Picton backs £404 million all-share offer from LondonMetric and SREIT

Picton Property Income has agreed terms for a recommended all-share takeover by LondonMetric Property and Schroder Real Estate Investment Trust, known as SREIT.

The transaction values Picton at approximately £404 million. Rather than receiving cash, shareholders would exchange each Picton share for shares in both acquiring real estate investment trusts, or REITs.

The offer provides a premium to Picton's recent share price and promises a substantial uplift in earnings and dividend income. However, it is being completed at a discount to Picton's underlying net asset value, and the final value will move with the LondonMetric and SREIT share prices.

The offer in numbers

Under the agreed terms, Picton shareholders would receive:

• 0.190 LondonMetric shares per Picton share
• 0.894 SREIT shares per Picton share

Based on closing prices on 30 July 2026, the combined consideration was worth 78.7p for each Picton share.

Key figure	Offer detail
Implied value per Picton share	78.7p
Total equity value	Approximately £404 million
Premium to Picton's 73.5p closing price	7.0%
Premium to three-month average price	9.9%
Discount to Picton EPRA NTA	8.2%
Pro-forma earnings accretion	39.4%
Illustrative dividend income increase	47.4%

EPRA net tangible assets, or EPRA NTA, is a property industry measure of underlying net asset value. The 8.2% discount means the offer does not give Picton shareholders full stated asset value, despite offering a premium to the market price.

That tension is central to the deal. Picton's board believes the income growth, improved liquidity and benefits of investing through two larger platforms outweigh accepting a discount to EPRA NTA.

The full terms can be found in the original company announcement.

Why Picton's board supports the deal

Picton began a strategic review and formal sale process in January 2026 after its shares had traded at a persistent and significant discount to net asset value.

That discount restricted Picton's ability to raise new equity and pursue combinations that might have created a larger, more liquid property company. The board considered alternatives including remaining independent and undertaking a managed wind-down of the portfolio.

It has now unanimously recommended the consortium's proposal. Picton's directors, advised by Stifel on the financial terms, consider the acquisition fair and reasonable.

The most striking claimed benefit is income. The consortium calculates that the new combination of LondonMetric and SREIT shares would provide Picton investors with a 47.4% immediate increase in dividend income, based on specified dividend targets and Picton's previously declared quarterly dividend.

It also calculates pro-forma earnings accretion of 39.4%, using full-year results for the year ended 31 March 2026. Pro-forma means the calculation estimates what the combined position would have looked like had the structure already been in place.

These figures are not profit forecasts, and investors should not assume the indicated earnings or dividends will necessarily be delivered in future periods.

What happens to Picton's properties?

The portfolio will be divided between the two buyers in a way that reflects Picton's existing debt arrangements.

LondonMetric will acquire 46% of the property assets by value. This includes 22 properties valued at £320 million on 30 June 2026, with industrial assets representing 81% of that allocation. The properties generated net contracted rent of £16.3 million.

LondonMetric will also acquire Picton's net cash assets, expected to be approximately £24 million on completion, excluding transaction costs and any final adjustments.

SREIT will take the remaining 54% by value. Its allocation includes 22 properties valued at £382 million, comprising 54% industrial, 29% office, 12% retail warehouse and 5% retail and other assets. These properties generated net contracted rent of £20.3 million.

SREIT's loan-to-value ratio, which compares net debt with property value, is expected to be approximately 32% at completion. That sits within its long-term target range of 25% to 35%.

For more background on the company, see the Picton Property Income Limited share page. Our earlier coverage also examined the £404 million all-share proposal for Picton.

What Picton shareholders would own

Following completion, existing Picton shareholders are expected to own approximately:

• 4.0% of the enlarged LondonMetric share capital
• 48.4% of the enlarged SREIT share capital

This is not a clean exit. Investors would remain exposed to Picton's assets while also gaining exposure to the buyers' wider portfolios, balance sheets and management teams.

LondonMetric presents itself as the more liquid platform, with an investment-grade BBB+ credit rating and an internally managed structure. SREIT expects its enlarged portfolio to be worth approximately £850 million, with around 450 tenants providing more diversified rental income.

SREIT's manager has agreed to reduce its investment management fee by 10 basis points across all tiers. One basis point equals 0.01 percentage points. It will also waive one year's management fee on the share of Picton's net asset value allocated to SREIT, with that waiver spread over 24 months.

The main risks to consider

The first issue is valuation. The offer stands at an 8.2% discount to Picton's EPRA NTA. Investors who believe the portfolio could ultimately realise close to stated asset value may view that as a meaningful concession.

Second, this is an all-share transaction. Its value is not fixed at 78.7p in cash. The amount shareholders ultimately receive will depend on the market prices of LondonMetric and SREIT shares.

Third, the projected 39.4% earnings accretion and 47.4% dividend increase are based on historical results, declared dividends and dividend targets. They are explicitly not profit forecasts or guarantees.

The structure is also relatively complex. Shareholders will move from owning one investment company to holding two REITs with different portfolios, strategies, fee structures and management arrangements.

SREIT is separately progressing succession planning for fund manager Nick Montgomery. He is expected to remain involved for as long as necessary to support an orderly transition, but identifying a replacement market-facing fund manager remains a strategic priority.

Voting and the expected timetable

The acquisition is expected to be completed through a Guernsey court-sanctioned scheme of arrangement.

At the Court Meeting, it must be approved by a majority in number of eligible shareholders present and voting, representing at least 75% in value of the shares voted. A related resolution must also receive at least 75% of votes cast at the General Meeting. Court approval is then required.

The consortium has received irrevocable voting commitments covering approximately 12.02% of Picton's issued share capital. This includes 11.67% held by TR Property Investment Trust.

The scheme document is expected within 28 days of the announcement, unless a later date is agreed and approved. Completion is targeted for around early September 2026, subject to the necessary conditions.

Picton has separately declared a first-quarter dividend of 0.69p per share. Based on the expected timetable, the first LondonMetric and SREIT dividends available to former Picton shareholders would be their respective second-quarter dividends, expected to be declared in November 2026.

A trade-off between asset value and future income

This proposal offers Picton shareholders a modest premium to the recent market price rather than full net asset value. In return, investors would receive stakes in two larger listed property businesses, with the consortium claiming substantially higher earnings and dividend income.

The board's recommendation suggests it sees scale, liquidity and income growth as more valuable than holding out for a price closer to EPRA NTA. Shareholders now need to judge whether that future potential adequately compensates for the discount and the added complexity of owning two separate REITs.