Life Science Reit Share Discussion Threads

[williamcooper104] 17/6/2024 10:00

Also they say it's going to cost them £150 psf - which looks tight - given it's only c£110 psf in old money (pre covid building costs) Apart from being far too tight to build a basic tech box, and not including fit out contributions for higher rent, it's far better to put an extra £30-40 psf into the elevations such that the tenant and their staff don't feel like they are working on an industrial park - plus should spend loads on landscaping too In a super hot tenant demand market you can get away with skimping but it's going to hit long term

[williamcooper104] 17/6/2024 09:55

Most of the future rent is in OTP It's steal portal frame buildings with slightly better elevations than a typical shed Can be built in about 9 months However in practise even if you are facing a fair wind of tenant demand it's still hard to develop out at that speed There can also be limiting factors - eg road improvements and electricity being the biggest stumbling blocks in Oxford So realistically it's going to to be probably around 7 years (or never of course)

[sebass] 17/6/2024 09:37

Can anyone guess a timeline on page 29 to achieving 26.2m ERV? My main reservation is how fast an incoming labour governemnt would be able to energise planning for labs leading to oversupply of labs down the road

[wshak] 14/6/2024 15:02

I also suspect the broker organising the deal will have kept a couple of million shares for himself to sell into the clearing rise.

[ghhghh] 14/6/2024 09:28

CC2014

I feel reasonably confident that we cleared out the sellers. The broker putting this together was adamant that it would clear the seller and our bids were conditional on this. Obviously best to be cynical but I doubt he would have lied to the all the block buyers. And the cross price of 33.75p supports this.

If the sellers have been cleared I'd expect there would be plenty flippers along for the ride. Suspect it may take a bit of time to clear them

[cc2014] 14/6/2024 07:57

It becomes clear that the persistent seller has not finished or the party taking the last lump never intended to hold and is flipping for a few percent

or both

[williamcooper104] 13/6/2024 15:32

There's a lot of latent speculative supply but much of this isn't going to be built out anytime soon Cambridge has problems with water Oxford has serious traffic/road problems - eg there's still about 5m sf to build out at Harwell but it won't happen until there's been major road improvements Both Cambridge and Oxford have problems with electricity (you need a lot for labs) For sure the tenant demand slowed a little over last couple of years but it's still well out of whack to supply

[ghhghh] 13/6/2024 15:11

Catabrit

Thanks for your post which I've copied to LABs for their comments.

With the exception of Rolling Stock Yard and Herbrand Street, these are all very secondary assets.

OTP (next to Oxford Airport) and Cambourne looks an okay locations to me. Cambourne Park is immediately adjacent to a junction on the dual carriageway A428 connecting to the M11.

Cambridge has a tonne of spec supply available and in far superior locations than Cambourne

I'll be interested to see LAB's take on this since they are forever plugging the attractive supply demand metrics. Can you please provide details of this 'tonne of spec supply in far superior locations'.

On my very crude napkin math I am not getting much above £220m of gross asset value which is basically the market cap + debt. And I don't think I was that stingy either. Maybe I was too mean on the London assets but even being generous / fair they barely add more than 20-30m extra to that total (10-15% upside).

Difficult to comment on this without knowing the breakdown. I was impressed when I meet the LABs team and the CV's of the BoD and management team team appear highly credible. Hence I'd be surprised if the realisable NAV is effectively half of their claimed NAV.

[catabrit] 12/6/2024 16:51

Had a quick look at this and here are my initial thoughts having spoken to someone who owns and manages one of the largest life science parks in the UK and in Europe:

- With the exception of Rolling Stock Yard and Herbrand Street, these are all very secondary assets.

- Cambridge has a tonne of spec supply available and in far superior locations than Cambourne.

- WAULT to nearest lease event is quite short for the sector.

- Leasing fundamentals across the board have weakened in the last 12-18 months.

- Credit quality has also weakened as it is now incredibly hard to get funding. VC firms are becoming way more discerning.

- Yields have moved out.

- You have spec development risk and there is no way you can assume NAV of over £200 psf on development land.

- A lot of people are trying to dress up offices as lab / med-tech space when they're basically offices.

On my very crude napkin math I am not getting much above £220m of gross asset value which is basically the market cap + debt. And I don't think I was that stingy either. Maybe I was too mean on the London assets but even being generous / fair they barely add more than 20-30m extra to that total (10-15% upside).

Their NAV is totally fictitious and on an asset-by-asset basis the margin of safety isn't anywhere near as great as you think it is.

I hope I am wrong and I hope you guys all make money. I really wanted to like the situation (have tonnes of cash to deploy!) but it was a super easy pass when you analyse the underlying assets.

[institutional investments] 12/6/2024 14:03

Well we all took the 10%. Always best on first go. See what they can do in coming days with it now

[spectoacc] 11/6/2024 10:58

Felt like an endless overhang, glad to see it possibly cleared (albeit you should have included me in the block trades).

[wshak] 11/6/2024 10:01

Hopefully, major drip, drip has gone.

We'll find out in coming days.

There is a possibility that some of those that bought in the block trade flip their shares into a rising price but that shouldn't be damaging as they aren't desperate to get out as the seller was.

If the seller returns (ie. they lied about the amount of stock they had), then shares will drift down again.

I won't be selling any at anything like the current price.

Looking for a big win over the next couple of years.

[chrisdgb] 11/6/2024 09:58

Wow nice, let us push back through 40p......

[sphere25] 11/6/2024 09:24

A one-off.

Interesting.

That could be very useful information. That 35p mark was key and it looks like it is having a good go at breaking out with the current price at 36p.

If this overhang is gone, then it should really bounce nicely from here.

Had a few nibbles up to 35p as a short term play.

Stop at under 34p looks the natural exit mark if there is no follow through.

All imo
DYOR

[aishah] 11/6/2024 09:18

@Wshak1
Added heavily to my #LABS position today at 33.75p as part of clear-out trade of sellers - assuming market makers honest about that.

[ghhghh] 11/6/2024 09:05

A few of us here joined a block trade to take out the seller(s). We are told overhang all gone FWIW so hopefully this is the bottom

[cousinit] 07/6/2024 07:29

A number of the material leases are quite short, maybe 5 years or less when including tenant break options. So it's not quite like these are 25 year, RPI linked leases that are underpinning the valuation.

[williamcooper104] 06/6/2024 22:00

Wouldn't worry too much about their tenants They are established growing companies rather than pure start ups - the failure rate isn't that high More importantly tenant demand in Oxford/Cambridge still extremely high

[giltedge1] 06/6/2024 20:22

I flagged up in March increasing competition due to budget changes. There seems a lot of red flags, tenants start ups, cash flow earnings £7M, Interest £10M, so a deficit there & then paid a dividend of £14M?. A rapacious manager not helping & not aligned with shareholders. I am sure there will be value, once all building completed, but I will sit this one out & watch from the sidelines, Maybe a wind up best option when all building completed. There are plenty of alternative Reits offering solid 8% covered yields & rising. Labs needs to fall further to match.

[williamcooper104] 04/6/2024 17:17

This must be on a similar discount to RGL now Given RGL has worse assets, much more highly levered and a non-zero risk of going into admin......

[gbcol] 04/6/2024 15:23

Yes I topped up again this morning as I thought we may have hit the bottom, but not quite so sure as still some chunky sells today. Must be getting close!

[peterboroughmatt] 04/6/2024 14:41

Just taken afew at 33.75 looks great value but I'm sure many have said that before.

[cousinit] 24/5/2024 15:30

Investec Wealth & Inve 17.98% 62,913,379
Schroder Investment Ma 8.63% 30,213,720
London & Amsterdam Tru 5.13% 17,939,237
Sarasin & Partners LLP 4.99% 17,452,282
Cerno Capital Partners 4.94% 17,293,200
Baillie Gifford & Co. 3.58% 12,512,393
Legal & General Invest 3.12% 10,905,907
Momentum Global Invest 2.61% 9,128,168
BlackRock (Luxembourg) 2.20% 7,682,860
BlackRock Investment M 1.94% 6,793,281
Columbia Threadneedle 1.75% 6,141,857
BlackRock Advisors (UK 1.44% 5,027,443

[spectoacc] 24/5/2024 15:22

RAT/Investec don't seem to know which of them owns, or how much, judging by the last 3 or 4. They ought to have crossed a threshold by now and we ought to get another Holdings RNS fairly soon.

They're sellers on the merger in others too - can't imagine LABS making their "lists" unfortunately.

If it's not them but someone else, would be interesting to know who. I've not got an up-to-date list of the major holders, but perhaps we could pick one out.