A trading update from Schroder Real Estate (SREI) shows the real estate investment trust has completed nine new lettings over the past two months as its joint acquisition of Picton Property completed.

Although SREI will not comment in detail on the impact of the £404m all-share bid with LondonMetric (LMP) that completed on 11 September until its half-year results next month, the update shows its portfolio has grown to £859m from £476m at 30 June as a result of the influx of assets from Picton.

The number of properties has swollen from 32 to 54 with annual rent jumping from £31.3m to £51m.

Since its last update on 5 August, the company has added £1.2m of annual rent through lettings of nine vacant units at 11% above their estimated rental value (ERV) and has agreed terms on 62,500 sq ft of vacant space that should generate a further £1.1m of rent.

The transactions include the letting of the 47,944 sq ft Union Park industrial estate in Norwich to logistics firm DPD following a £1.1m refurbishment. The £407,950 annual rent is 15% ahead of the 30 June ERV and 59% more than the rent paid before the work.

Terms have also been agreed on a further 27,000 sq ft of industrial space bringing in £395,000 rent. There have been three big lettings of retail properties in Salisbury, Bletchley and Leeds and a 15-year lease at the Headingley Central office in Leeds to Tesco at £115,000 in line with ERV.

Peter Lowe, who has succeeded Nick Montgomery as fund manager, said: “These lettings demonstrate the encouraging occupier dynamic we are seeing across the combined portfolio, which is accompanied by a strong focus on extracting cost synergies. Alongside continuing to improve the portfolio vacancy, we are also pursuing capital recycling opportunities to further enhance shareholder returns.”

Our view

Matthew Read, senior analyst at QuotedData, said: “This is an encouraging start for Schroder Real Estate following the Picton acquisition. The DPD letting illustrates how targeted capital expenditure can deliver a meaningful uplift in rental income and the £1.2m of additional annual rent, secured at 11% above estimated rental values, is welcome. With a £22m gap between the portfolio’s passing rent and estimated rental value, there is clearly much more to go for. Assuming SREI is able to close that gap, while extracting cost savings and recycling capital out of weaker assets, this should provide scope for earnings growth and could help narrow the discount.”

You’ve read the news. Now have your say. Which investment trusts, fund managers and ETFs deserve to win? You decide in the Investors’ Choice Awards 2026. Vote now.