Life Science Reit Share Discussion Threads

[cousinit] 14/3/2024 16:22

It happens occasionally...

It's taking time to recalibrate to the current environment where a seller who needs liquidity can do untold damage to the price (on what can be fairly limited volumes).

When trusts that seem to be perfectly fine are tossed around like flotsam and jetsam, others with a few hairs seem able to plumb deeper troughs.

The repurposing at LABS seems to be taking some time. Everything (generally) seems to take longer than management teams indicate, but in the past 5 years or so (particularly in the UK) timelines seem very sluggish/extended.

I know Specto has been quite sceptical on rate cuts. It did look at times over the last 3 months or so that they could be delayed for a while but the disinflation trends seem to be stronger in the UK and Europe such that that they may move first without waiting for the Fed. 2-3 cuts would hopefully be a useful tailwind to trusts with chunky yields and some floating rate debt.

[spectoacc] 14/3/2024 15:35

Hate to agree, but even if you take LABS to be offices not labs, it still looks not bad down here to me.

Persistent seller, so might go lower yet, but value is value.

Good luck holders.

[ghhghh] 14/3/2024 15:06

CousinIT

You have called this a lot better than me! I'm still buying and now one of my largest holdings.

43p discounts a lot of bad news. You have obviously seen the Presentation re the Interims re supply/demand?

My reason for buying REITs is mid term capital growth and I think LABs will do well - eventually!

[cousinit] 14/3/2024 12:10

Despite my reservations, I've taken a starter position here at 42p.

When I was kicking the tyres it was bobbing around 50p.

There's a fair amount in the price now and this leg down has been on no news. 10 days until the results, which may not be pretty.

[spectoacc] 23/2/2024 16:22

In here, albeit not calling the bottom on a chart like that.

I don't think a fall in NAV would bother me - LTV c.20%, and that's the relevance for NAVs atm (as witnessed by the many REIT deals at well below, API the latest).

But interesting comments re divi. My guess is they'll sustain it regardless, in the belief they'll have it covered again before too long.

[cousinit] 16/2/2024 12:47

ghhghh - fair play - I've always considered that you have an appetite for greater risk/reward!

In 5 years' time when some of the asset management initiatives may be starting to bear fruit, if the RSY space remains in demand along with lower interest rates this could look very appealing.

I do wonder how it might fare in the meantime if the NAV dips down into the 70s and the divi is cut. One aspect is whether the valuer can look through assets with limited income and assess them as lab developments or as is vacant offices.

[ghhghh] 16/2/2024 08:11

I've been buying in anticipation of superior growth potential from their more specialist strategy. Risks are how long it takes them to persuade the market that it's not offices and what does future demand look like for such a niche REIT.

Limited new build and rising replacement costs must bode well for future capital appreciation? Dividend cover a bit of a red herring at this price.

[cousinit] 15/2/2024 15:51

I think my current assessment is that they have one too many material assets. The WAULT is short outside of Oxford and the interest rate caps run out in barely more than a year. Debt could then be costing c7% partly backed by assets in London which currently have more like 5% yields and could potentially have chunky vacancies in a year or so from there.

If they can get a London asset away within 20% of the last valuation then it may make sense, but a completion of Oxford would then dominate. They could either split that or at least carve out the hotel.

A lot of things would need to land jam side up to avoid a (chunky) divi cut while base rates are running north of 4%.

[jonwig] 15/2/2024 14:46

CousinIT - thanks, that's the kind of thing worth pursuing!

[cousinit] 15/2/2024 13:58

I've been kicking the tyres here and wonder if anyone has any views.

The discount and the yield are definitely on the credit side, along with an element of pain already taken to refinance to 2026.

On the debit side:
Rent guarantees on asset voids have now expired with limited new letting (esp Cambourne)

Rolling Stock Yard has high quality tenants but like Cambourne the WAULT is short to break. Also Gyroscope has stopped development of their lead asset so is there a chance they exercise break? (See Syncona results)

Feels that the slow transition of some of the office assets into labs/hybrid opens up the risk of the valuer getting the red pen out on the back of general office value declines, especially given that these were largely bought prior to rates rising. The new OTP leases are a definite positive but the asset has less effect than the chunkier London/Cambridge ones.

[jonwig] 15/2/2024 10:00

Incidentally, if the FY net rental income were £13.5m, it would have to pay out 90% of that as a PID, ie. 3.4p. So the FY dividend would be 4.4p giving a historic yield of around 9%.

So it does look cheap ... but are the tenants high quality ones who can be relied on to pay the rent?

[jonwig] 14/2/2024 17:08

#134 - at the interim, the 1p dividend cost £3.5m, and net rental income was £6.6m. So that's decent, but earlier dividends were probably uncovered (as they weren't invested enough to earn rent). It will be clearer with the final results - probably end-March.

#135 - I think you've misunderstood. Their LABS shares were held in a client's account. The client has since taken his funds elsewhere. So he's either sold the shares or holds them with another asset manager. If the latter, he ought to be issuing an RNS saying so.

[gbcol] 14/2/2024 15:55

Re Hazelview RNS states under reason for notification “ Hazelview Securities Inc. no longer having control or direction over a client's assets.”

Well as they bought at £1+ and sold at half that I’d say that they never had control over clients’s assets! Personally I prefer to lose my own money rather than pay someone else to do it.

[orinocor] 14/2/2024 10:45

its not clear to me whether the 4p annual dividend is covered. any views?

[bathcoup] 14/2/2024 10:22

Hazelview Securities are obviously selling at a substantial loss. Do they have a legitimate reason? - that's my concern

[parsons4] 13/2/2024 12:17

The other RNS this morning is the answer for the very weak share-price. Don't forget the advisors bought stock recently at over 60p I topped up this morning because I think they are too cheap.

[davebowler] 13/2/2024 10:58

Liberum
New lease at Oxford Technology Park for £20.1 per sq. ft.
Analyst: Joachim Klement

Mkt Cap £181m | Share price 51.6p | Prem/(disc) -42.5% | Div yield 7.8%

Event

Life Sciences REIT announced that it has fully let Building 5 at Oxford Technology Park, covering 57,000 sq. ft. to WAE Technologies. WAE is a technology and engineering provider to a range of sectros, including green energy, medical engineering, and automotive. WAE is part of Forrtescue, a listed Australian company which aalso has an investment fund that invests in a wide variety of businesses including spinouts from Oxford and Cambridge Universities.

WAE will pay an annual rent of £1.146 million, or £20.1 per sq. ft. for a ten-year term with a break at year five on half the space and a rent review at the end of the fifth year.

Liberum view

This lease continues the improvements in the Oxford Technology Park. Since acquiring the space, LABS has increased the average rent from £15 per sq. ft. to £19.2. At £20.1 per sq. ft. the new lease is in line with this improvement and will increase the occupancy rate. However, the average WAULT to break for the Oxford Technology Park is 10.8 years and WAULT to expiry is 13.2 years so the new lease will reduce the WAULT for this asset somewhat.

[chrisdgb] 13/2/2024 10:19

Should bounce when this stock overhang is cleared...

[chrisdgb] 13/2/2024 08:11

Decent let this morning........zero interest

[chrisdgb] 12/2/2024 11:58

The Board need to use the results in March as a major relaunch of this proposition...or sell it..

[bathcoup] 08/2/2024 18:10

in free fall - so much for "The Company is targeting a NAV total return in excess of 10 per cent. per annum"

[chrisdgb] 26/1/2024 11:03

Languishing.........

[yump] 02/1/2024 11:57

Just been having a look here to try to figure out whether its worth investing.

I found this a helpful source:



Unsure as to whether LABS was a speculative, badly timed float, or whether the upgrading of existing estate allows for premium rental prices.

I saw the £20/sq ft one, which seems way below anything except a bare hybrid space !

There seems to be a discrepancy between the rates quoted in the survey paper and the rates obtained by LABS. I assume this is because the full rates would require much more development and LABS is not doing that.

So its a fairly basic REIT that is just acquiring space in what is expected to be a growing and stable market, rather than attempting uplift and premium rates.

Was the original intention to do the latter, but interest rate rises have scuppered it ?

I note 2 Oxford rentals have 10 year terms, so those are secure, but also impossible to improve on.

[saltwood] 31/12/2023 09:27

I saw news this morning that Novo Nordisk has secured space in London's Knowledge Quarter where LABS' Rolling Stock Yard is based. I did see that RSY has a vacant floor and wondered if we might have a nice RNS to greet us early in the New Year?!

hxxps://www.scrilnow.com/novo-nordisk-to-launch-ai-research-hub-in-londons-technology-district/