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Life Science Reit reduces dividend payment due to economic challenges delaying rollout

The £284m specialist property fund, Life Science Reit (LABS), announced that it would halve its dividends for 2023. The second payment of the year would be reduced from 3p to 1p per share. Despite reporting good progress in its annual results for the year ending on 31 December, LABS faced challenges such as economic uncertainty, occupiers delaying rental decisions, and high interest rates.

The company stated that it had to make a difficult decision to rebase the dividend in order to ensure it was covered by earnings and could grow sustainably from this level. By cutting dividends, LABS aims to have additional financial flexibility to deliver on its strategy effectively.

In its annual report, LABS reported strong performance across all key metrics, including occupancy rates and net operating income. However, the company faced challenges in terms of economic uncertainty and occupier behavior. In particular, many tenants delayed making rental decisions due to concerns about the future of their businesses. Additionally, high interest rates made it more expensive for LABS to borrow money, which put pressure on its cash flow and profitability.

To address these challenges and ensure long-term growth, LABS made the difficult decision to rebase its dividend policy. This will allow the company to retain more of its earnings and invest in growth initiatives that will create long-term value for shareholders. While some investors may be disappointed by the reduction in dividends, LABS believes that this is a necessary step to ensure sustainable growth over the long term.

By Samantha Jones

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