Life Science REIT Shares (LABS) Drop as Update Unveils Valuation Woes

Shares in Life Science REIT (LON: LABS) are under pressure today, as markets pick through a strategic review update and trading statement that paints a less-than-rosy picture for the company.

The firm, which focuses on developing and managing real estate for the burgeoning life science sector, announced a significant drop in its unaudited EPRA Net Tangible Assets (NTA) as of June 30, 2025, sending ripples through the market.

LABS currently trades at 40.54p, a 7% drop from its previous close of 43.60p, reflecting the market's immediate disappointment.

The headline figure is the 10.9% decline in EPRA NTA, which fell to £232.1 million, or 66.3 pence per share, from £260.4 million, or 74.4 pence per share, at the end of December 2024. This drop is attributed to a combination of factors, primarily a challenging market backdrop and slower-than-anticipated leasing activity within the life science sector.

More specifically, the company cited an outward yield movement, particularly affecting assets with existing vacancies, as the primary driver of the valuation decline. This indicates that investors are demanding a higher rate of return on these properties, reflecting increased perceived risk.

The timing of this announcement is particularly sensitive, as Life Science REIT is currently undergoing a strategic review, including a formal sale process.

While the company has reported receiving “significant interest from a range of sources,” the valuation decline inevitably complicates potential deal negotiations. The board is simultaneously evaluating the possibility of a managed wind-down of its portfolio, further underscoring the uncertainty surrounding the company's future.

Despite the negative headlines, there are some positive developments within the company's operations. Life Science REIT has successfully signed leases with four new occupiers during 2025, boosting contracted rent to £17.4 million and increasing occupancy to 85.1%.

Noteworthy lettings include the Oxford Expression Technologies at Oxford Technology Park and the full leasing of Rolling Stock Yard to Wayve Technologies.

However, these operational successes appear to be overshadowed by the broader market headwinds and the uncertainty surrounding the strategic review. The substantial discount between the current share price (40.54p) and the EPRA NTA (66.3p per share) reflects the market's scepticism about the company's ability to unlock its underlying asset value.