Picton Property Income (LSE:PCTN), the UK commercial property real estate investment trust, has agreed a recommended all-share offer from a consortium of LondonMetric Property and Schroder Real Estate Investment Trust (SREIT).
Under the deal, Picton shareholders will receive 0.190 LondonMetric shares and 0.894 SREIT shares for each Picton share held, with full terms set out in a separate Rule 2.7 announcement released the same morning.
The offer follows a strategic review and formal sale process launched on 13 January.
Alongside the offer, Picton reported its net asset value per share fell 0.7% to 101.5p at 30 June, from 102.2p in March, with total return for the quarter of 0.2%, down from 0.7% previously.
The independent portfolio valuation rose 0.4% on a like-for-like basis to £702.3 million, though this slipped to -0.3% after accounting for £4.8 million of capital expenditure, largely office upgrades in Bristol, Manchester and Colchester.
Occupancy held steady at 84%, and the company completed seven new lettings at rents 1% above March's estimated rental value, alongside the disposal of a non-core industrial asset in Gateshead for £1.2 million, 30% above its March valuation.
Loan to value rose slightly to 24.1% from 23.5%, with debt fixed at a 3.7% weighted average interest rate and a maturity of 5.5 years.
Picton declared an interim dividend of 0.69p per share for the quarter, down from 0.95p in the prior quarter.
Since the quarter end, the company has secured planning permission for a letting at Winnersh Triangle worth £0.2 million in annual rent, and holds a leasing pipeline of £2.0 million in annual rent, 93% of it in the industrial sector, subject to contract.
News Intelligence what this means for the company
Picton Property Income has agreed to an all-share takeover by a consortium of LondonMetric Property and Schroder REIT, with shareholders receiving 0.190 LondonMetric shares and 0.894 SREIT shares per Picton share held. The deal concludes a formal sale process launched in January, but comes as the REIT's operational momentum has softened: NAV per share fell 0.7% in the June quarter to 101.5p, total return slowed to 0.2%, and the interim dividend was cut 27% to 0.69p per share from 0.95p in the prior quarter.
- LondonMetric Property and Schroder Real Estate Investment Trust will each acquire a stake in Picton's £702.3 million portfolio and 84%-occupied commercial property base.
For Picton shareholders, the offer crystallises value at a time when the REIT's NAV and dividend trajectory are deteriorating, removing exposure to further commercial property headwinds. The all-share structure means Picton holders gain exposure to the acquirers' portfolios rather than cash, tying their outcome to those REITs' performance post-close.
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