Berenberg has reaffirmed its "buy" rating for Life Science REIT, setting a price target of 57p a share, citing strong growth potential in the UK’s life sciences property market.
Despite a challenging start to 2024, Berenberg believes the recent 25% rise in Life Science REIT’s share price signals investor confidence in the company’s leasing momentum, which is expected to accelerate in the second half.
The real estate firm, which focuses on lab and research spaces, is trading at a 46% discount to its net asset value, with Berenberg noting a dividend yield is 5%. The Oxford Technology Park, a key asset, is 62% occupied and will expand further by the end of the year, offering strong rental prospects.
Berenberg highlights Life Science REIT’s strategy of converting office spaces into laboratories, particularly at Cambourne Park, which could increase property values by up to 25%.
Despite economic headwinds, Berenberg remains optimistic about the UK life sciences sector, driven by rising demand for lab spaces and an uptick in venture capital funding.
With £3.2 million of space already under offer, the bank sees Life Science REIT well-positioned for growth as the market shows signs of recovery, reinforcing its positive outlook on the stock.
In morning trading, the shares were off 1% at 39.62p.