July 2026 will surely be remembered as ‘Merger Month’ with no less than three corporate transactions announced or concluded, with boards either recommending or being ‘minded to recommend’. The biggest news (certainly for the listed UK real-estate community) was the announcement that the board of Segro was ‘minded to recommend acceptance’ following the fourth iteration of Prologis’ approach. Having robustly argued that each offer undervalued the company, late in the month there was public encouragement (for the board to engage with Prologis) by two of the largest shareholders and this seems to have swayed their view. The ‘best and final’ offer has a 20% cash element with the bid valued at 1032p. Segro’s first-half (H1) results published on 29 July disclosed an updated net asset value (NAV) of 902p and the defence document focused on the huge potential of the data centres development pipeline which is exactly what attracted Prologis. Segro is 22% of the market cap of the UK listed real-estate sector and was the major driver of the 5.6% monthly return from the UK component of EPRA Europe. Other UK large caps saw strong performance such as Derwent London (8.4%), Landsec (8.4%) and British Land (6.9%).

The second merger announcement was an all Continental industrial / logistics affair with the French, family-controlled Argan (25.5%) merging with the Belgium family-anchored WDP (1.2%). Argan investors will receive 3 WDP shares for each ARG share. The former was trading at a 30% discount to its NAV as investors were concerned about the slowdown in the French economy as well the need for the business to continue to refinance on more expensive terms. For WDP this is a chance to diversify into France at a discount to NAV securing a high quality 100% let portfolio with a valuable landbank. Developing in France requires long-term, deep relationships with local authorities, Mayors and communities, and Argan has been a family-run business and trusted development partner for over three decades. The Trust owns 4.2% of the company and we are the second largest institutional investor. The holding equates to 2.5% of our net assets. This is a good deal for Argan holders beyond the immediate share price impact with the opportunity to be part of a pan European logistics developer and leverage cross-border tenant relationships.

The third merger announcement was less of a surprise and more of a sigh of relief. Finally (over six weeks from the last announcement) we received the Rule 2.7 statement on the takeover of Picton (4.4%) by a consortium of London Metric (LMP) and Schroder Reit (SREIT). The terms are as per the previous announcement, so the time to complete outstanding due diligence seemed excessive. The earnings enhancement for Picton shareholders is significant even if the deal is at a discount to NAV. For ‘naysayers’ its worth reminding investors that NAV is a third-party assessment of value, it is not market price. Trading at a perpetual discount reminds investors that the market is focusing on implied yield (and cash earnings) rather than an artificial assessment of value. Picton is a well-run business, it is just too small for the listed market. The 46 assets delivered £37m of rent roll (rising to £43m on lettings and reversion capture) and, even run efficiently with a small team, it cost £8m to run the company. As a large shareholder in many micro/small caps, we have actively encouraged mergers to improve efficiency and liquidity. In the case of Picton we are the largest shareholder (11.7% of issued share capital) and we had high hopes that the (de facto) CEO vacancy at SREIT (following the promotion of the previous manager to head of real estate at Schroders) would result in Picton’s CEO taking up the role. However, this week’s announcement confirms that both CEO and CFO will be leaving Picton as part of the transaction.

Beyond all this M&A, the month was also busy with H1 results. Without going into company specifics, the general tone was a message of modest, positive topline growth. Meanwhile a handful of businesses still have refinancing headwinds and this affected bottom-line earnings growth. Wherever there was delivery of new space this contributed positively as tenants continue to pay up for the right property in the right location. Buybacks remain an active tool of value gain where equity investors are leaving shares at wide discounts to NAV. Rounding off a busy month, Hammerson announced its H1 results alongside a £190m raise to acquire 50% of Manchester Arndale. The shares were placed at 355p and the stock ended the month at 382p. We participated.

The Trust’s AGM took place on 23 July including a presentation (and Q&A) from the manager. This is now available on our website or via InvestorMeetCompany.

	2025/2026	2024/2025	2023/2024	2022/2023	2021/2022
NAV (Inc)	4.4	4.5	16.7	– 19.5	– 14.1
Benchmark	5.0	3.4	14.8	– 20.2	– 18.8
Share Price	2.0	1.3	24.0	– 24.1	– 12.4