LondonMetric Property and Schroder Real Estate investment trust have reached an agreement in principle to buy the Picton Property Income REIT.
The all-share offer, which was announced on the London Stock Exchange today (12 May), values the entire issued share capital of Picton at £403.4m, or 78.2p per share. Some 54% of Picton’s shares will be purchased by SREIT, while the remaining 46% will be acquired by LondonMetric.
According to the two boards of the REITs set to purchase Picton, the acquisition would mean Picton retains its “good quality portfolio in the UK-listed arena”, while “addressing the challenges facing Picton as an independent listed company”.
“It would also provide Picton’s shareholders with the opportunity to crystallise a premium to the share price…. While reinvesting into two enlarged, UK-listed REITs that will enjoy the various benefits of enhanced scale.”
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Based on Picton’s closing share price of 73.1p as at 11 May, the deal would recognise a premium of approximately 7%, and a premium of 0.9% relative to Picton’s share price of 77.5p on 12 January, when the company first announced its formal sale process.
Earlier this year, Picton announced it was undergoing a strategic review. As part of this, the board said it would “consider options for a merger with other UK REITs, alongside other forms of consolidation, combination, or selling the entire issued share capital of the company”.
While the REIT’s performance had been strong, achieving top-quartile returns since its launch in 2005, its board noted the UK listed real estate sector had suffered from a “persistent valuation disconnect”, difficulties raising new equity and a reduction in the number of UK REITs.
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“The board of Picton strongly believes that the company’s share price has, for a sustained period of time, not adequately reflected the intrinsic value of the company and its portfolio of assets,” it stated in January.
“Despite the company’s excellent long-term property level track record, strong financial position and recent asset sales to third parties in line with book value, the undisturbed share price of 77.5 pence as at 12 January 2026 represents a 26.9% discount to the 30 September 2025 EPRA Net Disposal Value and a 24.0% discount to the 30 September 2025 NTA.”
Commenting on SREIT and LondonMetric’s proposed acquisition of Picton, Richard Williams, senior analyst at QuotedData, said: “SREI shareholders will come out of this proposed deal very well, with its portfolio swelling by around £375m and its portfolio weighting largely unaffected – meaning it will continue to be tilted towards the higher growth logistics sub-sector.
“It is getting these assets, which will be immediately earnings accretive, at a discount to book value too. Size and liquidity of shares have become of great importance over the last few years, and this deal would put SREI on a better footing, making it the largest REIT in the AIC’s UK Commercial property peer group.”
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