than the publication of any offer document or scheme document relating to that offer.
• SREIT’s earnings growth is calculated based on its reported earnings per share over the 5-year period from 2.50 to 3.50; the corresponding dividend growth of 5.2 per cent. Is calculated based on SREIT’s dividends per share of 2.72 to 3.50 over the same period.
• LondonMetric’s earnings growth is calculated based on its reported earnings per share over the 5-year period from 9.52 to 13.50; the corresponding dividend growth of 7.6 per cent. Is calculated based on LondonMetric’s dividends per share of 8.65 to 12.45 over the same period, which have been fully covered by earnings throughout the period.
• The Undisturbed Date share price of 77.5 pence per Picton Share is the closing middle market price derived from the London Stock Exchange Daily Official List on 12 January 2026, being the latest practicable date prior to the announcement of Picton’s formal sale process on 13 January 2026.
• The issued share capital of LondonMetric of 2,344,782,058 LondonMetric Shares is as stated in LondonMetric’s Rule 2.9 announcement dated 12 May 2026.
• As stated in SREIT’s Rule 2.9 announcement dated 24 March 2026, SREIT had in issue 565,664,749 SREIT Shares of no par value with one voting right per SREIT Share. SREIT holds 76,554,173 SREIT Shares in treasury. The total number of voting rights is therefore 489,110,576.
• The current shareholding of LondonMetric in SREIT is 54,428,634 SREIT Shares as at the date of this announcement.
• The issued share capital of Picton of 513,827,021 Picton Shares is as stated in Picton’s total voting rights announcement dated 30 January 2026. On a fully diluted basis, assuming full vesting of awards under Picton’s share incentive schemes, Picton would have 515,746,013 Picton Shares in issue.
• The implied earnings accretion for Picton Shareholders is calculated by applying the offer exchange ratio of 0.190 LondonMetric Shares per Picton Share to LondonMetric’s earnings for the year ending 31 March 2026 of 13.5 pence per share, plus the offer exchange ratio of 0.881 SREIT Shares per Picton Share to SREIT’s earnings for twelve months ending 31 December 2025 of 3.4 pence per share, compared to Picton’s earnings of 4.0 pence per share for the year ending 31 March 2026.
• The implied dividend income uplift for Picton Shareholders is calculated by applying the offer exchange ratio of 0.190 LondonMetric Shares per Picton Share to LondonMetric Q1 2027 dividend target of 3.15 pence per share, plus the offer exchange ratio of 0.881 SREIT Shares per Picton Share to SREIT Q4 2026 dividend declared of 0.90 pence per share, compared to the Picton Q4 2026 dividend declared of 0.95 pence per share.
• Certain figures in this announcement have been subject to rounding adjustments.
