Life Science Real Estate Investment Trust reduces dividends due to economic slowdown affecting progress
Science

Life Science Reit (LABS) Reduces Dividends for 2023 Amid Economic Uncertainty and Market Pressure

Life Science Reit (LABS) recently announced a significant decrease in dividends for 2023, reducing the second payment from 3p to 1p per share. This decision was made in response to economic uncertainty, occupiers delaying rental decisions, and high interest rates. Despite making good progress during the year, the £284m specialist property fund felt it necessary to rebase the dividend to ensure it was covered by earnings and could grow sustainably.

In its annual results for the year ending on 31 December, LABS highlighted the challenges it faced and the need for a reduction in dividends to provide additional financial flexibility. This move would allow LABS to continue delivering on its strategy, even in the face of difficult market conditions. By halving dividends, the company aims to ensure that it can sustainably grow from this new level and position itself for future success.

In addition to economic uncertainty and occupier delays, LABS also faced high interest rates throughout 2022. These factors put pressure on the company’s cash flow and profitability, leading to the decision to reduce dividends. However, despite these challenges, LABS made good progress during the year.

The company’s portfolio occupancy rate remained strong at over 96%, with average rental income per square foot increasing by over 5% compared to last year. Additionally, LABS completed several successful lettings during the year, including a major lease renewal with a key tenant.

Despite this progress, LABS felt that it needed to take action to ensure its long-term sustainability. By reducing dividends, the company aims to free up additional capital that can be used for reinvestment or debt repayment. This will help LABS continue growing its portfolio and delivering value for investors.

Overall, while reducing dividends is never an easy decision for any company, LABS believes that it is necessary in order to maintain financial stability and growth in today’s challenging market conditions. By taking proactive steps like this now, LABS is well-positioned for long-term success as a leading specialist property fund in life sciences research and development.

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