Life Science REIT, the real estate investment trust focused on UK life sciences properties, has completed the sale of Lumen House on the Harwell Campus in Oxford and said it is targeting “transformational opportunities”.
Lumen House was sold for £7.65 million to Harwell Science and Innovation Campus, a joint venture between Brookfield and the UK Atomic Energy Authority together with the Science and Technology Facilities Council. The disposal price represents a 5.6% net initial yield and is 2% ahead of June 2023 book value.
“By realising value from this investment now, we can better focus our efforts and the Company’s capital on larger scale opportunities where we are already on site and where we believe that the return profile is more attractive,” said Simon Farnsworth, managing director, Ironstone Asset Management & Life Science REIT’s Investment Adviser.
The current occupier will soon vacate Lumen House, creating an attractive development opportunity for the purchaser while providing Life Science REIT with additional flexibility to progress more “transformational opportunities”.
These include delivering fully fitted laboratories at Cambourne Park Science and Innovation Campus in Cambridge and progressing the development of Oxford Technology Park.
Lumen House was acquired in December 2021 for £7.05 million with the disposal achieving a 9% uplift on the acquisition price.
“The economic environment in which Life Science REIT acquired Lumen House is very different to the one we face today and the Company is making capital allocation decisions which reflect that,” said Farnsworth.
Life Science REIT’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 stated ambition is to become the property provider of choice for life science companies in the UK.
There is an 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 benefiting from a buoyant early stage funding environment, driving demand for laboratory space.
The Company’s 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.