Life Science Reit (LABS) H1 2024 earnings summary

Executive summary

• Portfolio value stable at £382.6m as of 30 June 2024, with occupancy rising to 82.5% and strong leasing momentum post-election and post-period end.

• Adjusted earnings increased 6.3% to £3.4m, with adjusted EPS up 11.1% to 1.0p per share, driven by leasing, cost savings, and robust ERV growth of 8.2%.

• Net rental income rose 12.1% to £7.4m, with 100% rent collection and a 7.7% reduction in total cost ratio.

• Contracted rents rose 7.9% to £15.1m, with £3.2m ERV under offer and a target ERV of £27.8m by September 2025.

• Strategic priorities include delivering sustainable space, progressing leasing, and maintaining strong financing.

Financial highlights

• Net rental income: £7.4m (up 12.1% year-over-year), with gross property income at £8.1m.

• Adjusted earnings: £3.4m (up 6.3% year-over-year); adjusted EPS: 1.0p (up 11.1%).

• Portfolio valuation: £382.6m (up 0.1% from December 2023, but down 3.8% LFL due to yield shift).

• NTA per share: 75.5p at June 2024 (down from 79.9p at December 2023), mainly due to valuation decline and dividend payment.

• IFRS loss after tax was £13.0m, mainly due to a £15.4m fair value loss on investment properties.

Outlook and guidance

• Targeting contracted rent growth from £15.7m to £27.8m by September 2025, with £3.2m of rent to be added by March 2025.

• Further 183,000 sq ft to complete at Oxford Technology Park in Q4 2024; Cambourne repurposing phase 1 to complete in Q4.

• Board expects leasing momentum to narrow the share price discount to NAV as market conditions improve.

• No major refinancing required until June 2026; debt fully hedged until March 2025.

• Long-term opportunities seen in delivering more life science space and capturing rent/yield premiums.