REG - Life Science REIT - Commencement of Strategic Review

Life Science ReitAnnouncement

14/03/2025 07:00

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RNS Number : 6478A  Life Science REIT PLC  14 March 2025

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

THIS IS AN ANNOUNCEMENT MADE UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS AND
MERGERS (THE "TAKEOVER CODE") AND IS NOT AN ANNOUNCEMENT OF A FIRM INTENTION
BY ANY PARTY TO MAKE AN OFFER UNDER RULE 2.7 OF THE TAKEOVER CODE. THERE CAN
BE NO CERTAINTY THAT ANY OFFER WILL BE MADE FOR LIFE SCIENCE REIT PLC, NOR AS
TO THE TERMS ON WHICH ANY OFFER MAY BE MADE.

This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018 ("MAR").

For immediate release

14 March 2025

Life Science REIT plc

("LABS" or the "Company")

Commencement of Strategic Review and Formal Sale Process,

Trading Update and Suspension of Dividends

Life Science REIT plc, the UK's only listed property business focused on the
growing life science sector, announces that it is undertaking a strategic
review to consider the future of the Company and to explore all strategic
options available to maximise value for shareholders, which may include a
potential sale or managed wind down of the Company (the "Strategic Review").
The Company is also announcing an update on recent trading and the fact that
it is in the final stages of negotiation in respect of revisions to the
investment advisory agreement between the Company, Ironstone Asset Management
Limited ("Ironstone") and G10 Capital Limited (the "Investment Advisory
Agreement" or "IAA").

Background to the Strategic Review

Since the Company's IPO in November 2021, it has fully invested its IPO
proceeds in a high-quality portfolio of assets located in the "Golden
Triangle" research and development hubs of Oxford, Cambridge and London's
Knowledge Quarter.  All properties are either leased, or intended to be
leased, to occupiers in the life science sector and 55% of rent is derived
from life sciences occupiers.

As set out in its interim results announcement on 26 September 2024, the Board
acknowledges the challenges and significant headwinds that the Company has
faced since IPO, in common with the wider REIT sector, including higher
inflation and elevated interest rates which have driven a fundamental slowdown
in leasing activity and negatively impacted investor sentiment.  These
factors, coupled with the Company's size and low levels of liquidity have led
to an underperformance of the share price, which has, as a result, traded at a
significant discount to net asset value for a prolonged period of time.

At this time, the Board also engaged with a number of shareholders to gather
their feedback on the Company and set key milestones for Ironstone, in
particular around forecast leasing activity, occupancy levels and completion
of development assets. Despite signs of improving confidence in the life
science leasing market in the summer of last year, uncertainty has since
returned to the broader market and as a result, these targets have proved
difficult to achieve.

Further to a number of discussions with potential acquirors in recent months
the Board has confidence that, in the context of a strategic review, the
business should be attractive to multiple parties if the outcome of the
strategic review leads to the sale of the business.

Trading update

In its interim results announcement, the Company also stated that it was under
offer or in advanced negotiations on £3.2 million of Estimated Rental Value,
which it expected to capture by March 2025.  To date it has captured £1.3
million with a further £1.4 million in solicitors' hands. However, as a
result of the delays in leasing activity, the expectation of further lease
incentives including rent free periods being required to secure further
leases, and the associated impact on cash flow, the Company has decided to
suspend any future dividends until the strategic review has been concluded.

In addition, the Company is today providing an update on its 31 December 2024
unaudited EPRA NTA which was £260.4 million or 74.4 pence per share.

The Company expects to publish its annual report and audited financial
statements for the year ended 31 December 2024 on 16 April 2025.

Revision to the IAA

The Board also announces that it is currently in the final stages of
negotiation with Ironstone to agree a significant reduction in the fees
payable under the Investment Advisory Agreement, in order to further align the
interests of Ironstone with the Company's shareholders. This will include a
reduction to the investment advisory fee, as well as a change to the metric
upon which it is calculated. The Board anticipates being able to announce the
revised fees shortly.

Implementation of Strategic Review

In line with the Board's previous commitment to continue to evaluate a variety
of options which best position it to maximise value for shareholders, the
Board has decided to undertake the Strategic Review. As part of the Strategic
Review, the Board will consider all available options including, but not
limited to, selling the Company's portfolio or subsidiaries (or portion
thereof), changing the Company's investment strategy and/or management
arrangements, commencing a managed wind down, selling the entire issued and to
be issued share capital of the Company (which would be conducted under the
framework of a "formal sale process" in accordance with the Takeover Code) or
undertaking some other form of consolidation, combination, merger or
comparable corporate action.

The Company has appointed Panmure Liberum Limited ("Panmure Liberum") as its
Financial Adviser to assist with the Strategic Review, including the formal
sale process.

The Board will update shareholders on the progress of the Strategic Review
(including the formal sale process) and make further announcements in due
course, noting that there is currently no certainty as to the outcome of the
Strategic Review.

Formal Sale Process & Takeover Code Considerations

As noted above, the Strategic Review will incorporate a formal sale process
undertaken under the framework of a "formal sale process" referred to in the
Takeover Code (the "Formal Sale Process"), which will enable conversations
with parties interested in making a proposal to take place on a confidential
basis.

Parties with a potential interest in making a proposal should contact Panmure
Liberum using the contact details below.

It is currently expected that any party interested in submitting any form of
proposal for consideration in connection with the Strategic Review (including
the Formal Sale Process) may, depending on the nature of the proposal, at the
appropriate time, enter into a non-disclosure agreement and standstill
arrangement with the Company on terms satisfactory to the Board and on the
same terms, in all material respects, as other interested parties, before
being permitted to participate in the process.

The Company then intends to provide such interested parties with certain
information on its business, following which interested parties shall be
invited to submit their proposals to Panmure Liberum. The Company will update
the market in due course regarding the indicative timings for the Strategic
Review, including the Formal Sale Process.

The Board reserves the right to alter or terminate any aspect of the process
at any time, and in such cases, will make an announcement as appropriate. The
Board also reserves the right to reject any approach or terminate discussions
with any interested party at any time (without liability to any person).

The Company is not currently in discussions with, or in receipt of an approach
from, any potential offeror relating to an acquisition of the issued and to be
issued share capital of the Company at the date of this announcement. The
Takeover Panel has granted a dispensation from the requirements of Rules
2.4(a), 2.4(b) and 2.6(a) of the Takeover Code such that any party
participating in the formal sale process will not be required to be publicly
identified under Rules 2.4(a) or (b) as a result of this announcement and will
not be subject to the 28 day deadline referred to in Rule 2.6(a) of the
Takeover Code for so long as it is participating in the process.

Following this announcement, the Company is now considered to be in an "offer
period" as defined in the Takeover Code, and the dealing disclosure
requirements of Rule 8 of the Takeover Code as summarised below will apply.

Shareholders are advised that this announcement does not represent a firm
intention by any party to make an offer under Rule 2.7 of the Takeover Code
and there can be no certainty that any offers will be made as a result of the
Formal Sale Process, that any sale, strategic investment or other transaction
will be concluded, nor as to the terms on which any offer, strategic
investment or other transaction may be made.

The individual responsible for releasing this announcement is Paula O'Reilly.

FOR FURTHER INFORMATION, PLEASE CONTACT:

 

 Life Science REIT plc

 Claire Boyle, Chair                                                            via Panmure Liberum

 MUFG Corporate Governance Limited - Company Secretary

 labs_cosec@cm.mpms.mufg.com

 Panmure Liberum - Financial Adviser & Corporate Broker                         +44 20 7886 2500

 Tom Scrivens / Chris Clarke / Alex Collins / Tim Medak

 labsstrategicreview@panmureliberum.com

 G10 Capital Limited - AIFM                                                     +44 20 7397 5450

 Maria Baldwin

 FTI Consulting - PR Adviser

 Dido Laurimore / Richard Gotla / Oliver Parsons                                +44 20 3727 1000

 LifeScienceReit@fticonsulting.com (mailto:LifeScienceReit@fticonsulting.com)

Other notices

Panmure Liberum Limited ("Panmure Liberum"), which is authorised and regulated
in the United Kingdom by the Financial Conduct Authority, is acting as
financial adviser exclusively for the Company and no one else in connection
with the matters set out in this announcement and will not be responsible to
anyone other than the Company for providing the protections afforded to
clients of Panmure Liberum or for giving advice in relation to such matters.

Neither Panmure Liberum nor any of its affiliates (nor their respective
directors, officers, employees or agents) owes or accepts any duty, liability
or responsibility whatsoever (whether direct or indirect, whether in contract,
in tort, under statute or otherwise) to any person who is not a client of
Panmure Liberum in connection with this announcement, any statement contained
herein or otherwise. No representation or warranty, express or implied, is
made by Panmure Liberum as to the contents of this announcement.

This announcement is not intended to, and does not, constitute or form part of
any offer, invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any securities whether
pursuant to this announcement or otherwise.

The release, publication or distribution of this announcement in jurisdictions
outside the United Kingdom may be restricted by laws of the relevant
jurisdictions and therefore persons into whose possession this announcement
comes should inform themselves about, and observe, such restrictions. Any
failure to comply with the restrictions may constitute a violation of the
securities law or any such jurisdiction.

About the Company

Life Science REIT plc is a specialist property business focused on the UK's
growing life science sector. The Company's portfolio of assets is located
across the "Golden Triangle" of research and development hubs in Oxford,
Cambridge and London's Knowledge Quarter and its strategic vision is to become
the property provider of choice for life science companies in the UK.

Life Science REIT is addressing the acute demand-supply imbalance for
laboratory space in the "Golden Triangle", which is characterised by low
vacancy rates and prime rental increases. The UK life science sector itself is
underpinned by strong structural drivers, including an ageing population and a
supportive regulatory environment as well as the growing interdependence with
technology, which is expanding the life science spectrum, driving strong
demand for laboratory space.

The Company's diverse portfolio of assets ranges from a 20-acre science park
currently under development through to fully let buildings, with an important
part of the Company's strategy being the conversion of existing properties to
laboratory space.

The Company's investment policy is focused on capital growth whilst also
providing a growing level of income.

The Company trades on the Main Market of the London Stock Exchange under the
ticker LABS.

LEI Number: 213800RG7JNX7K8F7525.

Disclosure requirements of the Takeover Code (the "Code")

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the
offer period and, if later, following the announcement in which any securities
exchange offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in, and rights
to subscribe for, any relevant securities of each of (i) the offeree company
and (ii) any securities exchange offeror(s). An Opening Position Disclosure by
a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm
(London time) on the 10th business day following the commencement of the offer
period and, if appropriate, by no later than 3.30 pm (London time) on the 10th
business day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead make a
Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s), save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.

Relevant securities in issue

In accordance with Rule 2.9 of the Takeover Code, the Company confirms that
that, as at the close of business on 13 March 2025, it had 350,000,000
ordinary shares of £0.01 each in issue. The ISIN reference number for these
securities is GB00BP5X4Q29.

Website publication

In accordance with Rule 26.1 of the Takeover Code, a copy of this announcement
will be available (subject to certain restrictions relating to persons
resident in restricted jurisdictions) on the Company's website
www.lifesciencereit.co.uk by no later than 12 noon (London time) on 17 March
2025. Neither the content of any website referred to in this announcement nor
the content of any website accessible from hyperlinks is incorporated into, or
forms part of, this announcement.

 

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