LondonMetric Property Revises Terms in All-Share Offer for Picton Property Income

Updated Offer Details and Impact on Picton Shareholders

The Boards of LondonMetric Property Plc and Schroder Real Estate Investment Trust Limited have announced revised financial terms for their indicative, non-binding all-share offer for Picton Property Income Limited. Under the updated terms, Picton shareholders will be entitled to 0.190 LondonMetric shares and 0.894 SREIT shares per Picton share. This represents an increase in the SREIT exchange ratio from the previously proposed 0.881 to 0.894, while the LondonMetric ratio remains unchanged.

Using the closing prices of LondonMetric and SREIT shares on 9 July 2026, the revised offer values each Picton share at 77.0 pence. This places the total valuation of Picton's issued and to-be-issued share capital at around a3397.0 million, with approximately 46% attributed to LondonMetric shares and 54% to SREIT shares. No additional financial details were provided in the announcement.

Board Endorsement and Strategic Review Results

Following extensive shareholder consultations, the Picton Board has reaffirmed its support for the revised offer. Earlier in 2026, the Board initiated a Strategic Review and Formal Sale Process to identify opportunities to maximise shareholder value. Shareholder feedback has been largely positive regarding the proposed offer.

Considering the strategic review and shareholder input, the Picton Board is inclined to unanimously recommend the revised offer, pending completion of due diligence and finalisation of transaction documentation. Specific shareholder voting intentions or percentages were not disclosed.

Advantages for Picton Shareholders

The updated offer is expected to deliver multiple benefits to Picton shareholders, including an improved implied earnings accretion of 39.4% on a pro-forma basis, based on full-year results ending 31 March 2026. This is an increase from the original offer’s 37.7%. Additionally, an immediate dividend income uplift of 47.4% is anticipated, based on LondonMetric’s Q1 2027 dividend target and SREIT’s Q4 2026 declared dividend.

The announcement clarifies that these figures on earnings accretion and dividend increases are not profit forecasts or estimates. No further financial projections were disclosed.

Offer Process Progress and Upcoming Steps

Since the prior update, all parties have engaged in further shareholder discussions and are advancing due diligence. Transaction documentation is being finalised, which is required before the Consortium can announce a firm intention to make an offer under Rule 2.7 of the City Code on Takeovers and Mergers.

Completion of confirmatory due diligence, receipt of consents, waivers, and approvals from Picton’s lenders, and finalisation of documentation are pre-conditions for a firm offer announcement. No specific timelines were provided.

Dividend Policies and Shareholder Rights

Picton shareholders will be entitled to receive and retain ordinary course dividends, provided these are supported by cash earnings for the relevant period. The permitted cash-covered dividend for the period ending 30 June 2026 will be determined upon firm offer announcement. Should Picton declare any excess dividends before completion, LondonMetric and SREIT reserve the right to adjust the exchange ratio accordingly.

This approach is intended to maintain fair value for shareholders while preserving the offer’s integrity. No specific dividend amounts or adjustments were disclosed.

Pre-Conditions and Possible Waivers

The announcement specifies several pre-conditions that must be satisfied or waived before a firm offer is made, including due diligence completion, lender consents, and transaction documentation finalisation. The Consortium may waive any or all pre-conditions at its discretion.

Even if these conditions are met or waived, there is no guarantee a firm offer will be made. Details on criteria for waivers were not provided.

Market Context and Strategic Objectives

This revised offer forms part of LondonMetric and SREIT’s broader strategy to strengthen their positions in the UK real estate market. Acquiring Picton is intended to create shareholder value through synergies and enhanced earnings and dividend potential.

The announcement notes alignment with the Consortium’s strategic goals but does not elaborate on specific market factors influencing the decision.

Regulatory Compliance and Framework

The Panel on Takeovers and Mergers has granted a dispensation from Rule 2.6(a) of the Code, allowing the Consortium to participate in Picton’s formal sale process without adhering to the 28-day deadline. This provides flexibility in finalising offer terms.

The revised offer is expected to proceed via a Court-sanctioned scheme of arrangement, though the Consortium retains the option to pursue a contractual offer. No further regulatory details were disclosed.