LondonMetric has agreed a deal to acquire TISE-listed Highcroft, a UK REIT which owns a portfolio of real estate assets weighted towards logistics (52%) and retail warehousing (27%).
The recommended all-share offer will see Highcroft shareholders receive 4.65 new LondonMetric shares for each Highcroft share.
On the basis of the closing price per LondonMetric share of 181.1p on 26 March 2025, the acquisition values each Highcroft Share at 842.1p or £43.8m.
This represents a premium of approximately 40.4% to the closing price per Highcroft share of 600.0p on the latest practicable date.
Highcroft shareholders will also be entitled to receive and retain the interim dividend of 35p that has been announced separately today and is due to be paid on 16 May 2025.
Background to, and reasons for, the acquisition
The boards of Highcroft and LondonMetric said that they believe that the acquisition has a compelling strategic and financial rationale for Highcroft shareholders. In particular:
- the acquisition provides Highcroft shareholders with the opportunity to crystallise a significant premium to the current Highcroft share price;
- Highcroft shareholders will be given the opportunity to remain invested in a highly rated and significantly more liquid company that has a 10-year track record of uninterrupted dividend growth;
- Highcroft shareholders will benefit from LondonMetric’s greater scale, enjoying: exposure to a larger, more diverse portfolio focused on structurally supported sectors and assets that enjoy high barriers to entry; strong income characteristics with a sector-leading weighted unexpired lease term of 19 years, 99% occupied portfolio and high quality occupier covenants; better and cheaper access to financing resulting from LondonMetric’s credit rating as an investment grade issuer; an internal management structure with strong alignment resulting from significant executive share ownership; and an efficient cost structure, with a sector-leading EPRA cost ratio;
- based on LondonMetric’s consensus FY26 dividend of 12.4 pence per share, Highcroft shareholders would receive a dividend of approximately 58 pence per share, in line with Highcroft’s last reported full year dividend; and
- the acquisition will be earnings accretive for the combined group.
Recommendation
The Highcroft directors unanimously consider the terms of the acquisition to be fair and reasonable and intend to recommend unanimously that Highcroft shareholders vote in favour of the scheme. They have irrevocably undertaken to vote their 3.27% holding.
In addition, LondonMetric has received irrevocable undertakings to vote in favour of the scheme from the supporting non-director shareholders in respect of 56.94% of the issued share capital of Highcroft.
In total, therefore, LondonMetric has received irrevocable undertakings from 60.2% of the issued share capital of Highcroft.
Comments
Andrew Jones, chief executive of LondonMetric, said: “This transaction adds complementary assets in our favoured sectors on an attractive basis across all key property metrics. It supports our strategy of greater consolidation within the sector. We are confident of our ability to extract economies of scale to deliver both value and earnings accretion. We will immediately begin to integrate the Highcroft portfolio and work towards disposing of approximately 20 per cent. of assets that are deemed non-core.”
Charles Butler, Non-Executive Chairman of Highcroft, said: “The Highcroft board believes that the Acquisition is a good outcome for all Highcroft Shareholders who will receive new shares in LondonMetric, which is a highly rated company with a strong history of paying dividends. As a small company, Highcroft would over time struggle to remain competitive and be able to maintain or even grow its future dividends – something which we believe is key to our shareholders. In addition, the Acquisition also has the support of the primary members of our two key shareholder groups representing approximately 56.94 per cent. of our shares in issue.”
