Life Science Reit (LABS ) has halved dividends for 2023 to 2p per share, slashing its second payment for the year to 1p from 3p per share.

In annual results for the year to 31 December, the £284m specialist property fund reported good progress during the 12 months. However, economic uncertainty, occupiers postponing rental decisions and high interest rates meant a ‘difficult decision’ had to be taken to rebase the dividend to ensure it was covered by earnings and could grow sustainably from this level.

It said the additional financial flexibility the cut in payouts provided would enable LABS to deliver on its strategy.

Chair Claire Boyle said the Reit’s flagship Oxford Technology Park was nearly 50% complete with rents up by a third since its acquisition.

Simon Farnsworth, managing director of the LABS fund manager, Ironstone Asset Management, said he was ‘delighted’ that quantum computing businesses had started to cluster at the park.

‘This demonstrates that the group’s assets are in the right locations, and that the offer is both attractively priced and tailored to growing parts of the UK life science market,’ he said.

The results showed adjusted earnings per share more than doubled from 0.7p to 1.9p last year but were insufficient to cover the reduced 2p dividend payout.

The like-for-like valuation of its properties fell 7.1% in response to a further 58 basis point (0.58%) rise in long-term government bond yields, although this was partly offset by a 5% growth in rental value.

As a result, net tangible asset per share fell 10.1p to 79.9p.

In early trading the shares, which had yielded 9% before today, dropped 5%, or 2.2p, to 40.9p. This puts them on a 49% discount. LABS listed in November 2021.