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Highlights
- UK based Life Science REIT is planning to list on the LSE’s submarket AIM.
- The company plans to raise around £300 million and go public in mid-November.
- Life Science REIT has about £445 million worth of investment pipeline, of which £305 million is under exclusivity.
A UK based real estate investment trust (REIT) that is focused on life sciences, Life Science REIT is planning to go public on the London Stock Exchange’s sub market, the Alternative Investment Market (AIM).
The company plans to raise about £300 million from its initial public offering (IPO).
Life Science REIT’s listing details
Life Science REIT is expected to become the first London listed life science-focused REIT. It is also expected to launch its IPO next month, around mid-November.
Life Science REIT plans to issue 300 million ordinary shares at an issue price of 100 pence per share.
The company has hired investment and advisory firm Ironstone Asset Management as its investment advisor for the IPO transaction.
Some of the members of Ironstone Asset Management’s management team have also committed to invest about £3 million into the IPO.
The company plans to use the proceeds from the IPO to purchase laboratory space in what is known as the UK’s golden triangle, which is located between Cambridge, London and Oxford.
Life Science REIT’s investment pipeline
The company has about £445 million in its investment pipeline, of which around £305 million is under exclusivity or is currently at an advanced stage of negotiations.
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About £220 million under the £305 million deal pipeline is expected to be income-producing assets that can offer an initial yield of 5 per cent. And about £85 million will have forward funding or development opportunities worth.
How will shareholders benefit from a Life Science REIT IPO?
The company plans to offer its shareholders an attractive total return. It aims to do so by keeping a focus on the company’s capital growth while simultaneously offering a growing level of income.
Life Science REIT is aiming a net asset value (NAV) total return of over 10 per cent per year.
The company is also targeting an annual initial dividend yield of 4 per cent and has a goal of boosting its dividend yield to 5 per cent in its initial few years.
The company hopes to meet its return targets by having a relatively conservative leveraging strategy. Life Science REIT is thus targeting a loan to value ratio (LTV) in a range of about 30 per cent to 40 per cent.
Bottom Line
The life sciences industry is currently witnessing the fastest growth rate in the past 18 years, according to a report by commercial real estate and investment company CBRE.
As per the CBRE report, the lab space construction market, which is among the top 5 markets in the life sciences sector tracked by CBRE, saw a sharp growth as it increased to twice its market size in the past year.
Ian Anderson, director of research and analysis at CBRE, said that REITs is one of the key factors helping with the growth in the life sciences sector.
Life Science REIT’s chairperson, Claire Boyle, stated that there had been a rise in demand for quality real estate in key locations due to the country’s push on life science spending.
The sector has also seen rising momentum due to a deeper focus on life sciences spending amid the ongoing pandemic.
