Life Science REIT is undertaking a strategic review of the business to explore all options for the future of the company, which may include a potential sale or managed wind down of the company.
In a statement, the company said that since its IPO in November 2021 it had fully invested its IPO proceeds in a portfolio of assets located in the ‘Golden Triangle’ of Oxford, Cambridge and London.
All of these properties are either leased, or intended to be leased, to occupiers in the life science sector and 55% of rent is derived from life sciences occupiers.
Despite signs of improving confidence in the life science leasing market in the summer of last year, the company said “uncertainty has since returned to the broader market and as a result, these targets have proved difficult to achieve”.
The slowdown in leasing activity, higher inflation and elevated interest rates, coupled with the company’s size and low levels of liquidity “have led to an underperformance of the share price, which has, as a result, traded at a significant discount to net asset value for a prolonged period of time”.
Further to a number of discussions with potential acquirers in recent months the board of Life Science REIT said it “has confidence that, in the context of a strategic review, the business should be attractive to multiple parties if the outcome of the strategic review leads to the sale of the business”.
The company has appointed Panmure Liberum as its financial adviser to assist with the strategic review, including the formal sale process.
In its interim results, the company said that it was under offer or in advanced negotiations on £3.2m of estimated rental value, which it expected to capture by March 2025. To date, it has captured £1.3m with a further £1.4m in solicitors’ hands.
However, as a result of delays in leasing activity, the expectation of further lease incentives including rent-free periods being required to secure further leases, and the associated impact on cashflow, the company said it has decided to suspend any future dividends until the strategic review has been concluded.
The board also announced that it is currently in the final stages of negotiation with Ironstone to agree a significant reduction in the fees payable under the investment advisory agreement. This will include a reduction to the investment advisory fee, as well as a change to the metric upon which it is calculated.
