Life Science Reit Share Discussion Threads

[cousinit] 08/4/2024 11:42

It's alive! It's alive!!

[spectoacc] 08/4/2024 11:22

Good to see a twitch.

[roulettewheel] 06/4/2024 21:19

Not sure but iShares UK Property UCITS ETF is down 49% over same period so food for thought

[toffeeman] 06/4/2024 19:53

Does he explain the 60% decline since flotation?

[roulettewheel] 05/4/2024 20:59

Interview with Simon Farnsworth from Life Science REIT

On Youtube www.youtube.com/watch?v=fnslItk8zPU

[williamcooper104] 28/3/2024 12:00

They'd be able to let it if the tenant breaks/exits at same rent £45 for a fitted lab is pretty cheap

[cousinit] 28/3/2024 11:34

Would be interesting to know what the break/dilaps clause is like. It clearly isn't an income strategy if you may be spending as much on fit out as the minimum contracted rent!

This seems indicative of occupiers wanting (and being able to demand!) flexibility. I guess this can act as a 'shop window' to other potential occupiers.

Very few assets now on 25 year, upward only leases outside of alternatives (if that includes logistics)

[williamcooper104] 28/3/2024 11:05

Sitting a shed out to CL2 labs also likely to be more expensive than fitting out an office to same standard Even so doubt it's more than £225psf Would of course be good to not have to guess

[williamcooper104] 28/3/2024 11:04

Yep - another way of looking at it is that it should be a c300-400bps spread over incremental cost of debt

[robards] 28/3/2024 10:55

So on your figures, the rent increase covers capex over 8 or 9 years, which is ... ok?

[williamcooper104] 27/3/2024 12:50

Of course you can rent for a much higher number if you fit out a unit with labs Question is how much capex Lab fit out, for standard wet/CL2 is c£180-200 psf

[williamcooper104] 27/3/2024 12:49

Simon Farnsworth, managing director of Ironstone Asset Management, the investment adviser to Life Science REIT, told Property Week the firm was about to sign a deal at OTP that would represent a doubling of its previous top rent at the park."We are hopeful of signing up to a deal this morning on a fitted lab basis to an occupier at the tech park at £45/sq ft, which would be a new top line for the park," he said. "Previously, that space in an unfitted condition would have been £22.50 – so effectively we are doubling the rent off the back of some capex."https://www.propertyweek.com/finance/life-science-reit-cuts-dividend-as-it-nears-record-rent-deal-for-otp/5129345.article

[williamcooper104] 27/3/2024 10:02

Right now having a converted inferior lab doesn't matter as the tenants haven't got a choice It could matter when there's a lot more purpose built labs in London - but that's some time away Tenants are all a little OCD about their labs

[williamcooper104] 27/3/2024 10:00

On 1 - LABS are right; there is currently still significant unmet demand - plus developing in Oxford and Cambridge is very difficult - no electricity in Oxford (labs use a lot) and no water in Cambridge. Within next 5-7 years there's a lot more supply coming into London - but that's not a problem now - and if I was buying into LABS now it would be on the basis of a wind up2 - market has more of a point here - it's not that you can't convert to labs but that those labs will always be inferior to purpose built, plus in urban areas you might have to internally store your plant losing a lot of lettable floor area - but that's more of a longer term problem- and as said these are not RGLO offices

[ghhghh] 27/3/2024 09:25

My take is that LABS is selling off because

1. Market doesn't believe that there is enough mid term demand for Lab space but LABS claim that interest/demand (stacked up by concerns re economy)is significantly greater than current supply and this imbalance is increasing thanks to reduced new build)

2. Market is valuing LABS on the basis of it's high % of offices, tarnishing it with the same obsolete/stranded assets discounts as RGL/CLS etc. But as far as I'm aware, all LABS offices have been acquired on the basis that they will be converted. Hence no concerns here (other than future funding) and the greater the write downs, the greater the valuation uplift on refurb, build cost inflation aside.

LAB's portfolio is already 100% A-C ESG when you exclude the one listed building.

And as far as I'm aware, they have no other significant funding commitments other than Oxford which is covered in Results? I'll double check with them.

I should get the Jefferies Note within a couple of days, this should add to the bear case!

[wshak] 27/3/2024 08:31

Are the directors particularly wealthy, enabling them to buy shares?

Four of them share £180,000, with Claire Boyle being the highest earner at £55K.

It is Ironstone Asset Management who are raking in £3.4m a year in fees.

[ghhghh] 27/3/2024 07:00

Management not buying is a red flag - if there’s a problem I think it’s more liquidity than values

Agreed but shares were over 60p (and fully valued) at YE, directors have been inside during current carnage. Plus I suspect they were intending to cut the dividend pre YE barring a miracle.

I'd hope we see some buying now but you never know when they are free to buy.

Jefferies have cut from Buy to Hold and slashed PT from 90p to 45p.

And the large seller evident over the last month still lurking at 43p.

[williamcooper104] 26/3/2024 23:08

Wouldn't worry too much about CW Scientists even less keen to go there than investment bankers once were Kings Cross/Oxford/Cambridge will do fine Tenants aren't that rent sensitive - it's not like they will go to CW because it's cheaper And it's not that CW can be cheaper as much of the rent comes from capitalised fit out costs

[giltedge1] 26/3/2024 22:17

Massive loss of capital from IPO, worry here is competition from recent Govt incentives to Canary Wharf empty offices to convert to Labs. Best avoided better value elsewhere SREI, SHED.

[williamcooper104] 26/3/2024 22:03

The valuations look reasonable and there's plenty of liquidity still for the sort of properties they have What I'm not sure about is the balance sheet commitments OTP was IIRC an acquisition of some built assets and forward funding commitments to buy future assets when built Don't know what funding liability (if indeed any left) there is Would want to understand that first before buying Management not buying is a red flag - if there's a problem I think it's more liquidity than values

[riskvsreward] 26/3/2024 20:39

Price more than halved in two years and you still don't see a single director buying. That tells you all as if it is really a bargain no one would know it better than the insiders and I don't see they will not have some of it if it is really a bargain.

[williamcooper104] 26/3/2024 20:21

Problem is that it's likely the vacant space requires capex and the development pipeline definitely does - plus at least some of that pipeline is forward funded investment acquisitions so lower return than pure development Given new debt is going to cost close to 7 can't see a lot of point However a wind down/sale of assets would work

[ghhghh] 26/3/2024 17:50

It is not viable as a stand-alone REIT

But letting the vacant assets lifts income to circa £20m and rolling out the development pipeline adds another £6m.

LABS claim the limited new build supply should strongly support rental growth when interest rates fall/economy recovers.

A 47% discount to NAV looks excessive, presumably this is because a high % of the portfolio is old offices but these will be subject to the ongoing refurbishment to labs programme.

[williamcooper104] 26/3/2024 16:07

Yep; hard to see it getting to the scale now But the assets aren't bad; even if you characterise some of them as more office than labs; they still are in good locations An office in Oxford trades at a very different price to one in Leeds

[jombaston] 26/3/2024 15:52

This shows the perils of investing in a REIT before it is properly established. Any dividends are obviously paid out of capital to start with. In this case the timing was unfortunate but that was always a risk. It is not viable as a stand-alone REIT although it could be attractive to a buyer.