Schroder REIT and LondonMetric have finalised terms for a £404m all-share deal to jointly acquire Picton Property Income.
Picton shareholders will receive 0.894 Schroder REIT shares and 0.190 LondonMetric shares per share.
This represents a premium of approximately 7% to the Picton share price of 73.5p immediately before the approach became public.
If the deal goes through as planned, Picton shareholders will hold about 4% of the enlarged share capital of LondonMetric and 48.4% of Schroder REIT.
The board of Schroder REIT has agreed to a 10 basis point reduction in fees across all tiers following completion, bringing the range to 0.8% to 0.6%.
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Manager Nick Montgomery will hand over to a new fund manager once a candidate is chosen.
Analysts at Shore Capital were positive on the deal from a Picton shareholders perspective.
They noted it provides shareholders the opportunity to remain invested in a ‘market-leading, FTSE 250-sized REIT’, benefitting from greater resources.
The also pointed to consistent earnings growth, with a six-year average of 5.3%, dividend growth of 4.8%, lower costs, more granular tenant income and greater access to credit facilities.
The deal is expected to be completed in September via scheme of arrangement.
