LondonMetric Property (LMP) and Schroder Real Estate (SREI) have unveiled their joint all-share bid for Picton Property Income (PCTN) that they have been preparing since March, offering 0.190 LMP shares and 0.881 SREI shares per Picton share.
At their respective closing prices of 187.7p and 48.3p last night, this values Picton at £403.4m or 78.2p per share, a 7% premium to the share price but a 9.2% discount to the 31 December portfolio valuation.
PCTN shares were not buoyed by the news, continuing their downward trajectory of the past two months with a 5.2% drop to 69.3p. Shares in the bidders also fell with SREI, a £263m real estate investment trust, off 4.1% to 46.3p, and LMP, the sector’s £4.3bn consolidator, down 1.3% at 185.2p.
Our view
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. It is also good to see a lowering of the management fees within the proposed offering. This deal is kind of small fry for LMP these days, but it continues its growth through M&A as it expands its triple-net property portfolio.”
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