Life Science REIT Agrees £150m Deal With HSBC

Life Science REIT, is a real estate investment trust which is focused on the growing life science sector within the United Kingdom. This deal has seen an agreement of £150m of debt financing being reached with HSBC Bank.

The interest rate in respect of drawn amounts of 225 basis points over SONIA, is currently equivalent to a total cost of 2.9 per cent which is comparable to that of institutional grade borrowing.

While the facility is currently undrawn, this will give the company additional financial resources as it continues with its plan of investing in and purchasing life science assets across the Oxford-Cambridge corridor and London.

The borrowing structure allows Life Science REIT to add new properties its portfolio in order to reach its optimal gearing target as it acquires new assets.

The company has a prudent approach to gearing and is targeting a LTV ratio of 30 per cent – 40 per cent over the longer term.

The debt facility announced this week provides Life Science REIT with the flexibility to improve the efficiency of their balance sheet as they continue to make progress on a number of acquisition opportunities whilst also enhancing their financial resources.

This shows further confidence in the Life Science sector in the UK as an emerging commercial real estate asset class, a sector which continues to grow year on year. It is estimated that that there is up to £15bn of capital allocated to UK life sciences real estate, of which less than 10% has been deployed to date. There is a clear and strong case for land owners and developers to deliver assets within this sector which has seen 166% increase in the last 3 years according to JLL.

The Team at UKDC believe that around £65bn has been allocated to the Life Sciences real estate sector globally, with around 23% of this earmarked for the UK. Venture capital raised on a global scale for life sciences has also increased from £14.6bn to £26bn in 2020 according to the BioIndustry Association, driving occupational demand in the sector.

The United States still remains the largest Life Sciences real estate market where institutional investment into the sector is well-established. The sector has been expanding across Europe with the UK at the forefront of this growth with a number of established clusters and hubs including Oxford, Cambridge and of course London.