Life Science Reit to wind down after board rejects lowball offers

Another Reit leaves the market after LABS’ board rejects discounted offers.

Life Science Reit (LABS ) is winding down after its board concluded that an orderly disposal of assets would return more value to shareholders than discounted offers received during a six-month strategic review.

The £139m trust, which owns life sciences offices and labs in Oxford, Cambridge and London’s “Knowledge Quarter,” launched a strategic review in March. The board explained that rising interest rates had slowed leasing activity, limiting the trust’s ability to fund capital expenditure projects designed to increase its life science remit and drive higher rents.

This in turn slowed demand – shares are down 49.8% over three years including dividends reinvested, though they are up 4.2% year to date.

The board said it had considered ‘all available options’ since then and rejected several non-binding offers that ‘represented material discounts to the company’s latest net asset value’. A managed wind-down was judged likely to deliver ‘materially in excess’ of those proposals, leaving open the prospect of further gains from ongoing initiatives and potential additional letting activity ahead of disposals.

The portfolio will be realised over 12–18 months, with borrowings repaid first and proceeds then returned to shareholders. The trust’s current level of gearing is 38%.

The plan requires shareholder approval to amend LABS’ investment objective and policy, with a general meeting to be convened in the coming weeks.

Claire Boyle, chair of Life Science Reit, 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.’

The decision comes shortly after LABS disclosed that Saba Capital, the New York hedge fund run by activist Boaz Weinstein, had built up a near 2% stake in the trust- the second alternatives trust to reveal a Saba stake this month. 

As of yesterday, shares in LABS trade on a 48.3% discount to net asset value (NAV).