Life Science REIT has increased its rental income by 35% over the first six months of the year, after taking over Oxford Technology Park.
Total gross property income in the year was 35.7% higher at £7.6m, against £5.6m for H1 2022. This reflected the full period of ownership of OTP as well as the 69,000 sq ft 7-11 Herbrand Street, both of which the REIT bought in May 2022.
However, it still shows a gap between the REIT’s estimated rental value of £17.3m and its contracted rent roll of £14.2m per annum, with occupancy standing at around 89%.
Chair Claire Boyle said: “Occupiers are being more thoughtful about taking space, and we have seen the pace of decision-making slowing.”
However, she pointed out that “the enquiries we are seeing are firm and the prices we are achieving are ahead of our own, and valuer’s, assumptions”.
“We are seeing good interest in our vacant space, which we expect to convert to lettings in the second half of the year at attractive rents.”
Over the six months the REIT’s portfolio has grown from £388m to £403m.
The REIT has moved forward with planning for its flagship OTP development, and “welcomed four new life sciences occupiers across the portfolio, significantly increasing occupancy as well as our life sciences exposure”, she said.
“Perhaps most notably, our refit of Rolling Stock Yard has delivered record rents for life sciences space in London.” The REIT has also refinanced its debt, with LTV at 20.3%, although up from the 16.8% LTV of December.
“We are well placed to deliver on our strategy,” Boyle said.
Simon Farnsworth, managing director at Life Science’s investment adviser, Ironstone Asset Management, added: “While the life science real estate sector has demonstrated resilience so far in 2023, it was not immune from the broader challenges facing UK property.”
He said the focus would now be on prelets. “We recognise the importance of actively de-risking developments through preletting, and of responding quickly to the changing needs of our occupiers by evolving our offer,” he said.
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