The unusual bid for a property investment trust
A three-way deal could see another name disappear from the sector.
12th May 2026 10:13
by Dave Baxter from interactive investor
Yet another property investment trust could disappear in an unusual acquisition by a “consortium” of two rivals.
The £403 million Picton Property Income Ltd Shs GBP (LSE:PCTN) has agreed to a deal that would see two other trusts, LondonMetric Property (LSE:LMP) and Schroder Real Estate Invest Ord (LSE:SREI), acquire chunks of it.
LondonMetric would take 46% of Picton, with the Schroder trust getting 54%. In return for each Picton share, existing investors would get 0.19 LondonMetric shares and 0.881 SREI shares.
In a complicated twist the deal, which is subject to approval from Picton shareholders among others, would mean that they own 4% of the enlarged LondonMetric and 48.2% of the enlarged SREI. Unusually, Picton shareholders have not been offered a cash exit.
Beyond that the deal comes with some of the normal selling points of investment trust mergers.
The announcement noted, for example, that the current offer represents a premium of around 7% to Picton’s closing share price on 11 May. However this does come on the back of a six-month period that has seen Picton’s shares fall by around 7.5%.
The acquisition meanwhile helps Schroder Real Estate to establish greater scale. SREI’s market capitalisation came to just £236.2 million at the end of yesterday, leaving it at risk of being subscale.
On top of this the enlarged SREI would introduce lower fees, with potential for further reductions in future.
“The fund will see an increase of more than 70% in net assets, which we expect to lead to a material improvement in secondary market liquidity and a reduction in ongoing costs, further helped by the reduction in management fee agreed as part of the transaction,” said Winterflood’s Emma Bird.
“This increased size should also ensure that the vehicle remains relevant for a wide range of investor types, with it no longer at risk of being viewed as subscale.”
If SREI has beefed up, another acquisition would leave investors with even less choice when it comes to property funds.
As we wrote last month, property as an asset class still holds some appeal but rampant consolidation has left investors with very limited options.
LondonMetric, which is highly acquisitive and has gobbled up multiple property trusts in recent years, is a FTSE 100 constituent and has a market capitalisation of more than £4 billion.
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