LondonMetric and SREIT agree £404 million all-share offer for Picton

LondonMetric Property PLC and Schroder Real Estate Investment Trust, or SREIT, have agreed a recommended all-share offer for Picton Property Income.

The transaction values Picton's shares at approximately £404 million. Rather than one buyer swallowing the whole business, Picton's properties will be divided between LondonMetric and SREIT, largely according to Picton's existing debt structure.

For LondonMetric shareholders, the important part is a proposed acquisition of 46% of Picton's property assets by value. This would add a £320 million portfolio heavily weighted towards industrial property, alongside expected net cash assets of approximately £24 million.

The offer at a glance

Under the terms, each Picton shareholder would receive:

• 0.190 new LondonMetric shares
• 0.894 new SREIT shares

Based on closing prices on 30 July 2026, this valued each Picton share at 78.7p.

Key offer figure	Detail
Implied value per Picton share	78.7p
Total implied equity value	Approximately £404 million
Premium to Picton's closing price	7.0%
Premium to three-month volume-weighted average price	9.9%
Discount to Picton EPRA NTA	8.2%
Expected completion	Around early September 2026

EPRA net tangible assets, or EPRA NTA, is a property industry measure intended to show the underlying value of a real estate company's tangible net assets.

The offer therefore provides a premium to Picton's recent market price, but it remains below the reported underlying asset value. That tension is central to the deal: Picton shareholders are accepting an asset-value discount in exchange for shares in two larger listed property companies, alongside the prospect of stronger earnings, dividends and liquidity.

What LondonMetric is acquiring

LondonMetric is set to acquire 22 Picton properties valued at £320 million as at 30 June 2026. These assets are held in entities subject to Picton's Canada Life debt facility.

The portfolio is split as follows:

Property subsector	Share of acquired portfolio
Industrial	81%
Office	12%
Retail warehouse	3%
Retail and other	4%

The assets produced net contracted rent of £16.3 million as at 30 June 2026. Their average EPRA net initial yield was 4.7% at 31 March 2026, with an equivalent yield of 6.5%.

Net initial yield measures annualised rental income against the property's value after allowing for purchasing costs. The higher equivalent yield reflects expected income across the remaining lease terms, including future rental changes.

The 81% industrial weighting appears particularly relevant to LondonMetric's strategy. Management describes the company as a triple net, or NNN, real estate investment trust. Under a triple-net structure, tenants typically carry responsibility for costs such as maintenance, insurance and property taxes, supporting a leaner landlord model.

LondonMetric is also expected to receive Picton net cash assets of approximately £24 million at completion, although this estimate excludes transaction costs and possible completion adjustments.

Why LondonMetric is doing the deal

LondonMetric says the acquisition should increase the scale and quality of its earnings while adding high-quality assets with reversionary potential. Reversion refers to the opportunity for rents to rise towards estimated market levels when leases are reviewed, renewed or re-let.

This is consistent with the acquisitive strategy described in the announcement. Investors can also revisit the company's recent rental income growth and dividend update for further company-specific context.

The attraction is reasonably clear. LondonMetric gains a sizeable industrial-heavy portfolio without having to acquire Picton's less aligned assets. SREIT takes the remaining 54%, including a larger office weighting, while the division also reflects Picton's financing arrangements.

That selectivity could make the deal easier to absorb than buying Picton outright. However, the announcement does not disclose a standalone earnings-accretion figure for LondonMetric shareholders or a quantified financial benefit from integrating its portion of the portfolio.

What Picton shareholders receive

Following completion, Picton shareholders are expected to own approximately 4.0% of the enlarged LondonMetric share capital and 48.4% of the enlarged SREIT share capital.

The consortium estimates that Picton shareholders would receive:

• 39.4% implied pro-forma earnings accretion
• A 47.4% immediate increase in dividend income
• Continued exposure to Picton's property assets through two listed REITs
• Improved share liquidity and greater income diversification

These calculations are based on historical results and stated dividend targets. The companies explicitly say they are not profit forecasts, so investors should not treat them as guaranteed outcomes.

Picton's board has unanimously recommended the transaction. Irrevocable voting commitments cover approximately 12.02% of Picton's issued shares, including support from TR Property Investment Trust and Picton directors.

For background on Picton's performance before the offer, see the earlier analysis of Picton Property Income's half-year results.

The main risks for LondonMetric investors

The clearest issue is dilution. Picton shareholders will receive new LondonMetric shares and are expected to own 4.0% of the enlarged company. Existing investors will own a smaller percentage of LondonMetric, so the acquired income and assets need to justify the additional shares issued.

The offer is also entirely share-based. Its implied value can move with both LondonMetric's and SREIT's share prices before completion, meaning the quoted 78.7p value is not fixed in cash.

LondonMetric will continue to hold shares in SREIT, although its voting interest is expected to fall from approximately 11.1% to 5.7% after completion. That holding will be subject to a six-month lock-in, limiting LondonMetric's ability to sell during that period except under specified circumstances.

There is also normal execution risk. The scheme requires Picton shareholder approval, including at least 75% in value of shares voted at the Court Meeting, approval of the required resolution at the General Meeting and Court sanction.

Finally, the portfolio figures show opportunity rather than guaranteed growth. Capturing the 6.5% equivalent yield depends on lease events and asset management, while property values and rental conditions can change.

What happens next

The scheme document is expected to be published as soon as practicable and within 28 days of the announcement unless a later date is agreed and approved where required.

Subject to the conditions being met, the acquisition is expected to become effective around early September 2026.

Picton has declared a first-quarter dividend of 0.69p per share, which will be paid only to qualifying Picton shareholders. LondonMetric's expected first-quarter dividend of 3.15p per share will similarly belong only to existing qualifying LondonMetric shareholders.

The first LondonMetric dividend expected to be available to former Picton shareholders is the second-quarter dividend due to be declared in November 2026.

The full terms, legal conditions and calculation details are available in the original company announcement.

A targeted expansion for LondonMetric

For LondonMetric, this is not simply a £404 million takeover. It is a targeted acquisition of the part of Picton's portfolio that management considers the best strategic fit.

The industrial weighting, £16.3 million of contracted rent and approximately £24 million of expected net cash are the principal attractions. The main questions are whether the assets deliver the anticipated rental upside and whether that value comfortably offsets the new shares issued.

Completion is not yet certain, but the unanimous Picton board recommendation and voting commitments covering 12.02% of its shares give the proposal an initial level of support.