Life Sciences REIT seeks to raise £ 300million in IPO
A new property investment fund (REIT) focused on life science labs seeks to raise Â£ 300million in a Initial Public Offering” data-explanation=” An Initial Public Offering (IPO)Â is the first time that the share of a companyÂ is offered to the public. IPOs, in the context of an investment company, are the point at which new funds are launched, floated and traded on the Main Market. For the latest news and research on IPOs.
” class=”glossary_term”>initial public offering (Initial Public Offering).
An Initial Public Offering (IPO)Â is the first time that the share of a companyÂ is offered to the public. IPOs, in the context of an investment company, are the point at which new funds are launched, floated and traded on the Main Market.
For the latest news and research on IPOs.
Life Science REIT has announced its intention to launch the main market. Companies are quoted rather than listed on AIM. Until recently companies quoted on AIM did not qualify for inclusion in ISAs but they now do." class="glossary_term">Alternative investment market (AIM) of the London Stock Exchange through a placement offer, subscription offer and intermediation for the issue of 300 million ordinary actions at an issue price of 100 pence.
If he made it, it would be the first London listed REIT focused on life science properties in the UK, a rapidly growing real estate industry.
It will focus on the life sciences ‘golden triangle’ between St Pancras, Cambridge and Oxford, London, where UK life sciences companies are primarily located due to innovation clusters in these areas where four of the world’s top 10 universities for life sciences and the world’s leading life science innovation, research and teaching hospitals are located.
The company will invest in a diversified portfolio wallet properties that are generally leased or intended to be leased to tenants operating in or benefiting from the life sciences industry. Examples of life science properties include wet and dry labs, offices and coworking spaces, manufacturing and testing facilities, and data centers. The company said there is an imbalance between supply and demand for specialty properties, which “should ensure high potential for rental growth over the next few years.”
The company has identified a pipeline of Â£ 445million projects of which around Â£ 305million are in exclusive or in advanced negotiations.
The company hopes to provide shareholders with an attractive level of total return by focusing on capital growth while providing an increasing level of income. It aims for a net asset value (NAV) total return greater than 10% per year and a first dividend yield of 4% per year, with an intention to grow to 5% in the first few years. The company will seek to achieve these performance targets with a conservative approach to leverage, targeting a gearing, which is a measure of a company's debts to its net assets.
For example, if my company has assets of Â£100 and them borrows another Â£100 it now has total assets of Â£200.
Its Loan to value ratio is 0.5 or 50% = 100/200.
Its gearing is expressed as 100% = 100/(200-100) though remember this can also be expressed as 200 - see the gearing definition.
Â" class="glossary_term">ready to value report (LTV) between 30 and 40%.
Ironstone Asset Management Limited will be its investment advisor. Ironstone has a management team with extensive experience in the UK real estate industry, led by Simon Farnsworth. Some of the management team have pledged to invest Â£ 3M in the issue, which will be on pari passu terms with all other investors.
The Â£ 445m pipeline, of which Â£ 305m is in exclusivity or in advanced negotiations, includes:
- Â£ 220million of income producing assets offering an initial yield of 5% with a strong reversible potential and average rents of Â£ 29 per square foot; and
- Â£ 85 million in term finance / development opportunities.
The company expects to invest substantially or to commit the net proceeds of the issue within six months of admission.
The life sciences sector
The life sciences real estate sector is characterized by increasing research and development (R&D) spending by health and technology companies, the emergence of more life sciences companies, in particular the âspin-outsâ of leading universities, the continuous advancements in the health sector which stimulate innovation, Covid -19 impact on the relocation of R&D, testing and manufacturing; and relocation of companies to key sites and clusters.
The supply of life science properties is limited in the sector, with many buildings unsuitable for life science requirements, and planning restrictions around key life science clusters are restricting development.
Initial alignment of the Investment Advisor’s management team with Â£ 3million investment in the issue and continued alignment in the form of 15% of the advisory fee paid in shares. A tiered advisory fee starts at 1.1% of NAV and drops to 0.75% of NAV.
The management team includes several members who have experience in setting up, operating and growing businesses, including a listed REIT supported by strong industry trends in the UK.
Stephen Barrow (non-executive director)
Stephen has over 30 years of experience in creating and managing funds. After starting as an investment analyst at Morgan Grenfell, Stephen managed the Â£ 5 billion UK equity exemption fund in the 1990s, combined with the role of head of global research. Stephen then set up the successful Global Equity Select strategy at Morgan Grenfell in 2002. Leaving Morgan Grenfell in 2005, Stephen built a successful team at IronBridge International and, as founding CIO, ultimately managed over $ 7 billion for a range of UK and overseas customers. Since 2012, Stephen has been investing in a range of real estate vehicles alongside his colleague Simon Hope, including Warehouse REIT. Stephen holds an MA in Economic History from the University of St Andrews.
Simon Hope (non-executive director)
Simon Hope is President of Global Capital Markets at Savills plc with over 35 years in the business. The vast majority of those years he specialized in the construction, acquisitions and disposals of portfolio investments. He was one of the founding directors of the Charities Property Fund, which is now worth Â£ 1.5 billion. He chaired Grosvenor Hill Ventures until 2007, which was the commercial and investment arm of Savills for real estate. In 2013, he became chairman of Tilstone Partners Limited, which is the investment advisor of Warehouse REIT plc, and a director of Warehouse REIT plc, an AIM cited real estate investment fund which was launched in 2017 and today has a market capitalization of Â£ 650million. Simon is the executive sponsor of the Savills Life Science practice which includes a multidisciplinary team of over 18 professionals. He studied property management at the Royal Agricultural College, Cirencester and is a member of RICS. He also holds an MBA from the University of Reading.
Simon Farnsworth – Managing Director
Simon Farnsworth is an experienced fund manager and chartered surveyor with over 30 years of experience in the UK property market. Previously, he was Managing Director of the UK Funds business of CBRE Global Investors and a member of their UK Executive and Investment Committees. Previously, he was Director of Business Development at GE Capital Real Estate. He holds a BSc in Land Management from the University of Reading. Most recently, he was a founding director of Westmount Real Estate, a real estate investment advisory and asset management firm specializing in acquisitions, asset management and financing across all sectors of the UK. He has considerable experience in the research, management and financing of many classes of real estate assets, as well as in developments, term financings and corporate transactions.
Andrew Pinto – Chief Financial Officer
Andrew Pinto has over 19 years of real estate finance experience and was previously CFO of the Langmead Group. Previously he was CFO of db Symmetry and previously Director of Treasury and Financial Analysis at Urban & Civic plc (formerly Terrace Hill Group plc). Andrew is a qualified corporate treasurer and accountant. He graduated in microbiology from the University of Warwick.
Pippa Stacey – Director of Sustainable Development
Pippa Stacey is a Chartered Accountant with a wide range of skills most recently focused on sustainability, governance and compliance. Recently she has supported listed entities, Warehouse REIT plc and Unilever plc, as a consultant, and prior to that she spent 11 years at PwC in their audit and forensics department, working on financial / non-financial investigations , regulatory corrective actions and audits. She graduated in Civil Engineering from the University of Nottingham.
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Claire Boyle (nÃ©e Barnes) (Chair)
Claire is a non-executive director and chair of the audit committees of Fidelity Special Values ââPlc and Aberdeen Japan Investment Trust PLC, and a non-executive director of The Monks Investment Trust. She has over 20 years of experience in financial services and investment management, having obtained the Certified Public Accountant from Coopers and Lybrand, where she specialized in litigation support and forensic accounting. Claire then worked for 13 years in equity investment management for Robert Fleming Investment Management, American Express Asset Management and most recently Oxburgh Partners, where she was a partner in charge of their European hedge fund. Claire graduated in Natural Sciences from Durham University.
Dr Sally Ann Forsyth OBE
Sally Ann is CEO of Stevenage Bioscience Catalyst and is a pioneer in the life science real estate industry, having been in charge of Colworth Science Park from 2005. She was Director of Science Park at Goodman, Head of Harwell Campus , then became CEO of Norwich Research Park. Sally Ann holds a PhD in Molecular Biology from the University of Cambridge and is a Qualified Management Accountant with LSE certification in Real Estate Economics and Finance. She received an OBE for services to business and science.
Mike is the Commercial Director of the British Heart Foundation (the âBHFâ), where he is responsible for their commercial revenues in 720 outlets, online channels and healthcare businesses, with annual revenues of over Â£ 200 million. sterling. The BHF funds life science research into heart and circulatory diseases. Previously, he was Managing Director of several national retailers, including Budgens, Londis and Whittard. Mike graduated in economics from UEA.
It is expected that a fourth non-executive director will be appointed within the first six months of his admission.
Life Sciences REIT seeks to raise Â£ 300million in IPO
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