Another “alternative assets” investment company heads for the scrap heap after Life Science REIT (LABS) concludes its strategic review and opts for a managed wind-down.
The £139m real estate investment trust, whose shares trade 48% below a depressed net asset value (NAV), said the potential value of selling its assets over the next 12 to 18 months was “materially in excess” of the non-binding offers it had received.
These had been priced at “material discounts” to NAV making it preferable to sell its five assets on their own or in groups.
Launched in late 2021, LABS shares have halved in the past three years, hurt by high inflation and interest rates that slowed down leasing of its specialist properties and hit investor sentiment.
The likelihood of a wind-down increased in July when the company said it had received “significant amount of interest” from potential buyers but warned the valuation of its real estate portfolio had fallen nearly 11% in the first half. It started the review and put itself up for sale in March and suspended dividends during the process.
Chair Claire Boyle said: “Further to a detailed strategic review, and following consideration of the alternative options available, the board believes that a managed wind-down will maximise value for shareholders and is in the best interests of shareholders. The board would like to thank the company’s shareholders for their significant patience and support during this challenging period.”
A circular will be published ahead of a general meeting for shareholders to amend the company’s investment policy to one of a realisation of its assets.
Our view
Richard Williams, property analyst at QuotedData, said: “The board has obviously concluded that selling down the portfolio piecemeal would garner greater value than the offers it has on the table for the company. LABS owns some large individual assets including two in central London and large campuses in Oxford and Cambridge that would be attractive to a larger pool of investors as single lots rather than bundled up into a big ticket portfolio. It is by no means guaranteed that the strategy will achieve greater value though, especially seeing as it will be viewed as a forced seller in this market. If it achieves sales at close to NAV it would be a great outcome for long-suffering shareholders – however, it could take a long time for this to be realised.”
