LondonMetric – Recommended Acquisition of Highcroft Investments

Summary

The boards of LondonMetric (LSE: LMP) and Highcroft (TISE: HCFT, www.highcroftplc.com), a UK REIT which owns a portfolio of real estate assets weighted towards logistics (52 per cent.) and retail warehousing (27 per cent.), are pleased to announce that they have reached agreement on the terms of a recommended all-share offer, pursuant to which LondonMetric will acquire the entire issued and to be issued share capital of Highcroft (the “Acquisition“). It is intended that the Acquisition will be effected by means of a scheme of arrangement under Part 26 of the Companies Act (the “Scheme“).

Under the terms of the Acquisition, Highcroft Shareholders will be entitled to receive:

for each Highcroft Share: 4.65 New LondonMetric Shares

On the basis of the Closing Price per LondonMetric Share of 181.1 pence on 26 March 2025 (being the last Business Day before this announcement) (the “Latest Practicable Date“), the Acquisition values each Highcroft Share at 842.1 pence and the entire issued and to be issued share capital of Highcroft at approximately £43.8 million and represents a premium of approximately 40.4 per cent. to the Closing Price per Highcroft Share of 600.0 pence on the Latest Practicable Date.

Highcroft Shareholders will also be entitled to receive and retain the interim dividend of 35 pence per Highcroft Share that has been announced separately today which is due to be paid on 16 May 2025 to Highcroft Shareholders on the register of members as at the close of business on 25 April 2025.

Background to, and reasons for, the Acquisition

LondonMetric’s objective is to own and manage desirable real estate that meets occupiers’ demands, delivers reliable, repetitive and growing income-led returns and outperforms over the long term.

The boards of Highcroft and LondonMetric 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: (i) exposure to a larger, more diverse portfolio focused on structurally supported sectors and assets that enjoy high barriers to entry; (ii) strong income characteristics with a sector-leading weighted unexpired lease term of 19 years, 99% occupied portfolio and high quality occupier covenants; (iii) better and cheaper access to financing resulting from LondonMetric’s credit rating as an investment grade issuer; (iv) an internal management structure with strong alignment resulting from significant executive share ownership; and (v) 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.^[†]

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^[†] This statement is not intended as a profit forecast and should not be construed as such and is not subject to the requirements of Rule 28 of the Takeover Code. This statement should not be interpreted to mean that the earnings per share in any future fiscal period will necessarily match or be greater than those for the relevant preceding financial period.

Recommendation

The Highcroft Directors, who have been so advised by Shore Capital as to the financial terms of the Acquisition, unanimously consider the terms of the Acquisition to be fair and reasonable. In providing its advice to the Highcroft Directors, Shore Capital has taken into account the commercial assessment of the Highcroft Directors. Shore Capital is providing independent financial advice to the Highcroft Directors for the purpose of Rule 3 of the Takeover Code.

Accordingly, the Highcroft Directors intend to recommend unanimously that Highcroft Shareholders vote in favour of the Scheme at the Court Meeting and vote in favour of the Resolution to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) as they have irrevocably undertaken to do in respect of their beneficial holdings of, in aggregate, 170,019 Highcroft Shares representing approximately 3.27 per cent. of the issued share capital of Highcroft as at the Latest Practicable Date.

Shareholder Irrevocables

In addition, LondonMetric has received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting, and in favour of the Resolution to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer), from the Supporting non-director Shareholders in respect of, in aggregate, 2,964,517 Highcroft Shares representing approximately 56.94 per cent. of the issued share capital of Highcroft as at the Latest Practicable Date.

In total, therefore, LondonMetric has received irrevocable undertakings from the Highcroft Directors and the Supporting non-director Shareholders in respect of, in aggregate, 3,134,536 Highcroft Shares representing approximately 60.20 per cent. of the issued share capital of Highcroft as at the Latest Practicable Date.

Dividends

Highcroft Shareholders will be entitled to receive and retain the interim dividend of 35 pence per Highcroft Share that has been announced separately today which is due to be paid on 16 May 2025 to Highcroft Shareholders on the register of members at the close of business on 25 April 2025.

Additionally, based on the expected timetable for the Acquisition to become Effective, Highcroft Shareholders who retain their New LondonMetric Shares following completion of the Acquisition would also be entitled to receive and retain LondonMetric’s fourth quarterly dividend in respect of the quarter ended 31 March 2025, to be announced on or about 20 May 2025 and due to be paid by mid-July 2025.

Timetable and conditions

• It is intended that the Acquisition will be implemented by way of a scheme of arrangement under Part 26 of the Companies Act 2006. However, subject to the Panel’s consent, LondonMetric reserves the right to elect to implement the Acquisition by way of a Takeover Offer.

• The Acquisition will be proposed to Highcroft Shareholders at the Court Meeting and at the General Meeting. In order to become Effective, the Scheme must be approved by a majority in number of Scheme Shareholders present and voting at the Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of the Scheme Shares voted by Scheme Shareholders at the Court Meeting. In addition, the Resolution must be passed by Highcroft Shareholders representing at least 75 per cent. of the votes validly cast on that resolution at the General Meeting, whether in person or by proxy. The General Meeting will be held immediately after the Court Meeting.

• The Acquisition will be implemented in accordance with the Takeover Code and on the terms and subject to the Conditions which are set out in Appendix 1 to this Announcement and on the further terms and conditions that will be set out in the Scheme Document.

• It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and the General Meeting, together with the Forms of Proxy, will be published as soon as practicable and, in any event, within 28 days of this Announcement, unless Highcroft and LondonMetric otherwise agree, and the Panel consents, to a later date. It is expected that the Scheme will become Effective by 21 May 2025, subject to the satisfaction or waiver (as applicable) of the Conditions and the further terms set out in Appendix 1 to this Announcement and to the full terms and conditions of the Acquisition which will be set out in the Scheme Document. A timetable of principal events will be included in the Scheme Document. The Scheme Document will contain property portfolio valuations in respect of Highcroft and LondonMetric in accordance with Rule 29 of the Takeover Code.

Commenting on the Acquisition, 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.”

Commenting on the Acquisition, 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.”