Annual Report and

Financial Statements 2022

Creating

space for

science

Life Science REIT plc is the UK’s first

listed property business focused on

the growing life science sector.

We target opportunities in the ‘Golden Triangle’

research and development hubs of Oxford, Cambridge

and London’s Knowledge Quarter. By investing

primarily in a diversified portfolio of properties that

are leased, or intended to be leased, to occupiers

in the life science sector, we aim to generate capital

growth whilst also delivering growing income.

Our shares are traded on the Main Market of the

London Stock Exchange, under the ticker LABS.

Find us online

www.lifesciencereit.co.uk

Our vision:

Our culture:

Our strategy:

We intend to become the property provider of choice for life

sciencecompanies in the UK, giving shareholders exposure to

aspecific growth sector.

• Open and collegiate

• Purpose driven

• Appropriately challenging

• Combining freshness and

experience

• Innovative

• Investment: acquire

well‑located assets where

wecan add value

• Asset management: drive

value and rents through active

management

• Financial: optimise returns

through appropriate financing

• Sustainability: committed

toclass‑leading performance

on ESG

Front cover

image

Cambourne

Business Park,

Cambridge

Life Science REIT plc Annual Report and Financial Statements 2022

CONTENTS

Strategic report

Pages 2 to 71

Financial highlights 2

Operational highlights 4

At a glance 6

Investment case 8

Chair’s statement 9

Market overview 12

Business model 18

Objectives and strategy 20

Key performance indicators 22

Strategy in action

Oxford Technology Park 24

Rolling Stock Yard 28

Investment Adviser’s report 30

Sustainability 38

Our stakeholders 58

Section 172(1) statement 60

Principal risks and uncertainties 62

Going concern and

viability statement 70

Corporate governance

Pages 72 to 99

Chair's introduction to

governance 72

Board of Directors 74

Investment Adviser 76

Corporate governance statement 78

Management Engagement

Committee report 89

Audit and Risk Committee report 91

Directors’ remuneration report 94

Directors’ report 96

Financial statements

Pages 100 to 141

Statement of Directors’

responsibilities 100

Independent Auditor’s report 101

Consolidated statement of profit or

loss and other comprehensive income

110

Consolidated statement

of financial position 111

Consolidated statement

of changes in equity 112

Consolidated statement

of cash flows 113

Notes to the consolidated

financial statements 114

Company statement of

financial position 137

Company statement of changes

inequity 138

Notes to the Company financial

statements 139

Additional information

Pages 142 to IBC

Unaudited supplementary notes not

part of the consolidated financial

information 142

Property portfolio 150

Shareholder information 151

Glossary 154

Contact details of the advisers IBC

Rolling Stock Yard,

London Knowledge Quarter

Read more on pages 24 to 27

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

FINANCIAL HIGHLIGHTS

Financial highlights

12 months to 31 December 2022

GROSS PROPERTY INCOME (LOSS)/PROFIT BEFORE TAX

IFRS (LOSS)/EARNINGS

PERSHARE

£13.1m

Period to 31 December 2021

: £0.5m

£(27.5)m

Period to 31 December 2021

: £7.7m

(7.9)p

Period to 31 December 2021

: 2.2p

EPRA EARNINGS/(LOSS)

PERSHARE

ADJUSTED EARNINGS/(LOSS)

PER SHARE

DIVIDENDS PERSHARE

0.4p

Period to 31 December 2021

: (0.1)p

0.7p

Period to 31 December 2021

: (0.1)p

4.0p

Period to 31 December 2021

: n/a

1. The Group presents EPRA Best Practices Recommendations as Alternative Performance Measures (“APMs”) to assist stakeholders in assessing performance

alongside the Group’s statutory results reported under IFRS. APMs are among the key performance indicators used by the Board to assess the Group’s

performance and are used by research analysts covering the Group. EPRA Best Practices Recommendations have been disclosed to facilitate comparison

withthe Group’s peers through consistent reporting of key real estate specific performance measures. However, these are not intended as a substitute for

IFRSmeasures. Please see the unaudited supplementary notes on pages 142 to 149 for further details onAPMs.

2. The comparative period is from 1 August 2021 to 31 December 2021.

3. Adjusted EPS excludes exceptional costs associated with the Company’s move from AIM to the Main Market of the London Stock Exchange. Therewere

noexceptional items in the period to 31December2021.

4. Dividends paid and declared in respect of the year to 31 December 2022, including the second interim dividend of 3.0 pence per share declared on

27March2023, and due for payment on 15May2023. Dividends paid during the year to 31 December 2022 totalled 1.0pence per share (period to

31December2021: nil).

5. Gross debt less cash, short-term deposits and liquid investments, divided by the aggregate value of properties and investments.

As at 31 December 2022

PORTFOLIO VALUATION IFRS NET ASSET VALUE (“NAV”)

IFRS NAV

PER SHARE

£387.6m

As at 31 December 2021: £192.2m

£319.5m

As at 31 December 2021: £350.6m

91.3p

As at 31 December 2021: 100.2p

EPRA NET TANGIBLEASSETS

EPRA NET TANGIBLE

ASSETSPER SHARE LOAN TO VALUE

£315.1m

As at 31 December 2021: £350.6m

90.0p

As at 31 December 2021: 100.2p

16.8%

As at 31 December 2021: n/a

We delivered a robust financial performance in 2022,

delivering on our IPO targets despite a challenging

macroeconomic environment.

Life Science REIT plc Annual Report and Financial Statements 2022

• IPO proceeds fully invested within six months of IPO,

inline with plan

• Completed move from AIM to the Main Market of the

London Stock Exchange, effective 1December 2022

• Paid or declared dividends totalling 4.0 pence per

share in respect of the period from Admission to

31December2022, meeting the Company’s IPO target

• Portfolio valued at £387.6 million as at 31 December

2022 with a revaluation loss of £31.3 million in the year,

reflecting a 7.5% reduction on book value. The vast

majority of the fall is attributed to the 2022 transactions

where acquisitions and purchasers’ costs were the

main contributor. Theremainder was on the like-for-like

portfolio where a 29bps outward yield shift in the

year was partly offset by a 4.7% like-for-like growth in

ERV reflecting the embedded value in the overall life

sciencesector

• IFRS net asset value of £319.5 million or 91.3 pence per

share at the year end, down 8.9% from 31December2021

• Agreed £150.0million debt facility with HSBC, comprising

£75.0million three-year term loan and £75.0million

revolving creditfacility, at 225 basis points over SONIA

• Gross debt of £110.8 million at 31 December 2022,

including £35.8 million drawn on Oxford Technology

Park (“OTP”) acquired facility, resulting in a loan to value

(“LTV”) of16.8%

• Capped SONIA on the HSBC term loan at 2.0% and an

existing SONIA cap acquired on the OTP facility at 0.75%,

resulting in interest rate protection at 94.1% of drawn debt

at year end

• Cancelled the share premium account of £339.3million,

tocreate substantial distributablereserves

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

OPERATIONAL HIGHLIGHTS

Operational highlights

As at 31 December 2022

1,2

CONTRACTED RENTROLL ESTIMATED RENTALVALUE OCCUPANCY

£13.8m

As at 31 December 2021

1,2

: £9.3m

£17.2m

As at 31 December 2021

1,2

: £10.1m

82.0%

As at 31 December 2021

1,2

: 80.9%

WEIGHTED AVERAGE

UNEXPIRED LEASE TERM

(“WAULT”) TO EXPIRY WAULT TO FIRSTBREAK NET REVERSIONARY YIELD

6.2 years

As at 31 December 2021

1,2

: 6.6 years

4.5 years

As at 31 December 2021

1,2

: 4.1 years

5.2%

As at 31 December 2021

1,2

: 5.0%

• Acquired:

• OTP for £120.3 million, comprising two complete

multi-let office/lab buildings, an on-site hotel and a

forward-funded development site

• 7-11 Herbrand Street (“Herbrand Street”) for

£85.0million, which is fully let as offices until 2026

andhas excellent potential for lab conversion

• Made good progress with asset management plans,

including developing new space at OTP and starting a

project to repurpose empty space at Rolling Stock Yard

(“RSY”) as ‘plug and play’ laboratories, the latter of which

has now completed

• Portfolio at the year end has good exposure to Oxford,

Cambridge and London Knowledge Quarter, and includes

income-producing assets and new-build developments

• Contracted rent roll increased from £9.3 million at

31December2021 to £13.8 million at 31 December 2022,

primarily as a result of the acquisitions

• Significant potential in the investment portfolio, with the

estimated rental value (“ERV”) of £17.2 million reflecting a

reversionary percentage of 8.7% on let space. Like-for-like

ERV growth in the year was 4.7%

• WAULT to expiry has reduced by 0.4 years to 6.2 years

(31 December 2021: 6.6 years), reflecting acquisitions and

the natural reduction of WAULT over time

• Occupancy of 82.0% at the year end (31December2021:

80.9%), with the 2022 acquisitions and lease up of OTP

driving an improvement on the prior year

1. Investment properties only. Development properties and land have been excluded from the abovemetrics.

2. The Group presents EPRA Best Practices Recommendations as Alternative Performance Measures (“APMs”) to assist stakeholders in assessing performance

alongside the Group’s statutory results reported under IFRS. APMs are among the key performance indicators used by the Board to assess the Group’s

performance and are used by research analysts covering the Group. EPRA Best Practices Recommendations have been disclosed to facilitate comparison with

the Group’s peers through consistent reporting of key real estate specific performance measures. However, these are not intended as a substitute for IFRS

measures. Please see the unaudited supplementary notes on pages 142 to 149 for further details onAPMs.

We made good progress implementing our strategy, acquiring

further attractive assets, driving reversionary values in the existing

portfolio and delivering our sustainability strategy.

Life Science REIT plc Annual Report and Financial Statements 2022

• New sustainability strategy developed, combining

corporate-level and asset-type specific objectives

• First year of disclosing performance for carbon, energy,

waste and water for four of our six assets, in line with

EPRA, SECR and TCFD requirements

• Appointed Richard Howell as a Non-Executive Director

and subsequently as Senior Independent Director and

Chair of the Audit and Risk Committee

• Appointed Sally Ann Forsyth as the Board’s Sustainability

Lead and Michael Taylor as Chair of the Management

Engagement Committee

• Completed letting to Oxford Ionics on 4,887 sq ft of

space at OTP, at a rent of £28.5 per sq ft

• Completed letting with a life science company backed by

Syncona on 7,322 sq ft at Rolling Stock Yard, at a rent of

£110.0 per sq ft

• Completed letting to Arcturis Data at OTP on 5,509 sq ft,

at a rent of £28.7 per sq ft

• The above lettings progress increases occupancy to

88.6%, a 6.6% uplift on the year end position

• In February 2023 the OTP debt facility was refinanced

by drawing down £26.3 million from the Group’s existing

£150.0 million HSBC facility as well as utilising existing

cash resources

• The Board has declared a second interim dividend

of 3.0 pence per share in respect of the year ended

31December 2022, in addition to the 1.0pence interim

ordinary dividend paid on 31 October 2022, and has

therefore met the target dividend yield of 4.0% set at IPO.

This will be paid as an ordinary dividend on 15May2023,

with an ex-dividend date of 13 April 2023

• Sustainability Committee formed with Sally AnnForsyth

as Chair

Sustainability and corporate governance

Post year end highlights

Cambourne Business Park, Cambridge

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

At the year end, our portfolio contained six assets

in key locations within the Golden Triangle.

AT A GLANCE

London

Cambridge

Oxford

Asset location by valuation

London

42.3%

Cambridge

24.4%

Oxford

33.3%%

Life Science REIT plc Annual Report and Financial Statements 2022

Rolling Stock Yard

London Knowledge

Quarter

Oxford Technology

Park, Oxford

Cambourne Business

Park, Cambridge

Area: 53,900 sq ft

Type: Hybrid

Contracted rent: £3.5 million

Valuation: £83.9 million

Acquisition date: December 2021

Investment: 104,300 sq ft

Development: 388,100 sq ft

Total area: 492,400 sq ft

Type: Hybrid

Contracted rent: £1.4 million

Investment: £43.8 million

Development: £77.6million

Total valuation: £121.4 million

Acquisition date: May 2022

Area: 231,700 sq ft

Type: Hybrid

Contracted rent: £4.1 million

Valuation: £87.2 million

Acquisition date: December 2021

7-11 Herbrand Street

London Knowledge

Quarter

Lumen House

Harwell Campus

Oxford

The Merrifield Centre

Cambridge

Area: 68,600 sq ft

Type: Office

Contracted rent: £4.0 million

Valuation: £79.8 million

Acquisition date: May 2022

Area: 17,600 sq ft

Type: Office

Contracted rent: £0.4 million

Valuation: £7.8 million

Acquisition date: November 2021

Area: 12,600 sq ft

Type: Laboratory

Contracted rent: £0.3 million

Valuation: £7.5 million

Acquisition date: November 2021

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

As the first London-listed REIT specialising in life science

real estate, we provide investors with a unique opportunity

to gain exposure to this exciting sub-sector.

INVESTMENT CASE

We believe the following factors make our business a compelling proposition.

Strong and growing

demand forlifescience

space

The UK is at the forefront of life science in Europe, with four of the top ten global

research universities and more than 6,500 businesses. Not only this, but it is first

globally on venture capital (“VC”) funding per capita, followed by the US. Significant

private and public investment is helping to grow existing businesses and create new

ones, resulting in strong and growing demand for suitable life science real estate.

Evenso, the market is relatively immature, with the Golden Triangle of Oxford,

Cambridge and London Knowledge Quarter having only a fraction of the purpose-built

laboratory stock of comparable locations in the USA. See pages 12 to 17.

Constrained supply has

driven rental growth and

yield compression

Existing life science real estate in the UK is typically at or beyond capacity, not

suitable or in the wrong locations. The resulting significant shortage of space is

driving rental growth. There is a significant opportunity for us to create new space

through forward-funding developments, change of use and developing new life

science hubs. In the Golden Triangle alone, an estimated 15 million sq ft of new space

for life science will be required over the next decade. See pages 12 to 17.

Highly experienced

management with a

proven track record

Our Investment Adviser, Ironstone Asset Management Limited (“Ironstone”), has a

highly experienced team of senior professionals, who have built, operated and grown

companies in the UK real estate market for more than three decades. The Investment

Adviser’s excellent relationships with potential vendors, agents, banks, financial

institutions and others gives us the ability to source investment opportunities

off-market, in a highly competitive environment. See pages 76 and 77.

Focus on sustainability

We are integrating sustainable practices into all aspects of our business. We have a

rigorous focus on minimising the environmental footprint of our assets, which aligns

with our occupiers, and create social value by providing space that enables scientific

activity to improve health and quality of life. High-quality workplaces support the

wellbeing of our occupiers’ employees and help them to meet the challenge of

attracting and retaining top talent. See pages 38 to 57.

A strategy for value

creation

We have significant potential to create value through active management of our

portfolio, including developing new life science facilities, enabling us to drive

capital values and increase our rental income. We also see good prospects for

further acquisitions of both income-producing assets and forward funding or other

development opportunities. We therefore expectto deliver further capital and

income growth over the coming years, supporting our total return and dividend

targets. See pages 18 and 19.

Life Science REIT plc Annual Report and Financial Statements 2022

CHAIR’S STATEMENT

At the end of the Group’s first full year, I am delighted to say

that we have delivered on the promises we set out at our IPO

in November 2021. We achieved our goal of fully deploying

the IPO proceeds within six months, completed our move

from AIM to the Main Market and met our dividend target.

Ourfocus now is on executing our business plans for each

ofthe assets, to drive capital values and income growth.

An attractive and resilient market

In my previous reports, I have outlined the significant

attractions of our market. There is high occupier demand in

the Golden Triangle locations we are targeting, underpinned

by long-term structural growth drivers. At the same time,

there is very little available space and a limited pipeline of

new developments, leading to robust rental growth. The life

science sector also has low exposure to consumer spending,

helping to insulate it from the broader economic cycle.

These positive attributes proved their worth in the second

halfof the year, as worsening economic conditions, high

interest rates and continued geopolitical uncertainty

contributed to a rapid expansion in yields in many real estate

sectors. While life science has not been immune, the strong

occupational market has helped to limit the impact on asset

valuations, with outward yield shifts being partly offset by

continued increases in estimated rental values.

Successfully implementing the strategy

In the first half of the year, we acquired OTP, which was the

final asset in our initial pipeline, and Herbrand Street in the

London Knowledge Quarter, which has excellent potential for

conversion to laboratories.

The portfolio offers significant near-term value creation

opportunities, including completing the development

site at OTP, repositioning Cambourne Business Park and

repurposing unlet space at Rolling Stock Yard as ‘plug and

play’ laboratories. We are making good progress with our

development programme at OTP, with a further two buildings

nearing completion and two more under way. Weare in

discussions with a wide range of potential occupiers at

OTP, including for space that has yet to complete, and have

announced new leases with Oxford Ionics and Arcturis Data

after the year end. We have also secured what we believe

to be a record rent for a lab in London at Rolling Stock

Yard, withour refit increasing rents from £65.0 per sq ft to

£110.0per sqft on the new lab space.

In addition to laboratories and offices, life science businesses

are increasingly focused on computing power and our

potential occupiers include data centre and quantum

computing companies. We are also looking at production

space within our sites, with demand increasing as companies

re-shore manufacturing to ensure supply chain resilience.

Increasingly, life science businesses want to have their head

office, R&D and production facilities within the UK and often

on the same site.

I AM DELIGHTED TO

REPORT THAT WE HAVE

DELIVERED ON OUR IPO

PROMISES, DEVELOPED OUR

SUSTAINABILITY STRATEGY,

AND ARE WELL PLACED FOR

FURTHER PROGRESS, WITH

SIGNIFICANT POTENTIAL FOR

VALUE CREATION IN THE

PORTFOLIO.

CLAIRE BOYLE

Chair

STRATEGIC REPORT

Life Science REIT plc

Annual Report and Financial Statements 2022

Financial performance and dividends

The portfolio was independently valued at £387.6 million

at the year end, refl ecting a 7.5% reduction on book value.

Market factors outlined above in addition to acquisition

and purchasers’ costs drove this decline. Like-for-like ERVs

increased by4.7%, due to further market rental growth which

helped to partially off set the decline in values during the year.

The IFRS net asset value at 31 December 2022 was 91.3pence

per share, an 8.9% reduction on the prior year after

accounting for the fall in portfolio valuations and the costs of

acquisitions in the year. IFRS earnings per share (“EPS”) was

a loss of 7.9 pence, while EPRA EPS was 0.4 pence. Adjusted

EPS, which excludes the eff ect of one-off exceptional costs,

was 0.7 pence.

At IPO, we set a target dividend yield of 4.0%, based on the

issue price of 100 pence per share. After paying an interim

ordinary dividend of 1.0 pence per share on 31 October

2022, the Board has declared a second interim dividend

of 3.0pence per share, to give a total for the period from

Admission to 31December 2022 of 4.0 pence, thereby

meeting our target. The second interim dividend will be paid

as an ordinary dividend on 15 May 2023, with an ex-dividend

date of 13 April 2023.

A well-fi nanced business

The business has a robust fi nancial position, with the

resources we need to implement our asset management plans

and signifi cant headroom in our facilities.

During the year we agreed our fi rst debt fi nancing, a

£150.0million facility with HSBC, split equally between a term

loan and a revolving credit facility. At the year end, total net

borrowings stood at £65.2 million, giving us a loan to value

(“LTV”) ratio of 16.8%. On a gross debt basis this was 28.6%;

we expect to maintain a LTV of 30%-40% in the longer term.

Given the sharp rise in interest rates in the second half of the

year, we were pleased to have put in place hedging that caps

the SONIA rate on the term loan at 2.0% until March 2025.

We also acquired an existing SONIA cap on the OTP facility

at 0.75%. As a result, 94.1% of our drawn debt at the year end

was at a capped rate.

Since the year end we have refi nanced the OTP debt facility

by drawing down £26.3 million from the existing HSBC facility

as well as utilising existing cash resources.

Move to the Main Market

At IPO, we said we intended to move from AIM to the Main

Market of the London Stock Exchange, which took place on

1December2022. The benefi ts include access to a deeper

pool of capital and a broader range of shareholders, which will

help us to implement our growth strategy and contribute to

increased liquidity in the shares. The move to the Main Market

also creates the potential for the Company to be included

in a broader range of equity indices in the future, including

FTSE’s EPRA and UK Index Series, which may further increase

demand for the shares and their liquidity. As at 17 March 2023

the Company was included in the FTSE UK All-Share and Small

Cap Indices. In addition, as a Main Market company, we now

comply with higher governance standards under the Listing

Rules, and related regulations and guidance. Wetherefore see

this as an important step in our development.

CHAIR’S STATEMENT CONTINUED

Life Science REIT plc Annual Report and Financial Statements 2022

Sustainability matters

Our approach to value creation includes rigorously

managing ESG issues. We incorporate environmental

and social characteristics in our business processes and

management and already have a strong track-record,

including BREEAM-certifi ed buildings and A or B rated

energyperformance certifi cates (“EPCs”). We are now

challenging ourselves to go further.

In 2022, we measured our carbon baseline, defi ned

our sustainability strategy and undertook a climate risk

assessment (see Sustainability section on pages 38 to

57 for further details). We are augmenting our existing

suite of management controls, KPIs and tools with wider

environmental and social metrics, to ensure we maximise

opportunities to collaborate with our occupiers, and that we

have a robust risk framework, including climate-related risks,

as part of our governance processes and business resilience.

From a governance perspective, we completed our fi rst

evaluation of the Board and its Committees, which showed

that we are functioning well together (see page 79 for

more information). As previously reported, we appointed

RichardHowell as a Non-Executive Director in May 2022

and he subsequently became our Senior Independent

Director and Chair of the Audit and Risk Committee. This has

allowed SallyAnnForsyth to focus on her role as the Board’s

Sustainability Lead (and Chair of the Sustainability Committee

from 2023), while Michael Taylor has taken over as Chair of the

Management Engagement Committee.

Looking forward

Going into 2023, we expect the favourable conditions

in theoccupational market to continue, supporting our

leasing activity as we execute our asset management plans.

Oursuccess to date with leasing-up OTP and the substantial

rental uplift with the post year end letting at Rolling Stock

Yard demonstrate the portfolio’s potential to drive further

earnings growth and support our asset valuations, by

fulfi lling the overwhelming demand in the Golden Triangle

for specifi cally designed lab space. We will continue our

development programme at OTP, where we are targeting to

complete afurther 388,100 sq ft of space by mid-2024.

Across the wider investment market, the potential for

further valuation declines in the fi rst half of 2023 may create

interesting acquisition opportunities for us in the second half

of the year.

Growth in the immediate future will be focused around our

letting, asset management and development activities. We

believe the strong occupier demand and limited supply of

space in the life science sector will continue to drive rental

growth in the future. In the short term we expect further

investment activity to be muted until the economic outlook

becomes clearer but will continue to closely monitor the life

science investment market for any interesting acquisition

opportunities.

Claire Boyle

Chair

24 March 2023

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

We operate in a highly attractive market, characterised by

a variety of long-term structural drivers, which contribute to

unprecedented levels of public and private investment.

MARKET OVERVIEW

Supportive long-term structural drivers

The COVID-19 pandemic has accelerated trends that were already under way, like the increasing use of digital tools, spurring

avariety of public-private partnerships at the same time as reminding governments of the importance of the science industry.

Life Sciences

Global firms

choosing

the UK

Ageing

population

Tech and

discovery

COVID-19

catalyst

Increasing

government

spending

Demand for

digital health

Large pharma

firepower

Life Science REIT plc Annual Report and Financial Statements 2022

The British government has a set clear mission to ensure the UK is a globally recognised hub for the science industry, one of its

key pillars of economic growth. Recent announcements and objectives include:

Plans for largest ever R&D budget:

£20.0billion by 2024-25 (+30.0%)

(March 2022)

Launch of a £119.0 million fund for overseas

research collaborations

(December 2022)

Proposed Plan B in lieu of access to funding

through Horizon

(January 2023)

Tax relief offer for companies that spend

more than 40% of total expenditure on R&D

(March 2023)

Proposal to set up a fast approval process for

the most cutting-edge medicines and devices

(March 2023)

Newly appointed Science, Innovation

andTechnology Secretary given dedicated

seat atthe Cabinet

(February 2023)

Launched a £370m Science and Technology

Framework to boost investment in innovation

(March 2023)

Plans to increase total R&D investment to

2.4% of GDP by 2027

(March 2022)

Creation of new Department for Science,

Innovation and Technology (“DSIT”)

(February 2023)

Government puts science high on the national agenda

Proposed

Actioned

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

£0m

£1,000m

£2,000m

£3,000m

£4,000m

£5,000m

2018

VC raised

2019

2020 2021 2022

London Oxford Cambridge Other Golden Triangle Other

+22% vs. 2020

VC funding into UK life science companies reached its second highest point in history at the end of 2022. Whilst funding was

lower than the record-breaking year in 2021, investment in 2022 was still 22% higher than 2020.

MARKET OVERVIEW CONTINUED

UK life science industry continues to attract substantial

venturecapital (“VC”) investment.

1. Cushman & Wakefield Q4 2022 Research.

The types of life science real estate

The life science market offers a range of potential building

types that we can invest in. These include:

• ‘wet’ labs, where drugs, chemicals and other types of

biological matter can be analysed and tested;

• ‘dry’ labs, which focus on applied or computational

mathematical analyses;

• write-up space, where people document their analysis

or come together and work in teams on developing and

analysing research;

• offices, incubator space and co-working;

• manufacturing and prototyping facilities;

• facilities and amenities, which support interactions

betweenoccupiers and their employees’ wellbeing; and

• data centres, to enable the rapidly growing need for

computing power and data handling in life sciences.

We can also acquire existing buildings which can be

repurposed for life science, or land we can use for

developments.

VC funding in UK life science companies

Life Science REIT plc Annual Report and Financial Statements 2022

‘GENIUS LOCI’, A PRIORITY

All assets strategically located in the UK’s Golden Triangle,

alifescience hotspot which has shown unprecedented strength.

Most important science cluster

in Europe: 6,500 life science

businesses in the UK

Global leader on VC funding per

capita: Cambridge led the ranking

and London and Oxford sat within

top five

Lab vacancy rates at all-time

lows: 0.2% in Cambridge and 2.6%

inOxford

Supply shortage: 21 million sq ft of

new space required in the UK for

life science over the next decade

Take-up at record highs:

1.4million sq ft recorded in the

Golden Triangle from life science

companies in 2022, the highest in

the last fiveyears

Strong lab rental growth forecasts:

4.4% p.a. in Cambridge until2027

1. UK Government Q4 2022 Research.

2. Savills Q4 2022 Research.

3. Bidwells Q4 2022 Research.

Life science is driven by like-minded and complementary companies clustering around knowledge hubs, such as major

universities and teaching hospitals. This helps them to innovate, share knowledge and benefit from government incentives and

business synergies, creating what is known as ‘Genius Loci’ within these ecosystems.

In the UK, the established clusters include the Golden Triangle of Oxford, Cambridge and the London Knowledge Quarter, which

is our primary focus for investment. There are also emerging clusters in Birmingham, Newcastle, Edinburgh and Manchester.

London

Cambridge

Oxford

2021A

25.0%

2022A

20.6%

2023F

11.1%

2.0%

2024F

0.8%

1.3%

2025F

3.1%

1.3%

2026F

3.7%

0.6%

2027F

3.6%

0.6%

Oxford

Cambridge

£45.0 psf

£55.0 psf

£65.0 psf

£75.0 psf

£85.0 psf

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

Year on year rental growth

MARKET OVERVIEW CONTINUED

Lab demand exceeds offices for the first time ever

Lab requirements exceeded office requirements for the first time ever across the Oxford to Cambridge Arc (“Arc”) in 2022,

with1.9 million sq ft take-up recorded in the Arc from life science companies in 2022, the highest ever recorded.

Unparalleled leasing and rental growth recorded in 2022

The demand for lab space continues to run close to record levels with the ongoing growth of science and tech businesses.

Forexample, Cambridge laboratory requirements stood almost four times ahead of the pre-pandemic level, pushing demand

toits highest point since AstraZeneca’s 2015 requirement.

In addition, rents rose to new highs with 10%-20% year-on-year growth recorded across the Golden Triangle.

Valuations reducing and yields experiencing an outward shift

In the second half of 2022, high inflation, political uncertainty, the sharp increase in interest rates post the ‘mini budget’, the

prospect of a recession and the ongoing war in Ukraine combined to significantly reduce asset values and expand yields in

many sectors of the UK real estate market.

1. Bidwells Q4 2022 Research.

Life Science REIT plc Annual Report and Financial Statements 2022

Take-up in the next ten years to notably exceed pipeline

When it comes to the outlook for the life science industry, take-up in the Golden Triangle for the next ten years is expected

to exceed the pipeline by c.3 million sq ft. In addition, up to £15.0 billion of live capital is looking for a home in UK life sciences

realestate.

Industrial

(28.6%)

Retail

H2 2022 absolute movement in valuation

Office Labs

(14.5%)

(14.1%)

(6.3%)

Take-up forecast up to 2031 (2022-2031)

Pipeline up to 2030 (2022-2030)

Golden Triangle Rest of UK

15.0m

sq ft

6.0m

sq ft

London Cambridge Oxford

4.5m

sq ft

4.3m

sq ft

3.2m

sq ft

Total Golden Triangle: 12.0m sq ft

1. CBRE Monthly Index Q4 2022 Intelligence.

2. The Group’s portfolio.

1. Savills Q2 2022 Research.

2. JLL Q4 2022 Intelligence.

While life science property has not been immune to these

pressures, valuations in the sector have held up well. The

valuation of our assets declined by 6.3% in the second half,

while industrial, retail and office asset valuations fell by an

average of 28.6%, 14.5% and 14.1% respectively. The healthy

performance of life science assets reflects the attractive

occupational market, rising rents and lack of dependency

oflife science companies on consumer spending trends.

When it comes to yields, both prime lab and office yields

experienced an outward shift following the increase in

interest rates throughout 2022; primes yields in Cambridge

and Oxford stood at 4.5% and 5.0% for lab and offices

respectively.

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

BUSINESS MODEL

Our business model is designed to create long-term value

forourshareholders and our other key stakeholders.

OUR VALUE CREATION MODEL

Identify

investment

opportunities

Complete

duediligence

and purchase

Add value

through asset

management

Monitor

investments

Hold or

divest

The Investment Adviser’s knowledge

and relationships are key sources of

competitive advantage for us, when

identifying potential investments. See

page 20 for our investment strategy.

When developing new assets, we seek to

mitigate any development risk through

forward funding or similar arrangements.

For speculative development, we use

best-in-class advisers, fixed-price

construction contracts, and seek pre-lets

wherepractical.

When suitable investment opportunities

arise, the Investment Adviser carries

out thorough due diligence, including

physically inspecting the asset. The

Investment Adviser then negotiates

terms with the vendor, after which the

transaction is subject to approval by

the Investment Adviser’s investment

committee, the AIFM and, for transactions

greater than 20% of gross asset value,

theBoard.

Through the Investment Adviser, we build

close relationships with our occupiers,

so we understand their businesses and

property requirements, which supports

our asset management. Our acquisition

due diligence identifies value creation

opportunities, along with an associated

business case and execution plan. For

information on our asset management

strategy, see page 21.

The Investment Adviser reviews each

property in the portfolio at least monthly,

with a particular focus on tracking

occupancy rates, rental values and rent

collections. The Investment Adviser also

visits each asset at least twice a year.

Monitoring the market and building

valuation databases ensures we are in a

position to take advantage of potential

investment and occupier opportunities.

We intend to be long-term holders of

our assets. This makes us an attractive

landlord to life science occupiers who

often have high barriers to exiting a

building, as the cost of the fit out, the

complexity of their equipment and the

timing of long-term projects can make

moving difficult and expensive.

However, we expect to opportunistically

and strategically dispose of selected

assets, following which we will typically

reinvest the proceeds into new investment

opportunities.

ESG

We are supported by sustainability

experts and have appointed a head of ESG

to embed the newly formed sustainability

strategy across future investments and

the portfolio.

ESG

Environmental and climate-related due

diligence highlight opportunities and risks

to be considered during the acquisition

process.

ESG

We drive decarbonisation and social

value through our connection with

occupiers, understanding environmental

performance at asset level and our

sustainability strategy.

Our climate impact assessment enables us

to form strategies to mitigate risks.

ESG

Our specialist advisers provide regular

updates on the rapidly evolving

regulatory environment, occupier and

other stakeholder expectations for ESG

performance

The Sustainability Committee ensures

accountability for progress on our

sustainability targets.

ESG

Driving towards decarbonisation, meeting

stringent environmental regulations and

climate-related issues may result in some

assets no longer meeting those high

standards.

THE VALUE WE CREATE

Economic value

By carefully selecting investments and implementing our asset management

plans, we benefit from rising rents and support the capital values of our assets,

leading to attractive dividends and total returns for shareholders.

As a REIT, we do not pay corporation tax on profits and capital gains from our

qualifying property rental business, which supports our ability to pay dividends.

Social value

We create social value in a number of ways, in particular by providing real estate that underpins life science research

intoglobally significant problems. In turn, we support job creation and economic activity in the communities surrounding

ourassets.

Through our sustainability strategy (see page 44), we have a clear focus on protecting the environment and providing

spacesand amenities that benefit the wellbeing of the people who work in them.

RESOURCES AND

RELATIONSHIPS

Our business model utilises

the following tangible and

intangible assets to create

value:

Physical assets

We are constructing a diversified

portfolio of real estate assets for life

science occupiers, with a primary

focus on the Golden Triangle.

Skilled and experienced

people

Our model allows us to benefit from

the skills and experience of the

Investment Adviser’s team, as well

as our other professional service

providers.

Specialist knowledge

Our exclusive focus on life science

real estate makes us attractive to

both occupiers and vendors. We

draw on the specialist knowledge

of the Investment Adviser’s team to

implement our strategy.

Relationships

Ironstone’s strong relationships in the

sector, including with vendors, agents

and other key market participants,

helps us to source acquisitions

off-market and to attract new

occupiers for our developments and

repositioned assets.

Financial assets

We finance the business using

shareholders’ equity and a prudent

level of bank debt, with an LTV target

of 30-40% in the long term.

Life Science REIT plc Annual Report and Financial Statements 2022

OUR VALUE CREATION MODEL

Identify

investment

opportunities

Complete

duediligence

and purchase

Add value

through asset

management

Monitor

investments

Hold or

divest

The Investment Adviser’s knowledge

and relationships are key sources of

competitive advantage for us, when

identifying potential investments. See

page 20 for our investment strategy.

When developing new assets, we seek to

mitigate any development risk through

forward funding or similar arrangements.

For speculative development, we use

best-in-class advisers, fixed-price

construction contracts, and seek pre-lets

wherepractical.

When suitable investment opportunities

arise, the Investment Adviser carries

out thorough due diligence, including

physically inspecting the asset. The

Investment Adviser then negotiates

terms with the vendor, after which the

transaction is subject to approval by

the Investment Adviser’s investment

committee, the AIFM and, for transactions

greater than 20% of gross asset value,

theBoard.

Through the Investment Adviser, we build

close relationships with our occupiers,

so we understand their businesses and

property requirements, which supports

our asset management. Our acquisition

due diligence identifies value creation

opportunities, along with an associated

business case and execution plan. For

information on our asset management

strategy, see page 21.

The Investment Adviser reviews each

property in the portfolio at least monthly,

with a particular focus on tracking

occupancy rates, rental values and rent

collections. The Investment Adviser also

visits each asset at least twice a year.

Monitoring the market and building

valuation databases ensures we are in a

position to take advantage of potential

investment and occupier opportunities.

We intend to be long-term holders of

our assets. This makes us an attractive

landlord to life science occupiers who

often have high barriers to exiting a

building, as the cost of the fit out, the

complexity of their equipment and the

timing of long-term projects can make

moving difficult and expensive.

However, we expect to opportunistically

and strategically dispose of selected

assets, following which we will typically

reinvest the proceeds into new investment

opportunities.

ESG

We are supported by sustainability

experts and have appointed a head of ESG

to embed the newly formed sustainability

strategy across future investments and

the portfolio.

ESG

Environmental and climate-related due

diligence highlight opportunities and risks

to be considered during the acquisition

process.

ESG

We drive decarbonisation and social

value through our connection with

occupiers, understanding environmental

performance at asset level and our

sustainability strategy.

Our climate impact assessment enables us

to form strategies to mitigate risks.

ESG

Our specialist advisers provide regular

updates on the rapidly evolving

regulatory environment, occupier and

other stakeholder expectations for ESG

performance

The Sustainability Committee ensures

accountability for progress on our

sustainability targets.

ESG

Driving towards decarbonisation, meeting

stringent environmental regulations and

climate-related issues may result in some

assets no longer meeting those high

standards.

THE VALUE WE CREATE

Economic value

By carefully selecting investments and implementing our asset management

plans, we benefit from rising rents and support the capital values of our assets,

leading to attractive dividends and total returns for shareholders.

As a REIT, we do not pay corporation tax on profits and capital gains from our

qualifying property rental business, which supports our ability to pay dividends.

Social value

We create social value in a number of ways, in particular by providing real estate that underpins life science research

intoglobally significant problems. In turn, we support job creation and economic activity in the communities surrounding

ourassets.

Through our sustainability strategy (see page 44), we have a clear focus on protecting the environment and providing

spacesand amenities that benefit the wellbeing of the people who work in them.

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

Our investment objective remains focused on providing

shareholders with an attractive level of total return, with a focus

on capital growth, whilst also providing a growing level of income.

OBJECTIVES AND STRATEGY

OUR

STRATEGY

INVESTMENT

STRATEGY

ASSET MANAGEMENT

STRATEGY

FINANCING

STRATEGY

To achieve our objectives, we are implementing the

strategy set out on the next two pages:

We aim to construct a portfolio diversified by property type and

occupier. We predominantly buy properties where we can add

value through active asset management and may acquire individual

buildings, groups of buildings or entire science parks (see page 31

for the types of property we consider).

We primarily target the Golden Triangle (see page 6) and may

consider opportunities in other emerging clusters around the UK.

We address the demand-supply imbalance for space in our target

locations by forward-funding developments and acquiring land

todevelop.

We invest in our properties to enhance their appeal to life science

occupiers and increase capital values and rents. This may include

extensions to buildings, refurbishments, change of use and fitting

out space as laboratories. We may use any periods of vacancy

(forexample on lease expiry) to carry out this investment.

Our strategy also includes enhancing our buildings’ sustainability

and engaging with occupiers to identify mutual agendas.

Seepages 44 and 45 for our sustainability strategy.

We finance our business using shareholders’ equity, along with a

prudent level of debt. We may also dispose of assets from time to

time, which will generate funds for reinvestment.

In the longer term, we expect to maintain a loan to value ratio of

30%-40%. Our approach to debt financing may include hedging.

We also intend to implement a Green Finance framework policy, so

we can access applicable schemes offered by financial institutions.

Progress Progress Progress

• Acquired two assets in the year:

• Herbrand Street for £85.0 million, which is fully let as offices

until 2026 and has excellent potential for lab conversion.

Seepage 30 for more information; and

• OTP for £120.3 million, comprising two complete multi-let

office/lab buildings, an on-site hotel and a forward-funded

development site. See page 30 for more information.

• Made good progress with our programme, including:

• nearing completion for two buildings at OTP and starting work

on two others;

• developing our plans to rebrand Cambourne Business Park

during H1 2023; and

• starting the refit of vacant space at Rolling Stock Yard

aslaboratories.

• See sustainability section for strategy progress, pages 44 and 45.

• Since the year end we have agreed two new leases at OTP

and secured a record rent of £110.0 per sq ft for London lab

space, onpart of the repurposed space at Rolling Stock Yard,

showcasing the benefits of our asset management.

• Agreed £150.0 million debt facility with HSBC, comprising a term

loan and revolving credit facility of £75.0 million each.

• Hedged the interest rate on the term loan by capping the SONIA

rate at 2.0%.

• 94.1% of drawn debt was hedged at the year end against rising

interest rates.

• In February 2023 the OTP debt facility was refinanced

by drawing down £26.3 million from the Group’s existing

£150.0million HSBC facility as well as utilising existing cash

resources.

Our objectives

We aim to provide shareholders with an attractive

total return, underpinned by secure income.

Total accounting return

Our target is in excess of 10.0% per annum, through

a combination of dividends and growth in NAV.

Outcome in 2022

The total accounting return for the year was -9.1%

(see page 149).

Plan for 2023

2022 transaction costs and macromarket

conditions drove a revaluation loss in 2022 being

the key contributor to the -9.1% total accounting

return. However, we remain committed to

targeting a return of at least 10.0% perannum by

continuing to implement our strategy set out over

the next two pages.

Dividends

Our target for the period from Admission to

31December2022 was a total dividend of

4.0pence per share, representing a yield of

4.0%on the IPO price of 100 pence per share.

Outcome in 2022

We declared total dividends in respect of the

period of 4.0 pence per share.

Plan for 2023

Our target dividend for 2023 remains at

4.0pence per share.

Life Science REIT plc Annual Report and Financial Statements 2022

OUR

STRATEGY

INVESTMENT

STRATEGY

ASSET MANAGEMENT

STRATEGY

FINANCING

STRATEGY

To achieve our objectives, we are implementing the

strategy set out on the next two pages:

We aim to construct a portfolio diversified by property type and

occupier. We predominantly buy properties where we can add

value through active asset management and may acquire individual

buildings, groups of buildings or entire science parks (see page 31

for the types of property we consider).

We primarily target the Golden Triangle (see page 6) and may

consider opportunities in other emerging clusters around the UK.

We address the demand-supply imbalance for space in our target

locations by forward-funding developments and acquiring land

todevelop.

We invest in our properties to enhance their appeal to life science

occupiers and increase capital values and rents. This may include

extensions to buildings, refurbishments, change of use and fitting

out space as laboratories. We may use any periods of vacancy

(forexample on lease expiry) to carry out this investment.

Our strategy also includes enhancing our buildings’ sustainability

and engaging with occupiers to identify mutual agendas.

Seepages 44 and 45 for our sustainability strategy.

We finance our business using shareholders’ equity, along with a

prudent level of debt. We may also dispose of assets from time to

time, which will generate funds for reinvestment.

In the longer term, we expect to maintain a loan to value ratio of

30%-40%. Our approach to debt financing may include hedging.

We also intend to implement a Green Finance framework policy, so

we can access applicable schemes offered by financial institutions.

Progress Progress Progress

• Acquired two assets in the year:

• Herbrand Street for £85.0 million, which is fully let as offices

until 2026 and has excellent potential for lab conversion.

Seepage 30 for more information; and

• OTP for £120.3 million, comprising two complete multi-let

office/lab buildings, an on-site hotel and a forward-funded

development site. See page 30 for more information.

• Made good progress with our programme, including:

• nearing completion for two buildings at OTP and starting work

on two others;

• developing our plans to rebrand Cambourne Business Park

during H1 2023; and

• starting the refit of vacant space at Rolling Stock Yard

aslaboratories.

• See sustainability section for strategy progress, pages 44 and 45.

• Since the year end we have agreed two new leases at OTP

and secured a record rent of £110.0 per sq ft for London lab

space, onpart of the repurposed space at Rolling Stock Yard,

showcasing the benefits of our asset management.

• Agreed £150.0 million debt facility with HSBC, comprising a term

loan and revolving credit facility of £75.0 million each.

• Hedged the interest rate on the term loan by capping the SONIA

rate at 2.0%.

• 94.1% of drawn debt was hedged at the year end against rising

interest rates.

• In February 2023 the OTP debt facility was refinanced

by drawing down £26.3 million from the Group’s existing

£150.0million HSBC facility as well as utilising existing cash

resources.

Read more on pages 24 to 27

Oxford Technology Park

Oxford

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

OCCUPANCY LIKE-FOR-LIKE

RENTAL INCOME

MOVEMENT

LIKE-FOR-LIKE

VALUATION

MOVEMENT

LIKE-FOR-LIKE

CARBON INTENSITY

TOTAL COST

RATIO

EPRA NET TANGIBLE

ASSETS PER SHARE

(“NTAPS”)

LOAN TO

VALUERATIO

DIVIDENDS

(PENCEPER SHARE)

82.0%

2021: 80.9%

1.2%

2021: n/a

(1.8)%

2021: n/a

n/a

2021: n/a

58.9%

2021: 163.5%

90.0p

2021: 100.2p

16.8%

2021: n/a

4.0p

2021: n/a

Description

Total open market rental

valueof the units leased

divided by total open market

rental value, excluding

development property and

land, and equivalent to one

minus the EPRA vacancy rate.

Description

The increase/decrease in

contracted rent of units

owned throughout the period,

expressed as a percentage

of the contracted rent at the

start of the period, excluding

development property and

land and units undergoing

refurbishment.

Description

The increase/decrease in

the valuationof properties

owned throughout the period

under review, expressed as a

percentage of the valuation

at the start of the period, and

net of capital expenditure.

Description

The like-for-like change in

landlord procured energy

consumption by area

measured in MWh/m

Description

EPRA cost ratio including

direct vacancy costs but

excluding one-off costs.

TheEPRA cost ratio is the

sum of property expenses and

administration expenses, as

a percentage of gross rental

income.

Description

This net asset value measure

assumes entities buy and sell

assets, thereby crystallising

certain levels of deferred tax

liability. Adjustments are also

made for the fair value of

certain financial derivatives.

Description

Gross debt less cash,

short-term deposits and liquid

investments, divided by the

aggregate value of properties

and investments.

Description

The total amount of dividends

paid or declared in respect of

the financial year divided by

the number of shares in issue

in the period.

Relevance to

ourstrategy

Shows our ability to retain

occupiers at renewal and to

let vacant space, balanced

with the need for vacancy to

carry out asset management

initiatives.

Relevance to

ourstrategy

Shows our ability to identify

and acquire attractive

properties and grow rents

over time.

Relevance to

ourstrategy

A high-quality portfolio and

an active asset management

programme will help us

to increase asset values in

favourable market conditions

and will help to support our

valuations when market

conditions are unfavourable.

Relevance to

ourstrategy

The sustainability strategy

targets for decarbonisation

will be set in 2023. This will

be a key measure of this

commitment going forward.

Relevance to

ourstrategy

Shows our ability to

effectively control our cost

base, which in turn supports

dividend payments to

shareholders.

Relevance to

ourstrategy

Reflects our ability to add

value by acquiring well and

through asset management,

which in turn increases our

resilience during market

downturns.

Relevance to

ourstrategy

Shows our ability to balance

the additional portfolio

diversification and returns

that come from using debt,

with the need to manage risk

through prudent financing.

Relevance to

ourstrategy

Shows our ability to construct

a portfolio that delivers a

secure and growing income,

which underpins dividend

payments to shareholders.

Performance

At 31 December 2022,

occupancy across the

investment portfolio was

82.0% (31December 2021:

80.9%), with the 2022

acquisitions and lease up of

OTP driving an improvement

on the prioryear.

Performance

At 31 December 2022,

like-for-like rental income

wasan increase of 1.2%, driven

by a rent review that settled in

the second half of the year.

Performance

The portfolio valuation

decreased by 1.8% on a

like-for-like basis, as a result

of the investment market

conditions described on

pages 16 and 17.

Performance

Will be reported on from

31December 2023 when there

are two full years of data.

Performance

The total cost ratio was

58.9% for 2022. This ratio

is expected to continue to

decrease as the buildings

at OTP complete and we

repurpose assets to lab space.

Performance

At 31 December 2022, the

EPRA NTA was 90.0 pence

per share (31 December 2021:

100.2 pence), driven by 2022

transaction costs and the

macroeconomic impact on

real estate valuations in the

second half of the year.

Performance

The LTV at 31 December 2022

was 16.8%. We expect the ratio

to be 30%-40% longer term.

Performance

The total dividend in respect

of the year was 4.0 pence per

share (paid plus declared).

This is in line with our target

at IPO.

Link to strategy Link to strategy Link to strategy

Link to strategy

Link to strategy Link to strategy

Link to strategy

We use the following key performance indicators (“KPIs”)

to monitor our performance and strategic progress.

KEY PERFORMANCE INDICATORS

Link to strategy key:

Investment strategy Asset management strategy Financing strategy

Life Science REIT plc Annual Report and Financial Statements 2022

OCCUPANCY LIKE-FOR-LIKE

RENTAL INCOME

MOVEMENT

LIKE-FOR-LIKE

VALUATION

MOVEMENT

LIKE-FOR-LIKE

CARBON INTENSITY

TOTAL COST

RATIO

EPRA NET TANGIBLE

ASSETS PER SHARE

(“NTAPS”)

LOAN TO

VALUERATIO

DIVIDENDS

(PENCEPER SHARE)

82.0%

2021: 80.9%

1.2%

2021: n/a

(1.8)%

2021: n/a

n/a

2021: n/a

58.9%

2021: 163.5%

90.0p

2021: 100.2p

16.8%

2021: n/a

4.0p

2021: n/a

Description

Total open market rental

valueof the units leased

divided by total open market

rental value, excluding

development property and

land, and equivalent to one

minus the EPRA vacancy rate.

Description

The increase/decrease in

contracted rent of units

owned throughout the period,

expressed as a percentage

of the contracted rent at the

start of the period, excluding

development property and

land and units undergoing

refurbishment.

Description

The increase/decrease in

the valuationof properties

owned throughout the period

under review, expressed as a

percentage of the valuation

at the start of the period, and

net of capital expenditure.

Description

The like-for-like change in

landlord procured energy

consumption by area

measured in MWh/m

Description

EPRA cost ratio including

direct vacancy costs but

excluding one-off costs.

TheEPRA cost ratio is the

sum of property expenses and

administration expenses, as

a percentage of gross rental

income.

Description

This net asset value measure

assumes entities buy and sell

assets, thereby crystallising

certain levels of deferred tax

liability. Adjustments are also

made for the fair value of

certain financial derivatives.

Description

Gross debt less cash,

short-term deposits and liquid

investments, divided by the

aggregate value of properties

and investments.

Description

The total amount of dividends

paid or declared in respect of

the financial year divided by

the number of shares in issue

in the period.

Relevance to

ourstrategy

Shows our ability to retain

occupiers at renewal and to

let vacant space, balanced

with the need for vacancy to

carry out asset management

initiatives.

Relevance to

ourstrategy

Shows our ability to identify

and acquire attractive

properties and grow rents

over time.

Relevance to

ourstrategy

A high-quality portfolio and

an active asset management

programme will help us

to increase asset values in

favourable market conditions

and will help to support our

valuations when market

conditions are unfavourable.

Relevance to

ourstrategy

The sustainability strategy

targets for decarbonisation

will be set in 2023. This will

be a key measure of this

commitment going forward.

Relevance to

ourstrategy

Shows our ability to

effectively control our cost

base, which in turn supports

dividend payments to

shareholders.

Relevance to

ourstrategy

Reflects our ability to add

value by acquiring well and

through asset management,

which in turn increases our

resilience during market

downturns.

Relevance to

ourstrategy

Shows our ability to balance

the additional portfolio

diversification and returns

that come from using debt,

with the need to manage risk

through prudent financing.

Relevance to

ourstrategy

Shows our ability to construct

a portfolio that delivers a

secure and growing income,

which underpins dividend

payments to shareholders.

Performance

At 31 December 2022,

occupancy across the

investment portfolio was

82.0% (31December 2021:

80.9%), with the 2022

acquisitions and lease up of

OTP driving an improvement

on the prioryear.

Performance

At 31 December 2022,

like-for-like rental income

wasan increase of 1.2%, driven

by a rent review that settled in

the second half of the year.

Performance

The portfolio valuation

decreased by 1.8% on a

like-for-like basis, as a result

of the investment market

conditions described on

pages 16 and 17.

Performance

Will be reported on from

31December 2023 when there

are two full years of data.

Performance

The total cost ratio was

58.9% for 2022. This ratio

is expected to continue to

decrease as the buildings

at OTP complete and we

repurpose assets to lab space.

Performance

At 31 December 2022, the

EPRA NTA was 90.0 pence

per share (31 December 2021:

100.2 pence), driven by 2022

transaction costs and the

macroeconomic impact on

real estate valuations in the

second half of the year.

Performance

The LTV at 31 December 2022

was 16.8%. We expect the ratio

to be 30%-40% longer term.

Performance

The total dividend in respect

of the year was 4.0 pence per

share (paid plus declared).

This is in line with our target

at IPO.

Link to strategy Link to strategy Link to strategy

Link to strategy

Link to strategy Link to strategy

Link to strategy

Creating the next

generation of life

science buildings

Oxford Technology Park

Key statistics

CBRE valuation: Occupancy of

completed buildings:

£121.4m 72.5%

31 December 2022 31 December 2022

% complete by area: Costs to complete:

21.2% £58.9m

31 December 2022 31 December 2022

Target contracted rent: Estimated completion:

£10.0m H1 2024

Buildings on

completion:

Total area on

completion:

11 492,400 sq ft

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

STRATEGY IN ACTION

We are delighted to have

completed the lease on Building1

which is intended to be a

stepping stone whilst we await

the delivery of our larger space

on the park. Quantum computing

will revolutionise life sciences,

from enabling design of better

catalysts through to moving drug

discovery from experimentation

in test tubes to real-time

simulation on computers. Oxford

Ionics will be actively targeting

life science sector customers as a

future revenue source.

Chris Ballance

Oxford Ionics

What is it?

OTP is a 20-acre science and technology park in a key location

in the Golden Triangle. It is less than two miles from Oxford

University’s Begbroke Science Park campus, seven miles north

of Oxford city centre and adjacent to Oxford Airport.

On acquisition in May 2022, OTP comprised two completed

buildings and a fully let hotel, and a development site for

eight further buildings, to give a total of more than 490,000

sq ft of hybrid life science space and amenities, 104,300 sq

ft (21.2%) of which was completed. OTP will off er a unique

combination of space, with unit sizes ranging from 6,000 to

50,000 sq ft and the fl exibility for laboratory, production and

offi ce uses. The buildings diff er in purpose, with Building 1 for

example being a headquarters-style offi ce and Buildings 4a

and 4b comprising an 11-unit Innovation Quarter, catering to

life science SMEs.

Existing occupiers include The Native Antigen Group, which

has signed a ten-year lease at a headline rent of £15.0 per sq

ft. Itis part of LGC Group, a global leader in life sciences. The

hotel is let to Premier Inn until 2045.

Headline rents for remaining and future space are targeted at

£20.0 - £25.0 per sq ft for hybrid lettings and £28.5 per sqft

f o r o ffi c e s .

What have we done since purchase?

Since acquisition, the development has progressed well.

Buildings 4a, 4b, and 5 are due to complete by the end of

H12023 and buildings 6 and 7 are expected to complete

during H2 2023.

A detailed planning application for Buildings 8 to 11 is

readytobe submitted and we are expecting to start on-site

during 2023.

We are seeing strong occupier interest in both the standing

units and those still in development. In the second half, we

agreed a pre-let with Williams Advanced Engineering (“WAE”)

on 56,500 sq ft in Building 5, at an initial rent of £18.8 per

sq ft, rising to £20.3 per sq ft after 18 months. WAE off ers

leading-edge technology to companies focusing on green

energy and medical engineering.

Since the end of the year, we have completed two leases in

Building 1. Arcturis Data on 5,509 sq ft at a rent of £28.7per

sq ft for ten years with a break and rent review after fi ve years

and Oxford Ionics on 4,887 sq ft at a rent of £28.5 per sq ft for

two years, with a break clause at the end of the fi rst year. This

gives Oxford Ionics initial accommodation, while it prepares

to occupy larger long-term space on the park. These lettings

increased occupancy of the completed space at OTP by 13.8%

to 86.3%.

What is the future?

We will continue to progress our development programme at

OTP, with the aim of completing the remaining 388,100 sq ft

of space by mid-2024. At the same time, we will secure further

lettings, with discussions ongoing with a range of potential

occupiers. In addition, we are in talks with potential operators

to provide high-class amenities on-site, including a café,

break-out space, meeting rooms and a gym.

Life Science REIT plc Annual Report and Financial Statements 2022

75 64b4a

119

oxfordtechnologypark.com

Current development

31 2

Under construction:

Phase 3:

Development progress as at 24 March 2023

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

Bespoke buildings

which suit all

conﬁ gurations

STRATEGIC REPORT

STRATEGY IN ACTION CONTINUED

Oxford Technology Park

Completed:

Life Science REIT plc Annual Report and Financial Statements 2022

Sustainability features

• Amenity space will help stimulate collaboration and

knowledge exchange between occupiers

• New units being constructed to a standard that meets

MEES EPC rating of A or B, and a target BREEAM

certifi cation of Excellent

• Features include:

– LED fi ttings with dimmable controls and presence

detection

– Environmentally friendly heating and comfort cooling,

with building sealed in excess of Building Regulations

– Energy monitoring systems and secondary metering

– Electrical installations, with a capped gas supply

– Recycling facilities to reduce waste to landfi ll

– Sustainable Drainage System (“SuDS”) with

attenuation

• We intend to install photovoltaic panels on all new buildings,

providing renewable energy sources, reducing energy

consumption and increasing attractiveness of buildings with

the potential to increase rents and valuations

• Supporting sustainable transport via cycle shelters and

electric vehicle charging points with future-proofi ng

ductwork for additional provision

Building 3

EV charger

Building 1

STRATEGIC REPORT

Key statistics at 31 December 2022

CBRE valuation: Area:

£83.9m 53,900 sq ft

Contracted rent: Occupancy:

£3.5m 66.7%

WAULT to expiry: NIY/NRY:

6.5 years 3.9%/4.6%

Life Science REIT plc Annual Report and Financial Statements 2022

We are pleased to lease further

space at Rolling Stock Yard and

continue our relationship with a

cluster which has a number of

distinct advantages for early-stage

life sciences companies. We place

great importance in ensuring that our

portfolio companies have access to

modern facilities in attractive areas,

and we have seen previously with

Gyroscope Therapeutics that Rolling

Stock Yard has the key ingredients

that we believe are essential for

success in early-stage biotech.

Michael Kyriakides

Investment Partner at Syncona

Sustainability features

• BREEAM Excellent and EPC A ratings

• All existing furniture has been repurposed or reused

and new furniture is sustainably sourced, long-lasting,

easily repairable and recyclable

• Building has LED lighting throughout

• 110 cycle spaces

• Reception area will offer ethically sourced coffee

Realising

reversionary rent

potential

STRATEGY IN ACTION CONTINUED

Rolling Stock Yard

Life Science REIT plc Annual Report and Financial Statements 2022

What is it?

Rolling Stock Yard is a nine-storey building in the vibrant

development area north of King’s Cross and St Pancras

stations, in the heart of London’s Knowledge Quarter. It off ers

53,900 sq ft of high-quality offi ce and laboratory space. The

building has been constructed to high sustainability standards

and was completed in March 2020.

On acquisition, Rolling Stock Yard was 66.7% occupied and

had already attracted life science companies as occupiers,

including Gyroscope Therapeutics and Pacifi c Biosciences.

The fi rst and second fl oors were both vacant, giving us the

scope to add value through asset management.

What have we done since purchase?

We saw an opportunity to refi t the fi rst and second fl oors

to create a combination of offi ce space and ‘plug and play’

laboratories. The refi t began in the second half of 2022 and

completed during Q1 2023.

The lab space is highly fl exible, with mobile benching and the

ability to sub-divide into smaller rooms, and has features such

as a changing lobby for cleanliness. The offi ce space includes

meeting rooms, break-out areas and other features allowing

occupiers to set up rapidly.

The capital cost for the lab refi t was around £2.0 million or

£158.5per sq ft.

Since the year end, we have announced a lease with a life

science company backed by Syncona on the second fl oor at

£110.0 per sq ft for 7,322 sq ft of space, up from £65.0 per

sq ft before the refi t. The lease is for fi ve years with a tenant

break at year three and increases occupancy at the building to

86.4%.

The reception area provides important communal space but

we identifi ed that it needed redesigning to make it a truly

attractive place for occupiers to collaborate with each other.

Thenew layout includes a ‘Co-Lab’ space with lounge seating

and a high-end coff ee machine, while the mezzanine fl oor

off ers a seating area with booths for meetings and work.

What is the future?

We are seeing occupier interest in the vacant fi rst fl oor and

will continue to market it to life science companies.

The redesigned reception area is an ideal space for events and

exhibitions, and we hope these will become a regular feature

at Rolling Stock Yard.

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

INVESTMENT ADVISER’S REPORT

Implementing the

investmentstrategy

We continued to implement the Group’s investment strategy

during the year, with the Group acquiring two further assets

for theportfolio.

7-11 Herbrand Street

On 6 May 2022, the Group acquired Herbrand Properties

Limited, which owned the freehold to Herbrand Street, for

£85.0 million at a net initial yield of 4.4%. The entire building

is let until October 2026 to Thought Machine, one of the UK’s

leading fintech companies, at a contracted rent of £4.0 million

per annum.

The asset is in London’s Knowledge Quarter, which includes

many innovative companies and major academic institutions

and healthcare organisations such as University College

London, University College Hospital, the Francis Crick Institute

and the Oriel project, a future world-leading eye hospital,

research and education centre due to open in 2027.

The iconic Art Deco building currently comprises Grade A

office space, with a net internal area of around 68,600 sq ft

on four floors with a partial basement. It represents an ideal

opportunity for development as a major life science asset,

with our feasibility study confirming it has great potential for

lab conversion, given its substantial floor-to-ceiling heights,

structural slab and large, column-free floor plates.

Oxford Technology Park (“OTP”)

On 13 May 2022, the Group acquired OTP through the

purchase of Oxford Technology Park Holdings Limited and

its subsidiaries, for £120.3 million (before rental guarantees

and other small adjustments) at a net initial yield on

purchase of4.8%.

The acquisition included OTP’s debt of £33.6 million and the

Group will provide up to £67.3 million of forward funding

to complete the park’s build-out, which is continuing to be

managed by the developer until practical completion.

More information on OTP can be found in the case study on

pages 24 to 27.

WE MADE GOOD PROGRESS

WITH ALL ASPECTS OF

THE GROUP’S STRATEGY,

WITH OUR DEVELOPMENT

AND ASSET MANAGEMENT

ACTIVITIES ADDING TO

INCOME AND SUPPORTING

CAPITAL VALUES.

SIMON FARNSWORTH

Managing Director

Life Science REIT plc Annual Report and Financial Statements 2022

The portfolio

The Group’s portfolio at 31 December 2022 was as follows:

Valuation

WAULT

Contracted rent

£ per Area

Occupancy

to break to expiry NIY NRY

Asset £m sq ft sq ft % Years Years £m p.a. £ PSF % %

Cambourne Business Park 87.2 376 231,700

80.1 2.1 5.5 4.1 22.1 4.4 5.8

Rolling Stock Yard 83.9 1,558 53,900

66.7

3.5 6.5 3.5 65.5 3.9 4.6

7-11 Herbrand Street 79.8 1,163 68,600

100.0 — 3.8 4.0 58.5 4.7 5.0

OTP – Investments 43.8 420 104,300 72.5 14.1 15.3 1.4 17.9 3.0 5.1

Lumen House 7.8 446 17,600 100.0 — 0.4 0.4 24.5 5.1 7.0

The Merrifield Centre 7.5 595 12,600 100.0 4.0 9.0 0.3 23.1 3.6 5.5

Investment assets 310.0 634 488,700 82.0 4.5 6.2 13.8 33.1 4.2 5.2

OTP – Developments 77.6 200 388,100

— — — — — — 4.8

Development assets 77.6 200 388,100 — — — — — — 4.8

Total 387.6 442 876,800 82.0 4.5 6.2 13.8 33.1 4.2 4.8

1. Restated from 31 December 2021 to exclude rental guarantees not held in escrow.

2. Restated from 31 December 2021 to exclude the reception area.

3. Restated from 31 December 2021 to be calculated as a percentage of ERV.

4. Full build-out area.

5. Restated in-line with measured survey.

6. Development property only, excludes development land.

The contracted rent roll for the investment assets at the year end was £13.8 million (31 December 2021: £9.3 million), up 48.4%.

Theportfolio has strong reversionary potential, with the estimated rental value of the investment assets at 31 December 2022

being £17.2 million (31 December 2021: £10.1 million). This is some 24.6% above the contracted rent of the investment assets,

with the let area having a reversionary percentage of 8.7%. Our asset management programme aims to unlock this potential

income growth over time. Overall occupancy at the year end has improved by 1.1% to 82.0% (31 December 2021: 80.9%) driven

by 2022 acquisitions and the lease up of OTP.

Development assets consist of OTP buildings which are currently being constructed and the remaining development land.

Asthe buildings practically complete they will be transferred into investment properties above. The 388,100 sq ft area shown

inthe table above is the expected area of the development assets once practically complete.

All of the assets are located within the Golden Triangle. The portfolio primarily comprises office and hybrid (office and laboratory)

space. The charts on the next page show the split of assets by location and type, based on their valuation, as well as by life science

occupier at 31December2022.

Offices Dry labsWet labs

Manufacturing

and prototyping

facilities

Types of real estate in the portfolio

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

INVESTMENT ADVISER’S REPORT CONTINUED

The table below shows the Group’s top ten occupiers at the year end. We expect companies that are not in the life science

sector to exit the list in the coming years, as leases expire and we reposition the assets for life science occupiers.

Contracted

rent p.a.

No. Name Asset

(£m) % of total

1 Thought Machine

HS 4.0 29%

2 Gyroscope RSY 1.5 11%

3 Carl Zeiss CBP 1.0 7%

4 Xero (UK) RSY 0.7 5%

5 Regus CBP 0.7 5%

6 MTK Wireless CBP 0.7 5%

7 Premier Inn OTP 0.7 5%

8 Native Antigen OTP 0.5 4%

9 Pacific Biosciences RSY 0.5 4%

10 Janet LH 0.4 3%

Subtotal – top ten 10.7 78%

Remaining

3.1 22%

Total 13.8 100%

1. HS – Herbrand Street; RSY – Rolling Stock Yard; CBP – Cambourne Business Park; OTP – Oxford Technology Park; LH – Lumen House.

2. Includes rental guarantees at Rolling Stock Yard provided by the vendor.

3. The Group’s investment policy limits any one tenant to no more than 30% of the higher of gross contracted rents or the valuer’s ERV of the Group’s portfolio,

including developments under forward-funding agreements. As we build out and lease up OTP, the rent roll will continue to diversify and reduce the proportion of

total rents coming from individual tenants.

London 42.3%

Oxford 33.3%

Cambridge 24.4%

Hybrid & labs 77.4%

Office 22.6%

Labs (wet & dry) 36.8%

Office 29.5%

Write-up 26.6%

M&P

7.1%

Life science occupier

area by floor type

Asset type by valuation

Asset location by valuation

1. Includes full OTP scheme.

2. 25% of portfolio area (incl. vacant space) currently let out to life science occupiers.

3. Manufacturing and prototyping.

The portfolio continued

Life Science REIT plc Annual Report and Financial Statements 2022

Implementing the asset

management strategy

The portfolio presents a range of different opportunities to

grow capital values and income, while positioning the assets

to meet occupier needs and enhancing their ESG credentials.

We made good progress with our asset management plans

during the year, in particular with developing new space at

OTP and repositioning existing space at other assets to appeal

to life science occupiers. Aspart of our new sustainability

strategy, we have developed long-term goals for the Group’s

assets, see pages 44 and 45 for more details.

Cambourne Business Park

The Group acquired Cambourne Business Park with the goal

of repositioning it as the premier science park to the west of

Cambridge. We progressed our rebranding project during 2022

and intend to relaunch the park under its new brand in H1 2023.

We have made a good start to attracting new occupiers, and

since the year end have 5,000 sq ft under offer to an occupier

who will fit out the space as a dry lab.

In addition, we are working up a scheme to convert around

20,000 sq ft to ‘plug and play’ laboratory space. This has the

potential to increase rents to £40.0-£50.0 per sq ft, compared

with the current £23.0 per sq ft, while remaining highly

competitive against rents for similar space at other parks

around Cambridge.

The EPC rating at Cambourne Business Park was reassessed

during the first half of the year, resulting in an improvement

from a D to a C rating, in line with our current target for the

Group’s assets. Our asset management programme will further

enhance the site’s environmental credentials and EPC rating.

Rolling Stock Yard

Information on our asset management activities at Rolling

Stock Yard can be found in the case study on pages 28 and 29.

7-11 Herbrand Street

The lease at Herbrand Street runs until Q4 2026. We continue

to engage with the occupier and our base case is that they will

stay until expiry. We are working up our plans for repositioning

the building for life science use, once the Group can secure

vacant possession.

Oxford Technology Park

Information on our asset management activities at OTP can

befound in the case study on pages 24 to 27.

Lumen House

During the year, we agreed a rent review on Lumen House,

which increased the contracted rent by £0.1 million per

annum from February 2022, in excess of our business plan

atacquisition.

The current lease at Lumen House expires in the second

quarter of 2023. We are working on plans to put forward

a comprehensive redevelopment of the asset, to make it

a highlyattractive proposition for life science occupiers.

Whilewe progress these plans, including carrying out a

feasibility study and securing planning permission, we are

in discussions with the current occupier about a short-term

extension to the lease.

The Merrifield Centre

The occupier at the Merrifield Centre has completed a

comprehensive refurbishment of the building, including new

laboratories, offices and meeting rooms. The Group has

contributed to the installation of electric vehicle charging

points and the occupier has upgraded the lighting to LEDs.

The refurbishment demonstrates the occupier’s commitment

to the asset and we are expecting a significant improvement

to the current EPC rating of D. A new EPC rating will be

obtained in H1 2023.

Rolling Stock Yard, London Knowledge Quarter

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

Financial review

Comparative figures

The comparative period for this set of results is from 1 August

to 31 December 2021. The Group only began to construct its

portfolio following the IPO on 19 November 2021, which meant

it was in operation for less than six weeks in that period. As

a result, it is not meaningful to compare the Group’s financial

performance in 2022 against the comparative period and the

discussion below focuses on 2022 on a standalone basis.

Financial performance

Total gross property income in the year was £13.1 million

(2021:£0.5 million). Total revenue, which includes service

charge income, was £15.7 million (31December 2021:

£0.5million).

Property operating expenses including the gross up of

service charge expenditure were £4.8 million (2021: £nil),

resulting in net rental income of £10.9 million. Property

operating expenses are primarily void costs on vacant units,

and provisions for doubtful debts, c.50% of which related to

historic arrears that were inherited on acquisition.

Administration costs comprise the Investment Adviser’s fee,

other professional fees, including audit and valuation, the

Directors’ fees, and a range of other costs such as insurance.

Administration costs before exceptional one-off costs totalled

£5.6million (2021: £0.8 million).

The Company incurred one-off costs in the year of

£1.0million, in relation to its move from trading on AIM to the

Main Market of the London Stock Exchange. There were no

one-off costs in the period to 31 December 2021.

The total cost ratio for 2022 was 58.9% (31 December 2021:

163.5%). This ratio is expected to improve with net rental

income continuing to grow, as the buildings at OTP practically

complete and lease up, and we repurpose our portfolio to

laboratory space, realising the reversionary rent potential.

Operating profit before the change in fair value of investment

properties was £4.4 million (2021: £0.3 million loss).

The unrealised loss on revaluation of investment properties

was £31.3 million (2021: £8.0 million gain), see the valuation

and net asset value section in this report for a full explanation

of the key drivers.

The net finance charge for the year was £0.5 million (2021:

£nil), which was made up of finance costs of £5.6 million,

finance income of £3.3 million, and £1.8 million of interest

capitalised, relating to the development of OTP.

As a REIT, the Group is not subject to corporation tax on its

property rental business and is estimated to incur a small

level of tax on its residual business of £0.1million. TheIFRS

loss after tax for the year was therefore £27.6million

(31December2021: IFRS profit after tax of £7.7million).

Thisresulted in an IFRS loss per share of 7.9pence

(31December2021: 2.2 pence earnings per share) and

EPRA EPS of 0.4pence (31December 2021: 0.1 pence loss

per share). Adjusted EPS, which is EPRA EPS excluding

the impact of exceptional one-off costs, was 0.7 pence

(31December2021: 0.1pence loss per share).

Dividends

The Company paid an interim ordinary dividend of 1.0 pence

per share on 31 October 2022, in respect of the period from

Admission to 30 June 2022.

At IPO, the Company set a target dividend yield of 4.0%,

based on the issue price of 100 pence per share. After paying

an interim dividend of 1.0 pence per share on 31 October

2022, the Board has declared a second interim dividend

of 3.0pence per share, to give a total for the period from

Admission to 31 December 2022 of 4.0 pence, thereby

meeting the dividend target. The second interim dividend

will be paid as an ordinary dividend on 15 May 2023, with an

ex-dividend date of 13 April 2023.

The cash cost of the second interim dividend for the period

is £10.5 million. At 31 December 2022, the Group had

distributable reserves of £337.1 million, the majority being in

the Company following the cancellation of the share premium

account in the year.

Valuation and net asset value

The portfolio was independently valued by CBRE as at

31December 2022, in accordance with the internationally

accepted RICS Valuation – Professional Standards

(the”RedBook”).

The portfolio valuation was £387.6 million (31December2021:

£192.2 million), a £195.4 million increase since 2021.

The increase in the year was driven by acquisitions of

£213.4million and ongoing development and repurposing

capital expenditure of £10.2 million. This was partially offset

by revaluation losses of £31.3 million (31 December 2021:

£8.0million gain), resulting in a 7.5% reduction on a book

value basis. £27.0 million of this loss can be attributed to

assets acquired in 2022 whilst the remaining £4.3 million is

driven by the remaining portfolio, a 1.8% like-for-like reduction.

The key drivers of the £27.0 million revaluation loss were

acquisition costs of £16.2 million and full costs being reflected

within the valuations in addition to some outward yield shift in

H2 2022.

INVESTMENT ADVISER’S REPORT CONTINUED

Life Science REIT plc Annual Report and Financial Statements 2022

The like-for-like portfolio £4.3 million loss can be split as

follows; £11.6 million is attributable to a year-on-year 29basis

points outward yield shift driven by declining market

conditions in H2 2022, off set by £7.3 million primarily due

to 4.7% like-for-like ERV growth as we continue to develop

ourassets.

The let portfolio has a reversionary percentage of 8.7%

which will help the portfolio to withstand any further market

outward yield shifts as we continue to deliver on our asset

management strategy.

As a result of the revaluation loss, the IFRS NAV was

91.3pence per share, down from 100.2 pence per share

at 31 December2021. TheEPRA NTA at the year end was

90.0pence per share (31December 2021: 100.2 pence

pershare).

The chart above reconciles the movement in the NTA per

share over the year (“NTAPS”). The portfolio revaluation loss

was the largest single contributor to the movement.

Debt fi nancing

In March 2022, the Group agreed a £150.0 million debt facility

with HSBC, comprising a £75.0 million three-year term loan

and a £75.0 million revolving credit facility (“RCF”). The

interest rate on the facility is 225 basis points over SONIA.

The facility has market normal covenants on LTV and interest

cover. It gives the Group additional fi nancial resources to

deliver its strategy and the fl exibility to add new properties to

the security pool, to reach the Group’s optimal gearing target

as it acquires newassets.

At 31 December 2022, the Group had drawn £75.0 million

against the term loan and £nil against the RCF. InAugust

2022, the Group secured additional protection against

future interest rate rises, by capping the SONIA rate on

the £75.0million term loan at 2.0% until 31 March 2025.

Thepremium for the cap was£2.3 million.

In addition to the HSBC facility, the Group acquired a debt

facility as part of the OTP transaction, which had £35.8 million

drawn against it at 31 December 2022 and is shown in current

liabilities at the year end, as it was due to mature in June 2023.

In February 2023 the OTP debt facility was refi nanced

by drawing down £26.3 million from the Group’s existing

£150.0million HSBC facility as well as utilising existing

cashresources.

The facility acquired as part of the OTP transaction also has

protection in place, capping SONIA at 0.75% for £29.3 million

of the drawn debt. As a result, 94.1% of the Group’s drawn

debt was hedged at the year end and the average cost of

debt was 4.0%.

At the year end, the Group had cash and cash equivalents

of £45.6 million (31 December 2021: £166.0 million), with the

reduction primarily refl ecting the acquisitions made during the

year, as well as our work to develop and reposition the assets

in the portfolio.

The LTV ratio as 31 December 2022 was 16.8%. On a gross

debt basis this was 28.6%; we continue to believe that a range

of 30%-40% will be optimal in the longerterm.

80.0

85.0

90.0

95.0

100.0

105.0

Dec 21

NTAPS

Adjusted

earnings

Move to Main

Market costs

SONIA cap

premium

Dividends

LFL

revaluation

decline

2022

acquisitions

revaluation

decline

Dec 22

NTAPS

100.2

0.7

90.0

(0.3)

(0.6 )

(1.0)

(1.3)

(7.7)

Pence per share

Movement in NTAPS

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

INVESTMENT ADVISER’S REPORT CONTINUED

Cancellation of the share premium account

On 12 April 2022, the share premium account of £339.3million

was cancelled in accordance with the provisions of the

Companies Act 2006 and transferred to a capital reduction

reserve, to create distributable reserves.

Resourcing for growth

We have continued to expand our team to ensure we have

the skills and capacity to secure the opportunities we see for

the Group. During the year, we recruited a Director of Asset

Management, a Senior Asset Manager, a General Counsel,

strengthened our finance team and employed a research

analyst with a background in life sciences, which will enhance

our knowledge of the market, help us to identify growth

opportunities and inform our due diligence on potential

occupiers.

We are committed to employing a gender diverse team,

having rolled out training on this subject in 2022. Our gender

ratio as at 31 December 2022 was 46% female and 54% male

(including consulting staff).

Post period end events

Since the year end, we have:

• completed letting to Oxford Ionics on 4,887 sq ft of space

at OTP, at a rent of £28.5 per sq ft;

• completed letting with a life science company backed by

Syncona on 7,322 sq ft at Rolling Stock Yard, at a rent of

£110.0 per sq ft;

• completed letting to Arcturis Data at OTP on 5,509 sq ft,

ata rent of £28.7 per sq ft;

• the above lettings progress increases occupancy of our

investmentproperties to 88.6%, a 6.6% uplift on the

yearend position;

• the Board has declared a second interim dividend

of 3.0pence per share in respect of the year ended

31December 2022, in addition to the 1.0pence interim

ordinary dividend paid on 31 October 2022, and has

therefore met the target dividend yield of 4.0% set at IPO.

This will be paid as an ordinary dividend on 15May2023,

with an ex-dividend date of 13 April 2023;

• Sustainability Committee formed with Sally Ann Forsyth

asChair; and

• in February 2023 the OTP debt facility was refinanced

by drawing down £26.3 million from the Group’s existing

£150.0 million HSBC facility as well as utilising existing

cashresources.

Life Science REIT plc Annual Report and Financial Statements 2022

Compliance with the investment policy

The Group’s investment policy is set out in full on pages 151 to 153. The key elements of the policy are summarised below.

Wecomplied with the policy throughout the year:

POLICY ELEMENT COMPLIANCE IN THE PERIOD

• Invest in a diversified portfolio of properties across the UK which are typically

leased or intended to be leased to tenants operating in, or providing a benefit to,

the life science sector (“life science properties”).

• Yes. All the properties are in the Golden

Triangle and are either leased or intended to

be leased to life science organisations.

• Examples of the assets the Group can acquire: wet and dry laboratories, offices,

incubators and co-working space, manufacturing and testing facilities, and data

centres.

• Yes. The assets acquired were a mix of

laboratory and office space.

• The Group can acquire individual buildings, a group of buildings across a single

science park or the entirety of a science park. This may include purchasing or

developing buildings that are leased or intended to be leased to tenants providing

ancillary services to employees of companies operating in, or providing a benefit to,

the life science sector.

• Yes. We have acquired both individual assets

and a science park.

• The Group will typically invest in income-producing assets, consistent with

providing capital growth and growing income.

• Yes. All the assets we acquired were income

producing (other than the development at

OTP) and offer potential for capital growth

and rising income through asset management.

• Any asset management or development opportunities will minimise any

development risk, typically through forward funding or similar arrangements.

• Yes. We are forward funding the development

programme at OTP and have a fixed-price

contract for each building with the developer.

• The maximum exposure to developments or land without a forward-funding

arrangement is 15% of gross asset value (“GAV”).

• Yes. There are no developments or land

without a forward-funding arrangement.

• No individual building will represent more than 35% of GAV, reducing to 25% of GAV

by 31 December 2023.

• Yes, no building exceeds these thresholds.

• The Group targets a portfolio with no one tenant accounting for more than 20%.

(but subject to a maximum of 30%.) of the higher of either (i) gross contracted

rents or (ii) the valuer’s ERV of the Group’s portfolio including developments under

forward-funding agreements, as calculated at the time of investing or leasing.

• One tenant exceeds 20% but remains

below the 30% threshold. This percentage

is expected to fall as OTP continues to be

developed and leased up.

• The aggregate maximum exposure to assets under development, including

forward fundings, will not exceed 50% of GAV, reducing to 30% of GAV by

31December2023.

• Yes, 20% of assets are currently in

development.

• No more than 10% of GAV will be invested in properties that are not life

scienceproperties.

• Yes, more than 90% of assets are currently

classified as life science properties.

• The Group will not invest more than 10% of GAV in other alternative investment

funds or closed-ended investment companies.

• Yes. The Company has no investments of

thistype.

Alternative Investment Fund Manager (“AIFM”)

G10 Capital Limited (“G10”) is the Company’s AIFM, for the purposes of the UK AIFM Regime, with Ironstone providing advisory

services to both G10 and the Company.

Ironstone Asset Management Limited

Investment Adviser

24 March 2023

Life Science REIT plc

Annual Report and Financial Statements 2022Life Science REIT plc Annual Report and Financial Statements 2022

STRATEGIC REPORT

SUSTAINABILITY

Ensuring we

growand manage

our portfolio

sustainably

Environmental, social and governance matters

Pages 38 to 57

Introduction from our Sustainability Lead and Chair of

Sustainability Committee 40

Sustainability highlights 41

Sustainability strategy 42

TCFD reporting 46

EPRA sBPR reporting 52

Oxford Technology Park, Oxford

Life Science REIT plc

Annual Report and Financial Statements 2022Life Science REIT plc Annual Report and Financial Statements 2022

Green and healthy certifi ed buildings

Environmental performance certifi cates

(“EPC”) ratings of A or B for all new buildings

We are committed to:

Robust benchmark data to enable us to build

a net zero carbon pathway

Biodiversity net gain

Zero waste to landfi ll

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

Introduction from our Sustainability Lead

and Chair of Sustainability Committee

OUR OCCUPIERS' FOCUS IS

TO HELP MAKE THE LIVES

OF MILLIONS BETTER; OUR

MISSION IS TO REDUCE THE

ENVIRONMENTAL IMPACT OF

THE REAL ESTATE WHILST

GIVING OCCUPIERS THE BEST

ENVIRONMENT IN WHICH

TOTHRIVE.

DR SALLY ANN FORSYTH OBE

Sustainability Lead and Chair of Sustainability Committee

Specifically, we are committed to achieving:

• green and healthy certified buildings;

• environmental performance certificates (“EPC”) ratings

ofAor B for all new buildings;

• robust benchmark data to enable us to build a net zero

carbon pathway;

• biodiversity net gain; and

• zero waste to landfill.

You can find more information about our strategy,

howwe developed it and the targets we have set

onthefollowingpages.

We have also established a Sustainability Committee that

I chair, which includes members of the Board, the Head of

ESG and representatives of the Investment Adviser’s asset

management and finance teams. The Committee’s main remit

is to oversee and review the formulation, implementation

and effectiveness of the sustainability strategy, as well as to

manage climate-related risks and opportunities. We held our

first meeting in February 2023.

Having done much preparation work during 2022, we have

now entered the implementation phase of our strategy, as we

work towards our targets with the support of our third-party

experts. In doing so, we will focus on bringing all our

stakeholders along with us on the journey.

The Group is committed to being a class-leading performer

on ESG matters. As regulations and stakeholder expectations

continue to rapidly advance, we aim to be an early adopter

of new best practices and to continue to engage with our

occupiers and other stakeholders, to understand and support

their evolving sustainability objectives.

In May 2022 I became the Board’s Sustainability Lead, with

overall responsibility for sustainability. In this role, I regularly

meet the Investment Adviser’s Head of ESG and have overseen

and supported the development of the Company’s sustainability

strategy during 2022. To define our approach, we have drawn

on our engagement with occupiers and the Investment Adviser’s

team, and a review of peer group practices, as well as taking

account of Article 8 of the Sustainable Finance Disclosure

Regulation (aspirational for the Group, currently classified as

Article 6) and our expectations of future legislation.

The strategy we have developed is multi-faceted, setting

out our sustainability objectives at a corporate level, as

well as more granular initiatives and targets for our existing

assets, and the minimum standards we need to meet for our

developments and future acquisitions.

SUSTAINABILITY CONTINUED

Life Science REIT plc Annual Report and Financial Statements 2022

Sustainability highlights

SCOPES 1 AND 2 GHG EMISSIONS DISCLOSURE

247.1 tonnes CO

WASTE DIVERTED FROM LANDFILL

100%

A-C EPC RATED PROPERTIES IN THE PORTFOLIO

83%

Since our inception, we have taken our environmental

responsibilities seriously. Over the last year we have

implemented our core strategy, deploying our capital across a

number of assets. As we progress into the next phase we will

widen our sustainability ambition, enhancing our assets across

a breadth of environmental and social issues.

We recognise the impact of climate change on both society

and the built environment, indeed over the year we have seen

theimpacts first hand with the summer heatwave impacting

across the UK.

For the Group this heightens the importance of action, so our

priority this year has been to understand the environmental,

socialand governance issues that are specific to our business,

fundamental to our stakeholders and deliver long-term value.

During 2022 we reassessed the EPCs at Cambourne Business

Park, which brings our total A-C ratings to a healthy 83%.

Withthe stringent MEES regulations proposed over the

coming years, we are well placed to meet the targets of

Crated buildings by 2027 and B rated buildings by 2030,

seizing the opportunity of green premiums attached to

moreenergy efficient buildings.

 ESG

STAKEHOLDER

ENGAGEMENT

See more on page 45

 ASSET LEVEL

CLIMATE IMPACT

ASSESSMENT

See more on page 48

 SUSTAINABILITY

STRATEGY

DEVELOPED

See more on page 42

31%

Rated

A–C

83%

Rated

A–C

2021 2022

17%

51%

25%

17%

14%

69%

A B C D

EPC ratings by area

STRATEGIC REPORT

Life Science REIT plc

Annual Report and Financial Statements 2022

SUSTAINABILITY CONTINUED

Sustainability roadmap

Current achievements

2021

The London Plan

• On-site energy reduction of

35% beyond current Building

Regulation Part L

• Whole-life carbon assessments

required

Q2 2022

SFDR analysis

ESG stakeholder mapping and

engagement

Q3 2022

Integrated ESG risks into corporate

risk register

Key:

The Group’s future

The Group’s achievements to date

UK Government

Sustainability strategy

development

Life science facilities are fundamental to enabling life scientists

to solve global environmental problems. This includes

issues such as disease; feeding the burgeoning population;

combatting pollution; and facilitating wellness of ageing

populations.

We recognise that collaboration and engagement is central

to the life science sector and are committed to creating

innovative hubs that enable life science businesses to

engage with one another and to build environments that

areconducive to solving global problems.

Our vision is to create environmental, social and economic

value for our shareholders and wider stakeholders by

integrating sustainability into the way we grow and manage

our portfolio. The Group is committed to achieving exemplary

environmental and social performance across all our

operations, and to underpinning our commitment through

arobust governance structure.

Q4 2022

Sustainability strategy developed

Climate impact assessment

and TCFD reporting

Annual Report including ESG

integration

Life Science REIT plc Annual Report and Financial Statements 2022

Future aims

2050

Net zero UK

2024

Biodiversity net gain across entire

portfolio

Date to be determined

Net zero carbon for direct

(Scope 1 and 2) carbon emissions

Net zero carbon for indirect

(Scope3) carbon emissions

Q4 2023

Zero waste to landfi ll

Supporting local charities

Biodiversity strategy on all projects

Net zero pathway for Scope 1 and

2 emissions

2025

The Future Buildings Standard.

Nonew gas boilers

Embodied carbon – Part Z

(proposed)

In 2022, we partnered with a specialist consultant

Square GainLimited (“Square Gain”), to help develop our

sustainability strategy. Our approach included detailed

stakeholder mapping and engagement, in addition to a review

of current and future regulation, and a peer review. This

informed a materiality assessment which was developed into

our sustainability strategy in alignment with the Sustainable

Finance Disclosure Regulations (“SFDR”).

The Group’s sustainability strategy incorporates corporate

commitments in addition to specifi c initiatives across our

existing portfolio and minimum standards for new acquisitions

and new ground-up construction. Specifi c and measurable

targets will be set this coming year so progress towards our

long-term goals can be reported.

Q1 2023

EPC A

BREEAM

Fitwel

Asset-by-asset plan

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

SUSTAINABILITY CONTINUED

Long-term goals

• Net zero carbon pathway

• Data driven carbon reduction targets

• BREEAM certifications and ‘best-in-class’ EPC ratings

across our portfolio

• Biodiversity strategy on all projects with external space

and achieve biodiversity net gain

• Encourage circular economy

• Zero non-hazardous waste to landfill

• Providing healthy buildings, using the Fitwel standard as

the basis for certified buildings

• Encouraging active travel and providing cyclist facilities

• Partnering with our occupiers on the journey to

achievingnet zero carbon and a healthy workforce

• Providing space in our buildings to enable occupiers to

collaborate

• Supporting and engaging with charitable organisations

inthe areas in which wework

• Sustainable governance that meets stakeholders

expectations

• Oversight of ESG risks and opportunities

• Identifying climate-related risks to influence strategy

andinvestments

• Communication via transparent disclosure and

participation in investor benchmarks and indices

Environment

Reducing our impact on the environment,

reducing carbon emissions and waste, and

enhancing biodiversity.

Social value

Providing buildings that enhance wellbeing,

encourage collaboration and enable a healthy

workforce for our occupiers.

Governance

Setting the highest standards of corporate

governance.

Sustainability strategy

Life Science REIT plc Annual Report and Financial Statements 2022Life Science REIT plc Annual Report and Financial Statements 2022

Key metrics

• Carbon emissions (CO

• Energy intensity (kWh)

• Asset carbon intensity

• Water and waste usage

• % of renewable energy procured

• Waste to landfill

• Number of biodiversity plans in place

• Number of building certification

• Number of Fitwel certifications

• Employee satisfaction survey results

• Active transport plans in place

• Number of occupier engagements/collaboration on

ESGissues

• Number of suppliers engaged on environmental and

socialissues

• Number of Sustainability Committee meetings held

• Use of refurbishment, development and acquisition

standards

• Board meetings where ESG is specifically discussed

• Progress of mitigation measures for climate-relatedrisks

• Benchmarking and indices results e.g. GRESB, EPRA,

MSCI

Achievements to date

• First publication of environmental performance data

• Energy disclosures (see ESG disclosures on pages 52 to 57):

• 247.1 tonnes CO

e – Scopes 1 and 2 GHG emissions

• 155.0 MWh of electricity generated from the solar

PV panels installed at Cambourne Business Park and

consumed on-site

• 100% waste was diverted from landfill

• Rolling Stock Yard and Oxford Technology Park Unit 1 –

BREEAM ‘Excellent’

• EPC ratings have improved significantly, A-C rated

properties are 83% of the portfolio compared to 31%

inDecember 2021

• ESG stakeholder engagement with our staff, occupiers

and Board to identify areas of mutual importance

• The Investment Adviser has sponsored the Cambourne

10km runandcommitted to a donation of £15,000 to a

local charity near OTP

• Cambourne Business Park feasibility study included a

local needs analysis

• Robust, fully functioning governance which underpins

our business and facilitates integrity and transparency

• Formed Sustainability Committee post year end, chaired

by Sally Ann Forsyth. Further details are set out on

page85

• Integration of climate-related risks into the risk

framework

• A climate impact assessment was undertaken by our

specialist consultant, the results of which are set out in

the TCFD sectionbelow

• First TCFD reporting

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

SUSTAINABILITY CONTINUED

TCFD reporting

The Group discloses its alignment with the Task Force

on Climate-related Financial Disclosures (“TCFD”)

recommendations for the first time this year. The Group

is exempt from the disclosure requirement as Listing Rule

9.8.6R(8) explicitly excludes closed-ended investment

companies. However, we fully support the recommendations

and wish to demonstrate ouralignment from the start.

In this report we will share our current response to climate

change and detail the considerations that we have made in

the past year in assessing the potential impact to our business.

Thereport will show our approach to assessing both the

transitional and physical risks that it may pose to our business,

along with consideration of the opportunities it will bring.

Some elements of these disclosures are addressed elsewhere

in the report and signposting is indicated below.

Compliance statement

The Group has chosen to commit to the TCFD disclosure

requirements (even though it is exempt) reporting on nine out

ofthe 11 TCFD requirements. The Group is not compliant with

thefollowing recommendations:

Strategy: Describe the impact of climate-related risks and

opportunities on the organisation’s businesses, strategy and

financial planning.

Metrics and targets: Disclose Scope 1, Scope 2, and, if appropriate,

Scope 3 greenhouse gas (“GHG”) emissions, and the related risks.

Over the course of 2023 the Group will continue to embed best

practice as per the recommendations, with a view to maturing our

disclosures. By way of explanation, we are currently not compliant

with the two requirements because:

• Climate-related risks and opportunities have been identified,

and the financial impact of these risks and opportunities will be

calculated in detail during 2023 to inform business strategy and

financial planning.

• Scope 1 and 2 GHGs are calculated and disclosed, and the Group

has commenced engagement with our occupiers to identify

their emissions, which form part of our Scope 3 emissions.

This data will be used to inform how we can best support our

occupiers to reduce these emissions, for example through the

provision of energy efficient buildings that promote active and

low-carbontravel.

PILLAR TCFD RECOMMENDATION SECTION NAME PAGE

a. Board oversight

b. Management role

a. Climate-related metrics

b. Scope 1, 2 and 3 GHG emissions

c. Climate-related targets

Governance

Investment Adviser’s

report

Sustainability

30 to 37

38 to 57

GOVERNANCE

a. Risk identification and assessment

process

b. Risk management process

c. Integration into overall risk management

Risk management 62 to 69

STRATEGY

a. Risks and opportunities

b. Impact on organisation

c. Resilience of strategy

Strategy

Governance

20 and 21

RISK

MANAGEMENT

METRICS

AND TARGETS

Life Science REIT plc Annual Report and Financial Statements 2022

Governance

Board oversight of climate-related risks

andopportunities

The Board is responsible for the Group’s risk management.

The Board reviews risks and opportunities within existing

reporting and governance structure and has established a

Sustainability Committee. The Audit and Risk Committee

reviews the risks at each meeting and provides updates to

theBoard.

In May 2022, Sally Ann Forsyth was appointed as

Sustainability Lead with overall responsibility for the

sustainability strategy. Sally Ann and the Investment Adviser’s

appointed Head of ESG have regular meetings to discuss

the three areas of sustainability, E, S and G. A Sustainability

Committee has been formed post year end, with members

from the Board, the Investment Adviser’s Head of ESG, Asset

Management and Finance. The Committee will meet twice a

year, with the first meeting being held in February 2023.

The Sustainability Committee monitors progress against

strategy targets which includes climate-related risk mitigation.

This review forms the basis of a paper included in the

quarterly Board meetings.

The Board will be given quarterly updates of our progress

against our sustainability strategy at Board meetings.

An analysis of the Group’s climate-related risks and

opportunities has been undertaken, by our specialist adviser,

with the results reviewed at Board level, and incorporated

into the corporate risk register. All risks and opportunities are

reviewed on a quarterly basis by the Investment Adviser and

then by the Audit and Risk Committee, which is ultimately

responsible for overseeing the climate-related risks and

opportunities. For full details of our Risk Management

Framework see page 62.

The Investment Adviser recommends acquisitions to the

Group; during this process environmental due diligence

is undertaken focused on flooding risk, geology and

EPC of the property. It is our intention to broaden these

considerations further so we understand the costs of meeting

new regulations such as MEES regulations and planning

restrictions. In 2023 we will be producing a sustainability

guide as partof the process on acquisitions.

Management’s role in assessing

andmanagingrisks and opportunities

The Group’s Risk Management Framework, which is approved

by the Board, sets out how we identify, evaluate and report

on our risks. The Investment Adviser has identified climate

change as one of our principal risks and it is therefore

incorporated into our risk framework (further detail of the

Risk Management Framework can be found on page 62).

TheInvestment Adviser reviews and updates the risk register

and reports quarterly to the Audit and Risk Committee.

The Investment Adviser’s appointed Head of ESG has been

working closely with Square Gain to design and implement

a challenging and relevant sustainability strategy. A key part

of the work undertaken by Square Gain was a climate impact

assessment of our assets. The results are shown on page49.

The output from the analysis was reviewed and discussed at

the first Investment Adviser risk review meeting of 2023.

Implementation and management of the sustainability

strategy is delegated to the Investment Adviser. The Head of

ESG ensures that the strategy and targets are communicated

to the Investment Adviser’s team and meets with the broader

team monthly to implement the action plan and drive

progress.

The specialist consultant has held a workshop with our

Investment Adviser to give an independent review of

climate-related risks and opportunities across our business.

The results of which fed into the sustainability strategy and

the risk register. The Audit and Risk Committee will review

these climate-related risks and opportunities to ensure the

assessment is accurate and mitigating action is appropriate.

For full details of our Risk Management Framework see

page62.

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

Strategy

Our approach

Over the last year, under the stewardship of our Board, we

have identified the climate-related risks and opportunities

over the short (present), medium (2030) and long (2050)

term, as set out in the section below.

This section will detail firstly our approach to the climate

impact assessment and defining material risks and

opportunities, secondly the material risks identified, thirdly

the impact of these risks and our organisational response,

andlastly how we incorporate resilience to climate change

into our organisation.

We understand that climate risk is both material risk

associated with rapidly changing weather events (physical

risk) and the resulting market shifts due to regulatory and

policy responses to overcome the impacts (transition risk).

Climate-related risks and opportunities

Climate impact assessment

An assessment analysis has been undertaken across the

Group’s portfolio, on an asset-by-asset basis, examining 2030

and 2050 time horizons. Both of these time horizons assess the

physical climate risks posed by future climate change, and also

the risks that arise as we transition towards a net zero carbon

economy.

Buildings have long design lifespans and climate-related

issues often manifest themselves over the medium and longer

term (as stated in TCFD Implementation Guide). The Group’s

approach incorporates the short-term time horizon as the

present, with medium term being 2030 and long term being

2050. Our approach to identifying and managing current

climate-related risks and opportunities is as per our risk

management process and material climate-related risks are

incorporated in our corporate risk register.

Methodology

To take account of the diverse range of climate futures, we

incorporate three of the Intergovernmental Panel on Climate

Change’s (“IPCC”) representative concentration pathways

(“RCPs”) measuring average global warming:

• RCP 2.6: 0.9-2.3°C

• RCP 4.5: 1.7-3.2°C

• RCP 6.0: 2.0-3.7°C

The pathways describe different climate futures, all of which

are considered possible depending on the volume of GHGs

emitted in the years to come. The climate scenario model

used is MAGICC6. MAGICC (Model for the Assessment of

Greenhouse Gas Induced Climate Change) is the climate

carbon cycle model, which has been continually developed

since its inception over 20 years ago.

It is a prime reduced-complexity model, often used by IPCC,

for key scientific publications and by a number of integrated

assessment models.

Using location data for each site our tool shows how the

severity of a broad range of climate impacts will change over

time, at different levels of global warming, which depend on

how rapidly governments cut their GHG emissions.

Defining a ‘material’ risk oropportunity

The Group defines a ‘material’ risk or opportunity in line with

the likelihood impact thresholds of our Risk Management

Framework.

The potential impact of climate change is one of our

principal risks, as we seek to both reduce our impact on

the environment and the impact of climate change on our

activities, portfolio and finances.

We have developed a separate climate-related risk register,

to help us identify, consider and mitigate both physical and

transitional risks.

Key risks included within the climate-related risk register are:

• occupier demand changes seeking more sustainable

options;

• decarbonisation pathway;

• stranded assets;

• flooding – impacting on occupiers and asset values; and

• inability to access Green Finance options.

Opportunities include:

• occupier demand for sustainable space results in a ‘green

premium’;

• lower cost of capital as market transitions towards green

economy; and

• opportunity to acquire discounted ‘brown’ assets and

transform to sustainable asset through re-purposing.

Refer to page 63 in the risk section which shows how we

envisage the potential change over time for these risks.

SUSTAINABILITY CONTINUED

TCFD reporting continued

Life Science REIT plc Annual Report and Financial Statements 2022

VULNERABILITY

Flooding

SCENARIO IMPACT MEDIUM

TERM 2030

IMPACT LONG

TERM 2050

RCP 2.6

RISK/FACTOR

Change in precipitation

in %

RCP 4.5

RCP 6.0

Building damage

RCP 2.6Change in wind speed

in %

RCP 4.5

RCP 6.0

Building damage

RCP 2.6

Change in maximum

of daily river discharge

in %

RCP 4.5

RCP 6.0

Building

inoperability, heat

stress

RCP 2.6

Change in daily

maximum air

temperature in °C

RCP 4.5

RCP 6.0

Building

inoperability

RCP 2.6Change in daily

minimum air

temperature in °C

RCP 4.5

RCP 6.0

Impact of climate risks andourresponse

We have completed a climate impact assessment for medium

and long-term impacts and have committed to undertake

robust climate risk and vulnerability assessments on all our

assets, with solutions implemented to reduce material risks.

The Group’s plan for transitioning to a low-carbon economy

is in formation. Last year, our first full year of operations,

was focused on identifying and measuring our Scope 1 and 2

carbon emissions baseline. 2023 is working towards defining

how we transition to a low-carbon economy and setting

targets to measure progress. Our approach will be through

occupier engagement, developing refurbishment standards

and investigating renewable options.

•

Risk 1: Occupier demand for sustainable space results

in a ‘brown discount’ to rents at less sustainable assets.

Tomanage this risk, we target BREEAM certification with

at least a ‘Very Good’ rating and EPC rating of at least B

(transition risk).

•

Risk 2: Stranded assets – building inoperability due to

significant fluctuation in air temperature, and an inability to

meet required operating temperatures. This risk is managed

across our acquisition and asset management activities,

by undertaking climate risk analysis, to ensure that we can

enhance the asset’s climate resilience when acquiring new

buildings and when undertaking works to refurbish and

repurpose the asset to life scienceuse (transition risk).

•

Risk 3: Flooding and/or building damage due to surface

water or river discharge. We have mapped our existing

portfolio against flood risks using the Environment

Agency database, and also incorporate this as part of our

duediligence process when acquiring new buildings. Most

assets are classified as having very low risk of flooding

(physical risk).

• Risk 4: Compliance costs to meet minimum EPC standards.

This risk is managed on acquisition via an environmental

assessment as part of the due diligence process to ensure that

the building has an EPC rating of at least B or we understand

the investment to meet the future Minimum Energy Efficiency

Standards (“MEES”) regulations (transitionrisk).

Low impact High impact

Key

Climate impact assessment results

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

Strategy continued

•

Risk 5: Increasing price of carbon offsets. Our strategy is to

reduce carbon emissions aligned with the carbon hierarchy,

with offsetting as a last resort towards our goal of achieving

net zero carbon for our direct emissions (transition risk).

• Risk 6: Increased cost of capital as markets transition to

a green economy. This risk is managed by our drive to

ensure that all portfolio assets are classified as ‘green’ and

our aim to align with the EU Taxonomy whereverpossible

(transitionrisk).

Resilience of the Group’s strategy

The baseline that we have set over the last year enables us

to further understand our assets and our strategies. The

impact assessment, climate-related risks and opportunities

will be incorporated into the Board and management team’s

2023 future strategy day. This in turn will define the Group’s

strategic direction.

The Group’s sustainability strategy takes into consideration

different climate-related scenarios, including a 2°C or lower

scenario, and uses RCP 2.6, RCP 4.5 and RCP 6.0, to ensure

our business operations have resilience in each of these

scenarios.

We mitigate physical climate-related risks on an asset-level

basis, by assessing each asset in our portfolio against physical

climate-related risk, and have identified these risks to be low

to medium risk for all assets, against all indicators for RCP 2.6

and RCP 4.5. For RCP 6.0 the risk of building inoperability due

to higher maximum temperatures is a more significant risk.

Wewill manage, minimise and mitigate this risk through the

incorporation of a sustainability checklist for use as part of our

due diligence process when acquiring new assets, including

climate-related risk assessment.

We will mitigate our climate impacts by implementing a range

of measures, including the use of BREEAM certification,

achieving A or B rated EPCs and enhancing biodiversity.

When acquiring new buildings, we also undertake an

environmental assessment and climate risk analysis as part

of the due diligence process. This helps to ensure that we

can enhance the asset’s climate resilience when works are

undertaken to refurbish and repurpose the asset to life

scienceuse.

New leases include clauses designed to assist with delivering

our climate change ambitions, for example requiring any

building alterations to be of a type and quality that does not

impact negatively on the EPC rating.

Risk management

Identifying and assessing climate-related risks

We have updated our risk framework with a new risk category

“Climate-related risk – physical and transitional risks to the

portfolio and the business, arising from climate change”.

Wehave overarching ESG and climate-related risks within the

corporate risk register, and have also, in conjunction with our

advisers, developed a separate climate-related risk register,

covering both physical and transitional risks. The impact

of climate change remains identified as one of the top nine

principal risks for the Group which are identified by assessing

the impact and likelihood of the risk occurring. The same risk

assessment principals and terminology are applied to climate

risk as to our other types of risks.

Our risk assessment process incorporates an assessment

of emerging regulatory requirements, for example MEES

(Minimum Energy Efficiency Standards), and how these could

impact on our operations. Our assessment has shown that our

portfolio is resilient and that these risks are not material at the

present time.

The Investment Adviser reviews and updates the risk register

on a quarterly basis, including both physical and transition

climate-related risks, which are assessed on both a business

and an asset level. The Head of ESG attends these reviews

and provides insights and suggests updates. Furthermore, our

specialist consultant will be invited to attend one meeting a

year prior to the Audit and Risk Committee update.

For full details of our Risk Management Framework see

page62 and consideration of emerging risks.

Managing climate-related risks

The risk register is presented at each meeting of the Audit

and Risk Committee, highlighting any changes in risk, whether

emerging, additional or deleted risks, changes to the controls

in place, or changes to the evaluation of our exposure to

thatrisk.

The Sustainability Committee will review and update the

climate-related risks, as appropriate, prior to each Audit and

Risk Committee meeting.

Integrating into the Group’s overall risk

management

We have established the climate-related risk identification,

assessment and management into our core Risk Management

Framework; see page 62.

SUSTAINABILITY CONTINUED

TCFD reporting continued

Life Science REIT plc Annual Report and Financial Statements 2022

Metrics and targets

The metrics used by the Group to assess climate-related

risks and opportunities are aligned with our strategy and risk

management process.

We believe that in order to have the positive impact that

we aspire to it is essential that we understand our carbon

footprint. This baseline allows us to set metrics and targets

against which to hold ourselves accountable on our journey to

net zero carbon and wider sustainability achievements. As part

of our sustainability strategy, 2023 will see us gathering data to

inform the target date for achieving net zero carbon.

For a list of externally communicated metrics see page 45.

Scope 1, Scope 2 and Scope3 GHG emissions,

and relatedrisks

The Group is currently focused on robustly measuring Scope

1 and 2 GHG emissions (see the following section EPRA sBPR

reporting for disclosure) and related risks, reporting externally

at a portfolio level and internally, at a granular detail per asset.

Currently, the Group is responsible for the majority of its

occupiers’ energy procurement and over 75.7% of the

landlord-procured energy was consumed by occupiers.

This will be used to identify opportunities and to establish

further targets to reduce total energy use, energy intensity

andcarbon emissions.

We are conscious that our occupiers’ energy use and carbon

emissions are significant and form a large part of our Scope 3

emissions. We are committed to supporting our occupiers to

minimise these impacts and related risks. We will make best

endeavours to collect, collate and measure robust Scope 3

data from our occupiers, although we recognise that this is

notlikely to ever be 100% accurate.

The Group is committed to engaging with the supply chain

to identify, measure and minimise Scope 3 carbon emissions.

Thisengagement will commence in 2023 and will help to

establish where we can assist key stakeholders, such as

occupiers, to reduce their own carbon emissions.

Targets

The Group uses a suite of targets to manage climate-related risks and opportunities and performanceagainst targets

(seepage45 for achievements to date), including:

Collate data to enable setting targets for GHG emissions, water

efficiency, energy intensity and carbon intensity

Number of BREEAM certifications with Excellent rating

EPC ratings of A or B across the portfolio and targeting A rated

onnewconstruction

The use of the Group’s sustainable refurbishment principles

Biodiversity assessments and achieving net gain on refurbishment and

new construction projects

Fitwel certification

Zero waste to landfill

Engage with every occupier on ESG at least every year (e.g. energy,

carbon, waste, biodiversity and water, wellbeing and vitality)

TARGET MANAGING RISK

1 & 2

1, 2, 3 & 4

1 & 2

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

The Group recognises that its activities have both direct and

indirect environmental and social impacts and is committed

to operating in a responsible and sustainable manner. One of

the Group’s investment objectives is to provide shareholders

with an attractive level of total accounting return. The focus

is capital growth whilst also providing a growing level of

income by investing primarily in a diversified portfolio of UK

properties that are leased or intended to be leased to occupiers

operating in the life science sector. These key activities are

undertaken by the Investment Adviser. The Investment Adviser

has responsibility for the day-to-day asset management

and implementation of the Group’s sustainability strategy.

To maintain a high level of transparency of our sustainability

impacts, the Group reports against relevant ESG indicators

in accordance with the third edition of the European Public

Real Estate Association (“EPRA”) Sustainability Best Practice

Recommendations (“sBPR”) and the Streamlined Energy and

Carbon Reporting (“SECR”) requirements (see pages 52 to 57).

Corresponding GHG emissions are calculated in line with the

GHG Protocol Corporate Accounting and Reporting Standard

and the corresponding Scope 1 and Scope 2 guidance.

For the progress on implementing our sustainability strategy

and the detailed management approach of different material

sustainability topics, please refer to the Sustainability section of

this Annual Report.

The Group’s EPRA sBPR response has been split into the

following four sections:

Reporting methodology

Environmental performance measures

Social performance measures

Governance performance measures

Reporting methodology

Organisational boundaries

The Group’s reporting boundary is based on the principle of

operational control, meaning that asset-level performance

measures are accounted for where the Group has the

authority, via its managing agents, to introduce and implement

its operating policies and procedures. Unless otherwise stated,

all absolute performance measures relating to electricity, fuels

and associated GHG emissions relate to assets where the

Group procures utilities for common areas, shared services,

lettable areas (including vacant and occupied units) and those

properties that are vacant. Assets held by the Group are

excluded from the reporting boundary where there is limited

or no operational control. Examples of this include instances

where occupiers are responsible for their own supply of

utilities, heating and waste disposal.

As of 31 December 2022, the Group owned six assets either

directly or through 100% owned subsidiaries, all of which were

classified as life science real assets located in the UK. Two of

the six assets were acquired during the 2022 reporting year.

Using the aforementioned principle, four out of six assets fell

within the reporting boundary at the end of the reporting

period. This represents 95.1% of the Group’s total investment

in real estate; Merrifield and Lumen House are excluded.

The remaining assets are single occupancy assets with no

operational control, therefore the Group has no authority to

introduce or implement its operating policies and procedures.

The Group does not have any partially owned entities that fall

within the organisational boundary.

The Group is externally managed and does not occupy any

offices for its business activities, nor does it own or lease any

vehicles.

Reporting period

Performance measures of absolute and intensity metrics are

reported for the year ended 31 December 2022. Performance

measures for like-for-like metrics are not reported due to

insufficient data for the prior year ending 31 December 2021,

given that theCompany was incorporated on 27July 2021,

consumptions before the incorporation were considered

out ofthe reporting scope and initial acquisitions being in

late2021.

Data estimation

The Group aims to report as complete and accurate data

as feasible and practicable. All data is based on invoices

and/or meter readings where available. Estimations have

been applied where invoices were not available at the time of

publication. Where data was only partially available within the

reporting period, we have adopted the following approach for

data estimation:

1. estimate consumption data based on the most recent three

months of available actual data; or

2. estimate consumption data based on available actual data

from the same period in the previous reporting year.

Following this rule of data estimation, the proportions of

estimated energy, water and waste data for 2022 were

31.3%, 17.8% and 51.3% respectively. Sincethe Company was

incorporated on 27July2021 with most of the assets being

acquired in late 2021, environmental performance data for

2021 is largely unavailable. As previously stated, like-for-like

comparison of the portfolio is inapplicable. Data availability,

quality and accuracy is expected to improve in the next

reporting year.

EPRA sBPR reporting

SUSTAINABILITY CONTINUED

Life Science REIT plc Annual Report and Financial Statements 2022

Where data estimation was not feasible, assets with no data

were excluded from the report unless specified otherwise.

Please refer to ‘disclosure coverage – number of assets’ in

the performance measures tables on pages 54 to 57 for

information of our environmental data coverage.

GHG emissions calculation

The Group reports Scope 2 GHG emissions using location and

market-based methods.

Location-based emissions reflect the average emissions

intensity for energy production in a defined local or national

region. Scope 1 and 2 GHG emissions were calculated using

the UK Government GHG Conversion Factors for Company

Reporting for the respective reporting periods.

Market-based Scope 2 GHG emissions were calculated using

the European residual mixes factors (versions 2021 and 2022),

which are default emission factors representing the untracked

or unclaimed energy and emissions, and the zero emissions

factor for both Renewable Energy Guarantees of Origin

(“REGO”) backed electricity supplies and onsite renewable

energy generation from solar photovoltaic (“PV”) panels.

Proportion from renewable sources is based on renewable

energy purchases plus renewable electricity generated from

onsite solar PVs and directly consumed. Solar PVs are installed

at two out of six assets (Cambourne Business Park and Rolling

Stock Yard). However, data for Rolling Stock Yard is currently

unavailable.

The intensity ratios for energy, water and GHG emissions are

expressed as landlord procured utility per net lettable floor

area. Only assets which were owned and managed during the

full 2022 reporting year, with sufficient data available, were

included in the calculation of intensity. Therefore, two assets

(Herbrand and OTP) are excluded from intensity calculations.

Segmental analysis of the Group by property type and

geography has not been included in the report considering

that all assets have the same classification (life science) and are

located in the same country (UK).

All environmental and social performance measures data

were externally reviewed and checked by Savills UK –

SustainabilityTeam.

Environmental performance measures

In 2022, the Group procured 5,307.4 MWh of energy for use

across its assets, of which 64.7% were electricity consumption

and 35.3% were gas consumption. The Company is responsible

for the majority of its occupiers’ energy procurement and

over 75.7% of the landlord-procured energy was consumed by

occupiers. During the reporting year, 154.5 MWh of electricity

was also generated from the solar PV panels installed and

consumed on-site. Reported total water consumption

of the portfolio in 2022 was 3,438.5 m

. However, water

consumption data was available for only two out of four assets

with operational control and cannot fully reflect the actual

consumption of the portfolio.

Total Scopes 1 and 2 (location based) GHG emissions for the

reporting year was 247.1 tonnes CO

e, split 16.6% Scope 1 and

83.4% Scope 2. Renewable electricity accounted for 9.2%

of the total electricity purchased and generated during the

year, resulting in a Scope 2 (market based) GHG emissions of

357.8tonnes CO

In 2022, total managed and reported waste was 160.6 tonnes.

All waste was diverted from landfill, of which 46.5% was

re-used or recycled and 53.5% incinerated for energy recovery.

As previously stated, year-on-year analysis will be reported

on from 2023 onwards as we do not have full prior year to

compare to due to initial acquisitions being late 2021.

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

Environmental performance measures continued

The Group has also focused on developing life science facilities with reduced footprints to enhance the overall sustainability

performance of its portfolio. Some examples of carbon saving initiatives that have been implemented in 2022 include LED

lighting replacements, installation of PIR sensors and the introduction of new waste streams for recycling.

All of our assets are in full compliance with the latest Minimum Energy Efficiency Standards (“MEES”) requirements. Rolling Stock

Yard and OTP Building 1 have obtained BREEAM ‘Excellent’ as built and it is our goal to obtain BREEAM certificates for all new

developments.

Greenhouse gas emissions (tCO

EPRA INDICATOR

ABSOLUTE LIKE-FOR-LIKE

2021 2022 2021 2022 % CHANGE

Direct emissions

GHG-Dir-Abs, GHG-Dir-LfL

Scope 1

0.7 41.1

Like-for-like metrics are inapplicable

due to the lack of data for two complete

consecutive reporting years

Indirect emissions

GHG-Dir-Abs, GHG-Dir-LfL

Scope 2 – location based2

2.2

206.0

Scope 2 – market based2

3.6 357. 8

Scope 3 (landlord procured

occupier consumption)

43.3 758.9

Total direct and indirect

Scopes 1 and 2

2.8 247.1

Disclosure coverage – number

of assets

2 of 2 4 of 4

GHG emissions intensity

GHG-Int

Scopes 1 and 2, tonnes CO

em

— 0.001

1. Scope 1: Direct GHG emissions from controlled operations such as combustion in owned boilers.

2. Scope 2: Indirect GHG emissions from the use of purchased electricity, heat or steam.

3. Scope 2: Location-based emissions are used for reporting total emissions and GHG emissions intensity.

SUSTAINABILITY CONTINUED

EPRA sBPR reporting continued

Life Science REIT plc Annual Report and Financial Statements 2022

Energy consumption (MWh)

EPRA INDICATOR

ABSOLUTE LIKE-FOR-LIKE

2021 2022 2021 2022 % CHANGE

Electricity

Elec-Abs, Elec-LfL

Total landlord procured 117.4 3,434.1

Like-for-like metrics are inapplicable

due tothe lack of data for two complete

consecutive reporting years

Landlord procured, consumed

by occupiers

107. 3 2,369.9

Total on-site renewable

electricity generated and

consumed

0.5 154.5

Proportion of procured

and on-site generated and

consumed electricity from

renewable sources

0.5% 9.2%

Fuels

Fuels-Abs, Fuels-LfL

Total landlord procured

126.6 1,873.4

Landlord procured, consumed

by occupiers

123.0 1,648.1

Proportion of procured fuels

from renewable sources

— —

Total energy

Total landlord procured 244.1 5, 307.4

Landlord procured, consumed

by occupiers

230.3 4,017.0

Total landlord procured and

generated

244.6 5,462.0

Proportion estimated 26.0% 31.3%

Disclosure coverage – number

of assets

2 of 2 4 of 4

Energy intensity

Energy-Int

Landlord procured, MWh/m

n/a 0.171

1. Proportion from renewable sources is based on renewable energy purchases and renewable energy generated and consumed on-site. Solar PV panels are

installed at two out of six assets (Cambourne Business Park and Rolling Stock Yard). However, such data was not available for Rolling Stock Yard, therefore only

Cambourne Business Park’s data is included in this figure.

2. There are no district heating and cooling systems in place (excluding DH&C-Abs, DH&C-LfL).

Water consumption (m

)

EPRA INDICATOR

ABSOLUTE LIKE-FOR-LIKE

2021 2022 2021 2022 % CHANGE

Water

Water-Abs, Water-LfL

Total landlord procured

397.1 3,438.5

Like-for-like metrics are inapplicable

due tothe lack of data for two complete

consecutive reporting years

Proportion estimated

— 17. 8%

Disclosure coverage –

number of assets

2 of 2 2 of 4

Water intensity

Water-Int

Landlord procured, m

n/a 0.136

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

Environmental performance measures continued

Waste management (tonnes)

EPRA INDICATOR

ABSOLUTE LIKE-FOR-LIKE

2021 2022 2021 2022 % CHANGE

Total weight of waste by

disposalroute

Waste-Abs

Waste-LfL

Recycled or re-used 1.1 74.6

Like-for-like metrics are inapplicable

due tothe lack of data for two complete

consecutive reporting years

Incineration with energy

recovery

1.8 85.9

Sent to landfill — —

Total 2.8 160.6

Proportion estimated 33.5% 51.3%

Disclosure coverage –

number of assets

2 of 2 3 of 4

Proportion of waste by

disposalroute

Waste-Abs,

Waste-LfL

Recycled or re-used 37.5% 46.5%

Incineration with energy

recovery

62.5% 53.5%

Sent to landfill — —

1. Data for the proportion of waste disposed of by disposal route according to type (non-hazardous and hazardous) in tonnes or as a percentage is unavailable.

Building certification

EPRA INDICATOR RATING

2022

NUMBER OF CERT.

% OF FLOOR AREA

Energy Performance

Certification (EPCs) Cert-Tot

A 3 27.4%

B 1 8.1%

C 7 49.4%

D 2 15.1%

E or below — —

Total 13 100%

1. Includes EPCs for two units that are not included in the EPRA reporting boundary due to there being no landlord control. These units include Merrifield Centre

and Lumen House.

EPRA INDICATOR

2022

NUMBER OF UNITS % OF FLOOR AREA

BREEAM Certificates Cert-Tot

Outstanding — —

Excellent 2 12.9%

Very Good — —

Good — —

Others — —

Total 2 12.9%

SUSTAINABILITY CONTINUED

EPRA sBPR reporting continued

Life Science REIT plc Annual Report and Financial Statements 2022

Social performance measures

The Group reported on all applicable EPRA sBPR social performance metrics. Being an externally managed company

with no employees, this is limited to the Board of Directors’ gender diversity, asset health and safety, and community

engagementmeasures.

EPRA INDICATOR 2022

GENDER DIVERSITY

DIVERSITY EMP

BOARD OF

DIRECTORS

FEMALE 50%

MALE 50%

Employee metrics:

Gender diversity (Diversity-Emp), Gender pay ratio (Diversity-Pay),

Employee training and development (Emp-Training), Employee

performance appraisals (Emp-Dev), New hires and turnover

(Emp-Turnover), Employee health and safety

(H&S-Emp)

The Group is an externally managed investment company. All of the

Group’s day-to-day management and administrative functions are

outsourced to third parties. The Company has no employees.

Asset health and safety assessments

H&S-Asset

Proportion of assets 100%

Asset health and safety compliance

H&S-Comp

Number of incidents; unresolved within the

required timeframe

—

Community engagement, impact assessments and

developmentprogrammes

Comty-Eng

Proportion of assets —

1. Gender diversity ratio as at 31 December 2022.

Governance performance measures

Governance performance measures relate to the Board. For full background information on our governance performance

measures, including a profile of the Board, a description of our nomination procedures, and processes for managing potential

conflicts of interest, please see pages 81 to 83.

Non-Executive Director Sally Ann Forsyth has significant experience relating to developing strategies to improve social and

environmental impacts in the life science industry. During her role in developing four internationally recognised science clusters,

and currently in her role as CEO of Stevenage Bioscience Catalyst, she has experience in implementing sustainability strategies.

EPRA INDICATOR 2022

Composition of the highest

governance body

Gov-Board

Number of executive Board members 100%

Number of independent/non-executive Board members 4

Average tenure on the governance body(months) 12.9

Number of independent/non-executive Board members with

competencies relating to environmental and social topics

Process for nominating and selecting the highest governance body

Gov-Selec

See corporate governance section,

pages 81 to 83

Process for managing conflicts of interest

Gov-CoI

See corporate governance section,

page83

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

OCCUPIERS SHAREHOLDERS

Meeting the needs of our occupiers is fundamental to our

business. They rely on us to provide the space in which

they can operate and we in turn rely on them for timely

rental payments.

To continue to grow our business, we need a supportive

shareholder base. To keep shareholders well informed, we

look to communicate with them regularly and openly, and

to provide high-quality corporate reporting.

Stakeholder interests

• The suitability of our assets for life science purposes,

including proximity to key life science clusters, their

sustainability credentials and their attractiveness as a

workplace for the talent occupiers need to attract

• Rental levels, lease lengths and terms

• Our knowledge and understanding of their businesses

• Our asset management plans, including sustainability

enhancements

• Our financial strength

• Our intentions regarding holding or disposing of the

assetthey lease from us

• Our sustainability strategy

Stakeholder interests

• Our ability to source accretive investments and add

value through asset management, to drive rental income,

capital values and our total return

• Our financial and operational performance

• The security of our dividend

• Our approach to environmental, social and governance

issues

• The skills and experience of the Board

• The skills and experience of the Investment Adviser

andits recruitment to support our growth plans

How we engage

• The Investment Adviser is responsible for building and

maintaining relationships with current and potential

occupiers, and for reporting to the Board on occupier

issues

• The Investment Adviser’s asset management team conducts

site visits and meets key decision-makers at occupiers, to

learn about their businesses and space requirements

• The property managers also engage with occupiers at

anoperational level

• The Investment Adviser’s Head of ESG and specialist

consultant engage separately with occupiers, to identify

mutual ESG-related targets

How we engage

• The senior team at the Investment Adviser takes the

lead in our investor relations programme and offers

meetings to major shareholders and potential investors

after the announcement of our financial results, as well

asresponding to requests for meetings at other times

• The Investment Adviser and our corporate broker

providefeedback to the Board following investor

meetings

• We also engage through a range of other channels,

including regular news flow, the Group’s website,

theAnnual Report and the Annual General Meeting

• If requested, we hold separate ESG conversations

Outcomes

• Started to engage with occupiers on ESG and their input

informed our materiality assessment and sustainability

strategy

• Provided our draft sustainability policy to occupiers and

gave verbal support for their decarbonisation actions

Outcomes

• Completed our move to the Main Market of the London

Stock Exchange

• Delivered 4.0 pence per share dividend (paid and

declared)

• Identified shareholder interest in the quickly changing

ESG landscape and their desire to understand how we

keep up to date and what our plans are

• Engagement with shareholders on ESG is ongoing and

weintend to highlight our approach to ESG in greater

detail over the next 12 months

OUR STAKEHOLDERS

Life Science REIT plc Annual Report and Financial Statements 2022

SERVICE PROVIDERS LENDERS

As an externally managed business, we are dependent

on our service providers for our day-to-day operations.

In particular, the Investment Adviser has a key role in

implementing our strategy.

Please see IBC for full details of our service providers.

An appropriate amount of gearing is important for

generating higher returns. We therefore look to build

strong relationships with lenders, who will provide the

debtfacilities needed to support our business growth.

Stakeholder interests

• The terms of their engagement

• Clarity of fees

• Open and two-way communication

• Prompt payment

Stakeholder interests

• The quality of the security we provide for our loans

• Our ability to meet our interest payments

• The strength and diversification of our income streams

• Hedging of interest rates where appropriate

• The suitability of our projects for Green Finance

How we engage

• The Board regularly engages with the Investment

Adviser, both formally and informally, with

representatives of the Investment Adviser attending

Board and Committee meetings by invitation

• The Investment Adviser is primarily responsible for

day-to-day interaction with our other service providers

and keeps the Board informed as necessary

• The Management Engagement Committee oversees and

reviews service provider performance on the Board’s

behalf (see pages 89 and 90)

How we engage

• The Investment Adviser is primarily responsible for

engaging with lenders and keeps the Board informed as

necessary

Outcomes

• The Investment Adviser holds calls with external service

providers at least quarterly

• Commitment to prompt payment

• Service providers deliver monthly monitoring reporting

to the Investment Adviser

Outcomes

• Agreed our initial debt facilities and a cap on the SONIA

rate (see page 125)

• Maintained open communication with lenders

• Regular portfolio updates and covenant compliance

reporting provide comfort to lenders

• Ongoing review of hedging arrangements with the

lenders and other advisers

Other stakeholders

In addition to the key stakeholders listed above, we have other stakeholders that are important to us. For example, local

councils may be significant stakeholders in relation to individual assets, where we may need planning permission for our

asset management or development plans.

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

SECTION 172(1) STATEMENT

Under section 172(1) (a)-(f) of the Companies Act 2006, the Directors are required to take into account the matters set out

in the table below, and to promote the success of the Company for the benefit of its members as a whole. In doing so, the

Directors must also consider the interests of key stakeholders and the environment in their discussions and decision-making.

Set out below are the matters the Board is required to take into account under section 172(1).

TAKING ACCOUNT OF

STAKEHOLDER VIEWS KEY BOARD DECISIONS

Information on stakeholder engagement,

including how the Board is kept informed

about stakeholder views, can be found

on pages 58 and 59. This engagement

is an important input into the Board’s

decision-making. The Directors keep the

methods for engaging with stakeholders

under review, to ensure they remain

effective.

The Board’s key decisions during the year included:

• approving the acquisitions of Herbrand Street and Oxford Technology Park;

• approving the first and second interim dividends in respect of the year, totalling 4.0 pence

per share;

• approving the Company’s move from AIM to the Main Market (see case study below);

• appointing Richard Howell as a Non-Executive Director; and

• approving the £150.0 million debt facility with HSBC.

See pages 78 and 79 for further details.

MATTER RESPONSE

a) The likely consequence of any decision

in the long term.

We intend to be long-term holders of our assets and therefore look to acquire or develop

assets that will appeal to occupiers for many years to come. Our asset management

activities also seek to future-proof our assets, for example by enhancing their sustainability

performance.

While generating income is an important consideration for us, we will not compromise on

our investment criteria by acquiring weaker assets to increase income in the short term.

During the year, the Board approved the acquisition of Herbrand Street in the knowledge

that the building can be readily converted to laboratory use at the end of the current

occupier’s lease term in Q4 2026, and the location in London’s Knowledge Quarter will be

very attractive to future life science occupiers (see page 30).

b) The interests of the Company's

employees.

As an externally managed company, we do not have any employees, so this matter is not

applicable.

c) The need to foster the Company’s

business relationships with suppliers,

customers and others.

Our relationships with our occupiers are central to our business model. The Investment

Adviser has a strong focus on building and maintaining these relationships and is supported

by the property managers. For more information on engagement, see page 58.

Relationships with our service providers are also key and are discussed on page 59.

During the year, the Board appointed Michael Taylor as Chair of the Management

Engagement Committee, which is responsible for overseeing relationships with our key

service providers (see pages 89 and 90).

d) The impact of the Company’s

operations on the community and

environment.

As the day-to-day operators of our assets, our occupiers have primary responsibility for any

community impacts. Our assets support our occupiers’ ability to create jobs, benefiting local

communities. More broadly, we aim to offer real estate that provides the right environment for

our occupiers to solve some of the world’s pressing issues – see pages 44 and 45 for more on

our social impact.

During the year, the Board appointed Sally Ann Forsyth as the Director to lead our approach

to sustainability. She has regularly engaged with the Investment Adviser’s Head of ESG during

the development of our new ESG strategy, as set out on pages 44 and 45.

Life Science REIT plc Annual Report and Financial Statements 2022

MATTER RESPONSE

e) The desirability of the Company

maintaining a reputation for high

standards of business conduct.

A reputation for high standards of conduct is important to us. We need occupiers to be

willing to sign multi-year leases with us and require long-term sources of debt and equity

capital to fund our strategy.

In 2022, we reviewed all of our policies and procedures in key areas as part of our move to

the Main Market, to underpin our approach to ethical business.

f) The need to act fairly between members

of the Company.

The Company has a fully independent Board and no shareholder or group of shareholders

has direct influence over the Board’s decisions. The principals of the Investment Adviser

own shares in the Company valued at approximately £2.3 million, which also aligns their

interests with those of shareholders as a whole.

Background

The Company’s shares were initially traded on AIM, following

our IPO in November 2021. As highlighted in the IPO

prospectus, our intention was always to move to the Main

Market of the London Stock Exchange within 12 months

of the IPO, depending on the successful deployment of

the capital raised. Many institutional investors were unable

to invest in AIM shares or were only able to take limited

positions. Moving the Company’s listing to the Main Market

has made the shares available to a broader range of

investors, as well as providing eligibility for index and tracker

funds from inclusion in the FTSE All-Share and Small Cap

Indices (effective from 17 March 2023). The new prospectus

issued on 1 December 2022 also included a placement and

share issuance programme.

Interested stakeholders

Shareholders: Existing and prospective shareholders will

benefit from our access to a larger pool of capital tosupport

our growth strategy, and increased liquidity in the shares.

The Company will continue to follow the AIC Code of

Corporate Governance, which incorporates the parts of the

UK Corporate Governance Code relevant to investment

companies. We also note that standards of corporate

governance are typically higher for Main Market companies

than for AIM and our corporate governance has evolved to

ensure that we are meeting these standards.

Occupiers: Increased access to capital will enable us to

add new assets to the portfolio, progress our development

projects to create new lettable space and support our

continued investment in our existing portfolio. This will

benefit occupiers, who will benefit from greater choice of

high-quality lab space to lease from us.

Lenders: Our ability to continue to grow the business

and further enhancements to our corporate governance

framework will improve our risk rating for lenders.

Service providers: Our service providers will benefit from

our continued growth and the opportunity to expand their

work with us.

Impact of the decision in the long term

We believe the move to the Main Market will have significant

long-term benefits, primarily arising from the increase in

growth prospects, a broader shareholder base and greater

liquidity in the Company’s shares.

CASE STUDY: OUR MOVE FROM AIMTO THE MAIN MARKET

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

PRINCIPAL RISKS AND UNCERTAINTIES

To be successful in the long term, our decision-making must

be informed by a clear understanding of our business risks

and opportunities, and our appetite for those risks.

Responsibilities

The Board has overall responsibility for managing risk,

identifying principal risks that may affect the Group’s

objectives and determining the nature and extent of risk

exposure that the business is willing to take in pursuit of its

strategy. The Audit and Risk Committee, on behalf of the

Board, oversees the Group’s framework for risk management.

Our framework for risk management is approved by the

Board. It sets out how we identify, evaluate and report on our

current and emerging risks, and incorporates the assessment

of the controls and mitigation strategies we have in place

for each documented risk. We apply a consistent evaluation

framework to the assessment of risks, providing a clear

basis for considering threats and opportunities across our

activities. Changes to our risk profile, alongside significant and

emergingrisks, are escalated to and considered by the Audit

and Risk Committee.

Our financial and operational performance and reputation are

subject to several risks and uncertainties. These risks could,

either separately or in combination, have a material impact on

our performance, occupiers, third-party service providers, the

environment and shareholder returns.

Our approach

Risk management is embedded in our business

decision-making processes. The Investment Adviser regularly

reviews and updates the corporate risk register, and this

is reported to each Audit and Risk Committee meeting,

highlighting any emerging, additional or deleted risks, changes

to the controls in place or changes to our exposure to that

risk. The Audit and Risk Committee reviews the risk register at

each meeting, with particular focus on the principal risks and

any emerging risks, and provides updates to the Board.

The Audit and Risk Committee also monitors our risk

management processes and approves relevant disclosures.

It has responsibility for monitoring financial reporting

and external audit plans and outputs, as well as providing

assurance to the Board in relation to financial, operational and

compliance controls, all of which are designed to manage our

exposure to risk.

The Board has approved the delegated authority matrix

and key policies, which ensure that responsibility for making

key decisions such as asset acquisitions and disposals is

clearly defined and understood. The authority matrix is

designed to ensure that these significant decisions are

taken at the appropriate level, taking into account the size

and complexity of the transaction, and its significance to

our plans. Whereappropriate, we support our policies with

rigorous guidance and documentation standards, such as our

Acquisition Protocol, which provide further assurance that

decisions are properly supported.

BOARD

Audit and Risk Committee

Management Engagement Committee

Sustainability Committee

Remuneration Committee

Nomination Committee

AIFM

Valuers

Auditors

Depositary

Other external

assurance

Investment

Adviser

Risk Management Framework

Life Science REIT plc Annual Report and Financial Statements 2022

Key climate-

related risks 2023 2024 2025 2026 2027

Occupier demand

changes seeking

more sustainable

options

Whilst our acquisition and development decision processes are designed to

incorporate forecasting and responding to changes in occupier demand, some

elements of this will be reactive, and this does present a potential increase in risk.

Decarbonisation

pathway

Meeting the challenges and targets set in our planned decarbonisation pathway

will require innovation and investment, which lead to an increase in risk.

Stranded assets We consider that our acquisition protocol, and capital investment planning and

approval process will effectively mitigate the risk of stranded assets, ie assets that

occupiers will not wish to lease.

Flooding –

impacting on

occupiers and

asset values

We do not consider that our current portfolio is at significant risk of flooding

andincorporate flood risk consideration in our investment decisions. As our

expertise in this area continues to develop we consider that the level of risk will

decrease further.

Inability to access

Green Finance

options

Our ability to access the benefits from green financing options will be linked

to the delivery of plans and achievement of targets in areas such as energy

efficiency, emissions reduction, and decarbonisation. We are investing in our

plans, which are being developed with the support of external specialists, and

consider that their delivery will reduce our exposure to this risk.

Risk appetite and awareness

Risk awareness exists through our decision-making processes

and is embedded in our systems, policies, leadership,

governance and behaviours. We have a primarily outsourced

model, so we are reliant on service providers, particularly

the Investment Adviser, to make decisions within agreed

parameters the Board has approved.

The Investment Adviser has a clear understanding of our

appetite for risk, which is determined by the Board and

incorporated within the risk framework.

Risk appetite

We have no appetite for risks relating to compliance with

regulatory and environmental requirements, or the safety

and welfare our occupiers, those working on our behalf,

and the wider community in which we work.

Our appetite for risks relating to climate change is low,

and we are actively focusing on identifying and mitigating

physical and transitional risks for the portfolio.

We will accept a reasonable level of risk in relation to

business activities focused on enhancing revenues,

portfolio values and increasing financial returns for

investors.

We seek to balance our risk position between:

• a strong focus on health, safety and regulatory compliance,

with our expectations agreed with service providers and

incorporated within contract documents, and monitored

through performance reviews by the Management

Engagement Committee;

• the acquisition and management of a balanced asset

portfolio, being selective in our acquisition decisions, and

following a clear investment appraisal process;

• a focus on mitigating climate-related risks and opportunities

through our portfolio acquisition decisions, development

planning, capital expenditure plans, and occupier

management and support activities; and

• generating profit and funds through activities, primarily

from our investment and occupier appraisal processes,

and by the effective delivery of activities by our third-party

service providers.

Environmental, social and governance

(“ESG”)risk

We have strengthened our approach to managing ESG risk

during the year. In particular, we have invested heavily in

understanding how we can best mitigate climate-related risks,

bringing in specialist support to assist in this area.

We have updated our risk framework to reflect this additional

emphasis, with a new risk category “Climate-Related Risk”,

covering physical and transitional risks to the portfolio and the

business, arising from climate change. We have overarching

ESG and climate-related risks within the corporate risk

developed a separate climate-related risk register, covering

both physical and transitional risks. This is reviewed by

the Investment Adviser and reported to the newly formed

Sustainability Committee, which has oversight of the Group’s

key risks.

Our assessment of the potential change over time for our key

climate-related risks is set out below. For further details see

page 48.

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

Principal risks

The Board confirms that it has performed a robust assessment

of the Group’s principal and emerging risks and considered

the long term in doing so. The Investment Adviser and the

Audit and Risk Committee regularly review the corporate risk

The Board considers its overarching risk to be that investment

objectives and performance become unattractive to investors,

leading to a widening share price discount to net asset value,

which hinders the ability to raise funds and grow.

The Board has identified its principal risks based on that,

and those are summarised here, along with the current risk

management strategy, the assessment of exposure to each

risk, and any change in assessment since our last report.

Changes in risk, emerging risk

There are no additional principal risks, and we have not

removed any risks previously considered to be principal.

Where the evaluation of the risk has changed, an explanation

has been provided in the detailed section below.

During our regular reviews of the corporate risk register

during the year, we specifically consider emerging risks.

This has led to the addition of a small number of risks to the

and their addition was primarily to ensure that mitigations

andassurances could be formalised.

BUSINESS RISKS

Poor returns on the portfolio

Inability to identify or secure assets/sites for

acquisition

Poor performance of the Investment Adviser or

othersignificant third-party provider

Inappropriate acquisition, or breach of investment

strategy

FINANCIAL RISKS

Interest rate changes

Inability to attract investment, either equity or

debtfunding

Breach of loan covenants, or prospectus

borrowingpolicy

COMPLIANCE RISKS

Loss of REIT status

CLIMATE-RELATED RISKS

Impact of climate change

Low risk

High risk

The heat map summarises the Group’s current principal risk exposures

Likelihood

Impact

6 5

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Life Science REIT plc Annual Report and Financial Statements 2022

BUSINESS RISKS

Risk Mitigations

POOR RETURNS

ONTHE PORTFOLIO

Achieving the targeted level of return

on our property portfolio over time is

fundamental to the success of the business.

The risk of a reduced return on the portfolio

could be caused by a number of factors,

including:

• reduced property valuations;

• reduced rent levels;

• an inappropriate balance of property

types within the portfolio;

• cost of capital increases, particularly as

interest rates rise;

• higher than anticipated void rates, and

bad debts; and

• increasing new tenancy costs (shorter

leases or significant works required to

attract occupiers.

In addition to these direct portfolio factors,

external macroeconomic challenges

reducing investment in the life sciences

sector, subsequently reducing property

values and rent incomes, and in the medium

to longer term this could also impact on the

number of potential occupiers looking for

property.

Our approach to the management of risk around the

portfolio follows three interlinked elements:

Asset value – we have a robust acquisition and

development process, with detailed modelling

undertaken to support acquisition decisions, and our

plans to develop and fit out space. Our investment

protocol reflects our delegated authority matrix,

ensuring that decisions are made at the right level,

and particularly significant decisions are referred to

the Board.

We aim to have a balance between sites developed

with occupiers, and the development of sites,

particularly with specialist facilities such as lab space,

in advance. This mix enables us to both meet potential

occupier requirements where these are very specific,

and also to attract potential occupiers who are

looking for reduced fit out cost and time. This helps

todrive rents and reduces void lengths.

We also undertake specialist asset opportunity

analysis to identify potential target occupiers to

approach proactively.

Occupier quality – our occupier take on process

includes ensuring we fully understand occupier

requirements and are confident that we can deliver

the asset functionality and quality required, and

also detailed evaluation of the potential occupiers

themselves, to ensure that they have a business

model and financial plans that can support the lease

and other property costs. Lease rates are flexed to

reflect the lease period, and we take rent guarantees

and rent deposits if appropriate.

Property management – our property manager is a

market leader in the field, with a depth and breadth of

resources across the range of management activities,

from rent collection, to asset maintenance and

tenancy management, to building and encouraging

sustainable and energy efficient operations within

our asset base. The property managers work closely

with the Investment Adviser’s asset managers,

and together they provide regular performance

review and reports to the Board. Rent collection

performance is also monitored by Link, who are

responsible for rent collection accounting and

maintenance of the debtor ledger.

Residual exposure:

Medium

Change:

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

BUSINESS RISKS

Risk Mitigations

INABILITY TO

IDENTIFY OR SECURE

ASSETS/SITES FOR

ACQUISITION

There is a risk that we may lose investment

opportunities and/or potential occupiers

to competitors. This could be driven by

aggressive competitors, the overall level

of competition in the market, insufficient

suitable available assets in the market,

or acquisition prices that would make it

difficult for us to generate sufficient returns.

There is insufficient space available in the market to

meet demand at the moment, and this is a focus area

for growth and government initiatives, which gives

us confidence that occupiers’ need for appropriate

space will continue. Our strategy includes acquiring

existing facilities, sites planned for new development,

and buildings which can be converted to meet the

specialist requirements of the sector.

Our Investment Adviser has an experienced

management team and is supported by external

property management specialists, who have

extensive expertise in the life sciences market. The

Investment Adviser regularly updates the Board on

the acquisition pipeline.

Residual exposure:

Medium

Change:

POOR

PERFORMANCE OF

THE INVESTMENT

ADVISER OR OTHER

SIGNIFICANT

THIRD-PARTY

PROVIDER,

INCLUDING

INACCURATE

OR INCOMPLETE

REPORTING

We operate an outsourced model and

depend on the performance of our

third-party service providers, particularly

the Investment Adviser, AIFM, Property

Manager and Fund Administrator.

Poor delivery from key providers could

result in poor decisions, reduced portfolio

returns or regulatory compliance failures,

and could have a financial impact on

investors. This risk covers all operational

areas of the business:

• environmental;

• health and safety;

• portfolio changes;

• portfolio and property management; and

• accounting and reporting.

We rely on receiving high-quality, accurate

and timely information from our service

providers, and inaccurate or incomplete

information could damage our finances,

properties, occupiers and reputation. In

particular, inaccurate information could

increase our revenue risk, as we depend on

third parties to invoice, collect, bank and

record revenues.

Our governance framework is designed to ensure

that the Board is involved with key decisions that are

material to the success of the business. There is an

approved delegated authority matrix and matters

reserved for the Board are defined.

Our service providers are contracted, with clear terms

of service and our expectations clarified. We have

contracted with organisations which are recognised

as experts in their fields.

The principal third-party providers oversee and

review our activities, with the AIFM reviewing

and approving key transactions proposed by the

Investment Adviser, and the Investment Adviser

monitoring the performance of the property

managers. Financial reports and information are

prepared by Link and checked by the Investment

Adviser’s Finance team, prior to reporting to the

Board.

The Board and Investment Adviser work together,

with regular Board meetings and ongoing contact

between the formal meetings. The Investment Adviser

has strengthened its team during the year, providing

additional resilience in the delivery of its services.

The Board members are experienced individuals,

appointed for their knowledge and their business and

commercial acumen. In addition to their performance

reviews and variance analysis as part of the normal

quarterly Board meetings, they formally review the

performance of key third-party service providers

through the Management Engagement Committee.

The valuation of the portfolio is a key risk area for the

Group. The valuation is undertaken by an independent

valuer, which provides additional assurance for the

Board on the accuracy of key metrics reported by the

Investment Adviser.

Residual exposure:

Medium

Change:

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Life Science REIT plc Annual Report and Financial Statements 2022

BUSINESS RISKS

Risk Mitigations

INAPPROPRIATE

ACQUISITION,

OR BREACH OF

INVESTMENT POLICY

Acquiring assets or taking on occupiers

which are not in line with our investment

policy and objectives could have a

detrimental effect on our portfolio values,

finances or reputation, and could also

increase risk for occupiers, particularly in

multi-tenanted properties.

Our investment policy is supported by processes

designed to ensure that acquisitions meet our

requirements.

Our acquisition protocol includes robust due diligence

processes and assessment against clear investment

criteria, including portfolio mix, property type and

quality, legal issues, environmental requirements,

sector and quality of occupier.

The Investment Adviser considers all potential

acquisitions against the investment policy, before

approval or referral to the Board for approval, where

required by the size of the acquisition. All acquisitions

and disposals are also approved by the AIFM. The

Board is informed of all acquisitions, whether its

approval is required or not.

The Investment Adviser and the Property Manager

provide us with expert knowledge of the properties

and geographical locations which are best suited

to the life science market, and decisions are made

around the acquisition pipeline accordingly, ensuring

that our property portfolio is best suited to the needs

of our target occupiers.

We also fully assess potential occupiers, ensuring that

they are clearly linked to the life science sector and

are of suitable financial stability and strength for the

lease concerned. These processes are designed to

ensure that our portfolio continues to be managed in

accordance with the stated investment policy.

Residual exposure:

Low

Change:

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

FINANCIAL RISKS

Risk Mitigations

INTEREST RATE

CHANGES

Interest rate rises may impact our ability to

utilise funding to execute our strategy, and

may also have an impact on the portfolio,

as occupiers may have reduced willingness

or ability to pay rents sufficient to make

properties profitable.

As we are unable to mitigate the potential for interest

rate rises, we focus on managing and mitigating

the consequences. We have developed a financing

strategy, with the use of interest rate caps and hedges

considered by the Investment Adviser and the Board,

and implemented as agreed.

Residual exposure:

High

Change:

Risk Mitigations

INABILITY

TO ATTR ACT

INVESTMENT, EITHER

EQUITY OR DEBT

FUNDING

There is a risk that we may be unable

to attract new investors or increased

investment from existing shareholders,

affecting our ability to grow and deliver our

strategic objectives.

This risk has increased over the year,

as general economic conditions have

deteriorated, and the interest rate risk

referred to above may make it more difficult

to agree funding at appropriate rates or

with appropriate conditions.

Our reputation for providing quality, well-managed

and suitable assets, in the right locations, will be key

to mitigating this risk. Our performance has been

positive, with several attractive assets acquired, and a

clear acquisition strategy for the future.

We have an experienced Investment Adviser, with a

good reputation and excellent market knowledge.

Our Board members have extensive experience

working within and for the life sciences sector, and

are key to our reputation in the market, through

their knowledge of the requirements and needs of

potential occupiers.

Residual exposure:

High

Change:

BREACH OF LOAN

COVENANTS, OR

PROSPECTUS

BORROWING POLICY

We set out our expected and maximum

loan to value ratios in the prospectus, and

separately have a loan to value ratio agreed

within our bank funding facilities.

Breach of any of these ratios, or the terms

and conditions of the funding facility, could

have a serious impact on the delivery of

our objectives, through cash shortages or

damage to our reputation.

The Investment Adviser is responsible for monitoring

operations, financial transactions and performance,

and reviews the financial position continuously to

ensure that neither the loan to value ratio nor any

specific requirements of the funding facility are

breached.

The Investment Adviser applies comprehensive

financial models to plan cash flows and funding

requirements. Cash availability is built into the

investment decision-making process. All acquisitions

are approved by the AIFM and the Depositary, and all

significant acquisitions and capital expenditure plans

are approved by the Board.

The cash position is reconciled monthly to the records

produced by Link, and the bank statements, by the

Investment Adviser’s Finance team.

Residual exposure:

Medium

Change:

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Life Science REIT plc Annual Report and Financial Statements 2022

COMPLIANCE RISKS

Risk Mitigations

LOSS OF REIT

STATUS

Failing to comply with the REIT framework

would put our status as a REIT at risk,

resulting in a potentially significant impact

on our shareholders.

We have a detailed governance framework, with

clearly allocated responsibilities set out in the

delegated authority matrix, and in contracts with the

Investment Adviser and other key service providers.

We obtain advice as needed from the AIFM, our

brokers and external legal support in relation to

governance compliance, FCA and listing rules.

Our position against the key requirements of the

REITlegislation is reviewed by the Investment Adviser

each month, by Link quarterly, and is reported to

the Board. Cash and earnings cover for dividends

is monitored through the comprehensive cash flow

forecasting process.

Residual exposure:

Medium

Change:

CLIMATE-RELATED RISKS

Risk Mitigations

IMPACT OF CLIMATE

CHANGE

The potential impact of climate change

is one of our principal risks, as we seek to

both reduce our impact on the environment

and the impact of climate change on our

activities, portfolio and finances.

We have developed a separate climate risk

mitigate both physical and transitional risks.

Key risks documented in that register

include:

• change in occupiers’ requirements, as

they seek more sustainable property

options;

• inability to access green funding, leading

to higher financing costs;

• the potential for assets to be impacted

by extreme weather events such as

prolonged extreme heat or flooding,

reducing occupiers’ willingness to lease

properties, property rental values and

therefore the value of our portfolio; and

• potential cost impacts from our

decarbonisation pathway.

We are already seeing the increasing impact of

climate change on our environment and we recognise

our responsibility to develop a portfolio and

associated working practices which will reduce our

environmental impact, while enabling us to deliver

results for our investors.

Further details are included in our TCFD and

Sustainability reports (see pages 38 to 57), but

a summary of the actions we have taken and

plannedare:

• new developments to be BREEAM ‘Excellent’ or

‘Very Good’ rated;

• environmental assessment of all potential

acquisitions, as part of the acquisition process;

• EPC plus reports are part of our standard process

for acquisitions, and we are now using them for all

buildings where appropriate to provide a baseline

position. These reports are used to support our

decarbonisation plans;

• capital expenditure planning includes

consideration of climate-related risk, with

appropriate building standards being applied,

suchas energy efficient lighting and heating,

andareduction in greenhouse gas emissions;

• external specialists have been appointed to assist

us with developing our sustainability roadmap and

route to carbon zero; and

• our standard quarterly Board report pack includes

ESG and climate-related risk information, to ensure

that Board members are fully informed.

Residual exposure:

Medium

Change:

STRATEGIC REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

GOING CONCERN AND VIABILITY STATEMENT

Going concern

The Board monitors the Group’s ability to continue as a going

concern. Specifically, at quarterly Board meetings, the Board

reviews summaries of the Group’s liquidity position and

compliance with loan covenants, as well as forecast financial

performance and cash flows. Throughout the period, the

Board had been meeting frequently, in conjunction with the

Investment Adviser, to review cash resources and acquisitions

of investment properties.

The Group ended the year with £45.6 million of unrestricted

cash and £92.6 million of headroom readily available under

its debt facilities. The Group is operating significantly

within its covenants and a sensitivity analysis has been

performed to identify the decrease in valuations and rental

income that would result in a breach of the LTV, or interest

cover covenants. For the HSBC facility, valuations would

need to fall by 43.9% or rents by 30.5%, when compared

with 31December 2022, before these covenants would

be breached, which, based on available market data, is

considered highly unlikely.

As at 24 March 2023, 98.0% of rents invoiced in

December2022 in relation to the quarter to 24 March 2023

were received.

As part of the going concern assessment, and taking the

above into consideration, the Directors reviewed a number

of scenarios which included extreme downside sensitivities

in relation to rental cash collection, making no acquisitions

or discretionary capital expenditure, and minimum dividend

distributions under the REIT rules.

Based on this information, and in light of mitigating actions

available, the Directors have a reasonable expectation that the

Group and the Company have adequate resources to continue

in business for a period of at least 12 months from the date

of approval of the Annual Report and Financial Statements.

The Directors are also not aware of any material uncertainties

that may cast significant doubt upon the Group’s ability to

continue as a going concern. They therefore have adopted the

going concern basis in the preparation of the Annual Report

and Financial Statements.

Assessment of viability

In accordance with the AIC Code of Corporate Governance,

the Directors have assessed the Group’s prospects over a

period greater than the 12 months considered by the going

concern provision. The Directors have conducted their

assessment over a three-year period to 31 December 2025,

allowing a reasonable level of accuracy given typical lease

terms and the cyclical nature of the UK property market.

The principal risks detailed on pages 62 to 69 summarise

the matters that could prevent the Group from delivering its

strategy. The Board seeks to ensure that risks are kept to a

minimum at all times and, where appropriate, the potential

impact of such risks is modelled within its viability assessment.

The Group’s investment portfolio acquired to date delivers the

intended investment strategy of a diversified portfolio located

within the Golden Triangle of Oxford, Cambridge and London

located near major universities, hospitals and public and

commercial organisations where there is a shortage of high

quality real estate space to support expanding life science

businesses. This is expected to lead to low vacancy rates and

further rental and capital growth.

The Directors’ assessment takes into account forecast

cash flows, debt availability, forecast covenant compliance,

dividend cover and REIT compliance. The model is then stress

tested for severe but plausible scenarios, individually and in

aggregate, along with consideration of potential mitigating

factors. The key sensitivities applied to the model are a

downturn in economic outlook and restricted availability of

finance, specifically:

• Increased occupier turnover

• Increased void costs

• Increased interest rates

Taking into account mitigating actions, the results of the

sensitivity analysis and stress testing demonstrated that the

Group would have sufficient liquidity to meet its ongoing

liabilities as they fall due, maintain compliance with banking

covenants and maintain compliance with the REIT regime

overthe period of the assessment.

Life Science REIT plc Annual Report and Financial Statements 2022

Furthermore, the Board, in conjunction with the Audit and

Risk Committee, carried out a robust assessment of the

principal risks and uncertainties facing the Group, including

those that would threaten its business model, strategy, future

performance, solvency or liquidity over the three-year period.

The risk review process provided the Board with assurance

that the mitigations and management systems are operating

as intended. The Board believes that the Group is well

positioned to manage its principal risks and uncertainties and

the economic and political environment.

The Board’s expectation is further supported by regular

briefings provided by the Investment Adviser. These briefings

consider market conditions, opportunities, changes in the

regulatory landscape and the current economic and political

risks and uncertainties. These risks, and other potential

risks which may arise, continue to be closely monitored by

theBoard.

Viability statement

The period over which the Directors consider it is feasible

and appropriate to report on the Group’s viability is a

three year period to December 2025. This period has been

selected because it is the period that is used for the Group’s

medium-term business plan. Underpinning the plan is an

assessment of each unit, driving the letting and capital

expenditure assumptions. These in turn drive the financing

assumptions and other forecast cashflows.

Having considered the forecast cash flows, covenant

compliance and the impact of sensitivities in combination, the

Directors confirm that, taking account of the Group’s current

position and the principal risks set out in the strategic report,

they have a reasonable expectation that the Group will be able

to continue in operation and meet its liabilities as they fall due

over the three-year period of their assessment.

On behalf of the Board

Claire Boyle

Chair

24 March 2023

Cambourne Business Park, Cambridge

CORPORATE GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

WE WORKED HARD TO PUT

A ROBUST GOVERNANCE

FRAMEWORK IN PLACE

BEFORE THE IPO AND HAVE

MADE FURTHER GOOD

PROGRESS WITH OUR

GOVERNANCE AGENDA

DURING 2022.

CLAIRE BOYLE

Chair and Non-Executive Director

The importance of strong governance to a company’s success

is well established, as it provides a framework within which

we can effectively implement our strategy. We worked hard

before the IPO to put a robust governance framework in place

and have made good progress since Admission. You can find

further details in the followingpages.

Following shareholder approval, Life Science REIT plc

(the “Group”) migrated its listing from the AIM market of

the London Stock Exchange to the premium segment of

the London Stock Exchange on 1 December 2022 and is

therefore required to comply with the AIC Code of Corporate

Governance (the “AIC Code”) published by the Association of

Investment Companies and to state how it will comply with

that code.

The AIC Code addresses the principles and provisions set

out in the UK Corporate Governance Code as published by

the Financial Reporting Council (the “UK Code”), as well as

setting out additional principles and provisions on issues that

are of specific relevance to listed investment companies. The

Board considers that reporting against the principles and

recommendations of the AIC Code will provide more relevant

information to its shareholders.

During the year ended 31 December 2022, we made good

progress with our governance agenda. Highlights included

the following: we successfully implemented our succession

planning programme with the appointment and induction of

Richard Howell as Chair of the Audit and Risk Committee and

Senior Independent Director; set up new Board Committees

and reorganised existing Director responsibilities accordingly;

worked on our ESG and sustainability strategy framework,

appointing Sally Ann Forsyth as Sustainability Lead, reflecting

the importance we and our stakeholders place on ESG

considerations; ensured compliance with the applicable

principles and provisions of the AIC Code following Admission

to the Main Market; reviewed all the acquisitions made in the

year and approved the purchase of assets in the investment

pipeline of the Group. We have also set agendas for the Board

for the year ahead including a separate strategy day that took

place in February 2023.

As part of good governance practice, the Board set up a

Nomination Committee and a Remuneration Committee

under the chairship of Sally Ann Forsyth and Michael Taylor

respectively post the migration of Company’s listing to

the premium segment of the London Stock Exchange.

ASustainability Committee has also recently been set up with

Sally Ann Forsyth as the Chair, with the first meeting being

held in February 2023.

CHAIR’S INTRODUCTION TO GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

The Directors are working well together and we have a

collegiate culture, with open discussions and appropriate

challenge. We are benefiting from our complementary

backgrounds, which include experience in life science real

estate, life science organisations, finance and investment

trusts. As at the date of this report, 50% of the Board is female

and we will continue to consider diversity, including ethnicity,

in future appointments.

The Board’s priorities for 2023 include supporting and

overseeing the Investment Adviser in the continued successful

implementation of our strategy. We will also continue to

embed the Group’s corporate governance framework and

further develop the Board’s relationships with our other

service providers. As an externally managed business, our

service providers play an important part in our governance

arrangements and the Management Engagement Committee

chaired by Michael Taylor works with the Investment Adviser

toensure they continue to function effectively.

Claire Boyle

Chair

24 March 2023

AIC CODE – PRINCIPLES PAGE

BOARD LEADERSHIP

ANDPURPOSE

COMPOSITION,

SUCCESSION AND

EVALUATION

REMUNERATION

DIVISION OF

RESPONSIBILITIES

AUDIT, RISK AND

INTERNAL CONTROL

74 to 81

81 to 85

94 and 95

78 to 80

87, 91 to 93

CORPORATE GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

The Board consists solely of independent Non-Executive

Directors. During the year under review, Richard Howell was

appointed as a Non-Executive Director of the Company.

Claire was appointed as a Director of the Company on

14October2021. Claire is a non-executive director and chair of the

audit committee of Fidelity Special Values Plc and Aberdeen Japan

Investment Trust PLC and a non-executive director of The Monks

Investment Trust.

She has over 20 years’ experience working in financial services and

investment management, having qualified as a chartered accountant

with Coopers and Lybrand, where she specialised in litigation support

and forensic accounting. Claire then spent 13 years working in equity

investment management for Robert Fleming Investment Management,

American Express Asset Management and latterly Oxburgh Partners,

where she was a partner with responsibility for their European

HedgeFund.

Claire has a degree in Natural Sciences from Durham University

and is a Fellow of the Institute of Chartered Accountants in England

andWales.

Sally Ann was appointed as a Director of the Company on

14October2021. Sally Ann is CEO of the Stevenage Bioscience

Catalyst and is a pioneer of the life science real estate industry with

16years of experience in the delivery of outstanding science parks.

She has been responsible for the strategy, growth and development

of four internationally recognised clusters including Harwell Oxford,

Colworth Science Park, Norwich Research Park and most recently

Stevenage Bioscience Catalyst, where she is CEO.

She began her career with Unilever where she had lead responsibility

for Scientific Strategic Alliances and Open Innovation and gained an

insight into the needs of growing companies as part of the founding

team of Unilever Ventures. She gained her property experience

through Goodman International where she was Director of Science

Parks responsible for the development and management of their

UKportfolio.

Sally Ann has a PhD in Molecular Biology from the University of

Cambridge, a certificate in Real Estate Economics and Finance from

LSE and is a qualified management accountant (CGMA). She was

awarded an OBE for services to Business and Science in 2021.

BOARD OF DIRECTORS

Claire Boyle

Chair of the Board of Directors

Appointed: 14 October 2021

   

Dr Sally Ann Forsyth OBE

Non-Executive Director and

Chair of the Nomination Committee

and Sustainability Committee

Appointed: 14 October 2021

   

Life Science REIT plc Annual Report and Financial Statements 2022

With effect from 24 June 2022, Richard took on the role

ofSeniorIndependent Director of the Company and Chair

oftheAudit and Risk Committee.

Michael was appointed as a Director of the Company on

14October2021.

Michael is the Commercial Director for the British Heart Foundation

(“BHF”) which is the largest funder of life science research into heart

and cardio-vascular disease in the UK. Since joining the BHF in 2012 he

has overseen significant growth and diversification of their commercial

revenues across the extensive retail estate of over 700 retail shops,

new online channels and commercial health ventures, with annual

revenues now exceeding £200 million p.a.

Prior to joining BHF he spent over 20 years working in senior roles in a

wide range of major retailers with significant retail, logistic and office

property portfolios, and has been managing director of a number of

national retailers including Budgens, Londis and Whittard.

Michael has a degree in Economics from UEA.

Richard was appointed as a Director of the Company on 3 May 2022.

Richard is Chief Financial Officer of Primary Health Properties plc,

the FTSE 250 REIT and leading investor in flexible, modern primary

healthcare accommodation across the UK and Ireland.

Richard is a Chartered Accountant and has over 20 years’ experience

working with London-listed commercial property companies, gained

principally with LondonMetric Property plc and Brixton plc. Richard

was part of the senior management team that led the merger of Metric

Property Investments plc and London & Stamford Property Plc in

2013 to create LondonMetric Property plc with a combined property

portfolio of £1.4 billion.

Richard has extensive finance experience, having previously held senior

accounting positions within listed property companies operating across

the UK. Whilst working for LondonMetric Property plc and Brixton plc,

he has been involved in over £5 billion of property transactions.

Michael Taylor

Non-Executive Director and

Chair of the Management Engagement Committee and

Remuneration Committee

Appointed: 14 October 2021

   

Richard Howell

Senior Independent Director and

Chair of the Audit and Risk Committee

Appointed: 3 May 2022

   

Key to Committees:

Audit and Risk

Committee

Management

Engagement Committee

Nomination

Committee

Remuneration

Committee

Sustainability

Committee

CORPORATE GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

The Board has appointed Ironstone Asset Management

Limited toprovide day-to-day investment advisory and

assetmanagement services to the Group.

INVESTMENT ADVISER

Ian is a qualified chartered surveyor with

over 30 years’ experience in the UK real

estate market. His asset management career

began at Imry Holdings where he was

responsible for the £200 million Halogic

Portfolio in joint venture with GE Real Estate.

He moved on to become Director of Frame

Investments Limited, a privately owned

property investment and asset management

company specialising in multi-let value-add

portfolios in the UK with financial partners

including PRICOA and Portfolio Holdings

Limited. He was then appointed Director of

Asset Management for the Strategic Partners

series of UK value-add funds at CBRE Global

Investors with assets under management

of £1billion. Subsequently, he went on to

co-found Westmount Real Estate Ltd, a

boutique investment advisory and asset

management business acting for a wide range

of domestic and international investors. Ian

has a BSc in Land Management from the

University of Reading and is a Member of the

Royal Institution of Chartered Surveyors.

Simon is an experienced fund manager and

chartered surveyor with over 30 years of

experience in the UK real estate market.

Previously he was a Managing Director of

the UK Funds business of CBRE Global

Investors and a member of their UK Executive

Committee and Investment Committee.

Prior to that he was a Business Development

Director at GE Capital Real Estate. Latterly,

Simon was a founding director of Westmount

Real Estate, a boutique real estate investment

advisory and asset management business

advising on acquisitions, asset management

and financing across all UK sectors. He

has considerable experience in sourcing,

managing and financing across many real

estate asset classes along with developments,

forward fundings and corporate transactions.

He has a BSc in Land Management from the

University of Reading.

Stephen has over 30 years’ experience

setting up and managing funds. Starting as

an investment analyst at Morgan Grenfell,

Stephen managed the £5 billion UK Equity

Exempt Fund in the 1990s combined

with the role of Head of Global Research.

Stephen then set up the successful Global

Equity Select strategy at Morgan Grenfell

in 2002. Leaving Morgan Grenfell in 2005,

Stephen built a successful team at IronBridge

International and, as founding CIO, ultimately

managed over $7 billion for a range of UK

and overseas clients. Since 2012, Stephen

has been investing in a range of property

vehicles alongside colleague Simon Hope,

notably Warehouse REIT. Stephen has an MA

in Economic History from the University of

StAndrews.

Ian Harris

Director of Asset Management

Simon Farnsworth

Managing Director

Stephen Barrow

Chair (Non-Executive Director)

Life Science REIT plc Annual Report and Financial Statements 2022

Please see pages 30 to 37 for the

Investment Adviser’s report.

David has over 30 years’ commercial and

financial global experience, most recently

with Round Hill Capital, a real estate private

equity firm. He has held senior executive

positions with Campus Living Villages,

Balfour Beatty Investments and Lend Lease

Infrastructure and was the European CFO of

Babcock & Brown, the investment manager

who established the now FTSE 250 listed

company International Public Partnerships.

Previously David was a Technical Director

with Ernst & Young in Australia and is a Fellow

of the Institute of Chartered Accountants,

England & Wales. David has a BSc in Fuel and

Energy and Management Studies from the

University of Leeds.

Simon is a Senior Adviser at Savills UK, with

over 35 years’ tenure at the company. From

2004 to 2021 he was Global Head of Capital

Markets specialising in portfolio investment

construction, acquisitions and disposals.

He was a founding director of the Charities

Property Fund which is now £1.5 billion in

size. He chaired Grosvenor Hill Ventures

until 2007, which was Savills’ proprietary

trading and investment arm for property.

In 2013 he became chairman of Tilstone

Partners Limited, which is the investment

adviser to Warehouse REIT plc, and is a

non-executive director of Warehouse REIT

plc, an AIM-quoted real estate investment

trust which was launched in 2017 and which

has a market cap of more than £650 million.

Simon was the executive sponsor of Savills’

Life Science practice which incorporates

a multi-disciplinary team of over 18

professionals. He studied Estate Management

at the Royal Agricultural College, Cirencester

and is a RICS Fellow. He also holds an MBA

from Reading University.

David Lewis

Finance Director

Simon Hope

Vice-Chair (Non-Executive Director)

January – March 2022 April – June 2022

• External debt facility approved

• Updates from Management Engagement Committee

and Audit and Risk Committee Chairs

• Review of investment policy and Matters reserved

forBoard

• Acquisition of Herbrand Street approved

• Acquisition of OTP approved

• Approval of Annual Report and Financial Statements

for the year ended 31 December 2021

• Approval of policy regarding responsibilities of

theChair

• Annual General Meeting

Key Board activities during the year

At each quarterly Board meeting a report from both the AIFM and the Investment Adviser is reviewed, which includes relevant

matters to highlight since the previous meeting and details of portfolio activity, the pipeline and health and safety matters.

CORPORATE GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

This report explains the key features of

theGroup’s governance structure.

Statement of compliance

As highlighted in the Chair’s statement on page 9 the

Company migrated the listing of its ordinary shares from

the AIM market of London Stock Exchange to the premium

segment of the London Stock Exchange on 1 December 2022.

The UK Listing Rules require listed companies to disclose

how they have applied the principles and complied with the

provisions of the UK Corporate Governance Code.

The Board has considered the principles and provisions of

the AIC Code of Corporate Governance published by the

Association of Investment Companies (the “AIC Code”).

TheAIC Code addresses the provisions set out in the UK

Corporate Governance Code as published by the Financial

Reporting Council (the “UK Corporate Governance Code”),

as well as setting out additional provisions on issues that are

of specific relevance to listed investment companies. The

Board considers that reporting against the principles and

recommendations of the AIC Code will provide more relevant

information to its shareholders.

The Company complies with the AIC Code which complements

the UK Corporate Governance Code and provides a framework

of best practice for listed investment companies.

As an externally managed investment company with no

executive directors, employees or internal operations, all

of its ongoing management and administration functions

are delegated to the Investment Adviser and other service

providers, and as such the Board does not consider that

the above provisions are relevant to the Company. We have

therefore not reported further on these provisions.

In accordance with the AIC Code, the Company established an

Audit and Risk Committee and a Management Engagement

Committee. Following the migration of the Company’s

ordinary shares to the premium segment of the London Stock

Exchange, the Board agreed to establish separate Nomination

and Remuneration Committees under the chairship of

SallyAnn Forsyth and Michael Taylor respectively.

The Board undertakes an annual review of its compliance

with the principles and recommendations of the AIC Code of

Corporate Governance. A copy of the AIC Code, which was

last updated in 2019, can be obtained via the AIC website,

www.theaic.co.uk.

Board of Directors

Under the leadership of the Chair, the Board of Directors is

collectively responsible for the long-term sustainable success

of the Company, generating value for shareholders and

contributing to wider society.

CORPORATE GOVERNANCE STATEMENT

July – September 2022 October – December 2022

• Approval of 2022 Interim Report

• Approval of interim 2022 dividend

• Consideration of move to Main Market listing

• Approved move from AIM to Main Market listing

• Financial year 2023 budget approval

• Review of Directors’ performance evaluation for the

year ended 31 December 2022

The Board receives and reviews a quarterly share register analysis, as well as a report from the Company Secretary including

regulatory and governance updates.

Life Science REIT plc Annual Report and Financial Statements 2022

It establishes the purpose, values and strategic aims of the

Group and satisfies itself that these and its culture are aligned.

The Board ensures that the necessary resources are in place

for the Group to meet its objectives and fulfil its obligations

to shareholders within a framework of high standards

of corporate governance and effective internal controls.

The Directors are responsible for the determination of the

Group’s investment policy and strategy and have the overall

responsibility for the Group’s activities, including the control

and supervision of the AIFM and Investment Adviser.

The Board consists entirely of independent Non-Executive

Directors. The Directors possess a wide range of relevant

business and financial expertise and brief biographies,

including details of their significant commitments, can be

found on pages 74 and 75. The Directors consider that they

are able to commit sufficient time to the Group’s affairs.

None of the Directors has a service contract. Letters of

appointment set out the terms of their appointment and

copies are available on request from the Company Secretary

at LABS_CoSec@Linkgroup.co.uk and will be available at

the AGM. The Directors are not entitled to any compensation

for loss of office. Under the Company’s Articles and in

accordance with the AIC Code, Directors are required to retire

at each AGM and seek annual re-election.

The Company has established an induction procedure for

new Directors, including the provision of an induction pack

containing information about the Group, its processes and

procedures. New appointees would also meet the Chair, the

wider Board and relevant personnel at Ironstone.

CORPORATE GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

Chair and Senior Independent Director

The Chair, Claire Boyle, and the Senior Independent Director,

Richard Howell, were deemed by their fellow independent

Board members to have been independent on appointment

and to have no conflicting relationships.

The role and responsibilities of the Chair are outlined below

and clearly defined and set out in writing, a copy of which is

available on the Group’s website at www.lifesciencereit.co.uk.

The Senior Independent Director acts as a sounding board

for the Chair and as an intermediary for other Directors

when necessary. He leads the annual appraisal of the Chair’s

performance, takes responsibility for an orderly succession

process and is also available to shareholders to discuss any

concerns they may have.

Purpose and culture

The Group’s purpose is to own and manage life sciences real

estate across the UK, providing the space its occupiers need

for their businesses to thrive. Further information about the

purpose of the Group can be found in the strategic report

atpage 8.

The Chair leads the Board and is responsible for its overall

effectiveness in directing the Group. She demonstrates

objective judgement, promotes a culture of openness and

debate, and facilitates effective contributions by all Directors.

In liaison with the Company Secretary, she ensures that the

Directors receive accurate, timely and clear information.

TheDirectors are required to act with integrity, lead by

example and promote this culture within the Group.

The Board seeks to ensure the alignment of the Group’s

purpose, values and strategy with the culture of openness,

debate and integrity through ongoing dialogue and

engagement with the AIFM, Investment Adviser and the

Group’s other service providers. The culture of the Board will

be considered as part of the annual performance evaluation

process which is undertaken by each Director. The culture

of the Group’s service providers is also considered by the

Board during the annual review of their performance and

while considering their continuing appointment. This includes

assessing their approach to significant ethical issues such as

modern slavery. The Company’s Modern Slavery Statement,

reviewed by the Board each year, is available from its website

www.lifesciencereit.co.uk.

Nomination Committee

As noted on page 85, following the Company’s migration

of the listing of its ordinary shares to the premium segment

of the London Stock Exchange, the Board has established

a separate Nomination Committee. The Nomination

Committee consists of the whole Board and is chaired by

SallyAnnForsyth. The Committee meets at least annually

and terms of reference are in place which include reviewing

the Board’s size, structure and diversity, succession planning

and training. Potential new Directors are identified against the

requirements of the Group’s business and the need to have

a balanced Board. The Company is committed to ensuring

that any vacancies arising are filled by the most qualified

candidates.

CORPORATE GOVERNANCE STATEMENT CONTINUED

Structure of the Board

Management

Audit and Risk Nomination Remuneration Sustainability Engagement Independent/

Committee Committee Committee Committee Committee Non-independent Gender

Claire Boyle

Independent Female

Sally Ann Forsyth

Independent Female

Michael Taylor

Independent Male

Richard Howell

Independent Male

1. Chair of the Board during the year and Chair of the Management Engagement Committee until 11 March 2022.

2. Chair of the Nomination Committee with effect from 1 December 2022 and Sustainability Lead during the year. Chair of the Audit and Risk Committee until

24 June 2022.

3. Chair of the Management Engagement Committee with effect from 11 March 2022 and the Remuneration Committee with effect from 1 December 2022.

4. Appointed 3 May 2022. Senior Independent Director and Chair of the Audit and Risk Committee with effect from 24 June 2022.

Life Science REIT plc Annual Report and Financial Statements 2022

Recruitment and succession planning activities

Prior to establishment of the Nomination Committee, the

Board lead the process for appointments of new Directors

to the Board and its Committees, and ensured plans were in

place for orderly succession and oversaw the development

of a diverse pipeline for succession. Furthermore, the Board

was responsible for ensuring that there was a formal, rigorous

and transparent procedure for the appointment of new

Directors to the Board, including a review of other significant

commitments Directors may have.

During the year, the Board engaged in a search for a fourth

Non-Executive Director with assistance from the executive

search firm Odgers Berndtson. The Board confirms that

Odgers Berndtson is independent of the Company and each

of its Directors as of the date of this report.

The Board identified for this search that any one of the

following attributes were important for the successful

candidate to be able to contribute to the Board, and would

further be considered during the Company’s ongoing

succession planning:

Chair

Non-Executive Directors

Audit and

Risk Committee

Nomination

Committee

Purpose

Culture

Remuneration

Committee

Management

Engagement

Committee

• recent and relevant financial experience;

• transactional experience in the area of property

acquisitions;

• exposure to commercial real estate and/or real estate

asset management; and

• board experience from a plc environment.

Following a consideration of the desired background and

expertise of the new Director in order to complement the

skills already on the Board as stated above, a shortlist of

potential candidates was then provided by Odgers Berndtson.

The Directors met with a number of these candidates,

following which Richard Howell was appointed to the Board

on 3May2022. Please see page 75 for Richard Howell’s

biography.

The Nomination Committee will hold its first meeting in

2023, at which the Board plans that a skills matrix will be

created and discussed to identify current strengths and areas

of weakness for the Board to consider during its ongoing

succession planning activities.

Investment Asset management Financial

Sustainability

Committee

CORPORATE GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

Diversity and inclusion

In accordance with the AIC Code, the Board is comprised of

a group of individuals who have an appropriate balance of

skills and experience to meet the future opportunities and

challenges facing the Group. Appointments are made first

and foremost on the basis of merit and taking into account

the recognised benefits of all types of diversity. The Board

ensures that diversity is an important consideration and part

of the selection criteria used to assess candidates to achieve a

balanced Board.

In April 2022, the FCA announced additional diversity targets

for FTSE listed companies on a ‘comply or explain’ basis, the

reporting of which is to be effective for financial accounting

periods commencing 1 April 2022 onwards. Whilst this is not

applicable to the Company for this year’s annual report, the

Board supports the introduction of the new rules and the

Group will report its compliance against this new requirement

in the Annual Report for the year ending 31 December 2023.

The Board is currently comprised of a 50:50 male to

femaleratio.

CORPORATE GOVERNANCE STATEMENT CONTINUED

Management

Audit and Risk Engagement

Board Committee Committee

Claire Boyle 4/4 4/4 2/2

Sally Ann Forsyth 4/4 4/4 2/2

Michael Taylor 4/4 4/4 2/2

Richard Howell

3/3 3/3 1/1

1. Following the Company’s Admission to AIM on 19 November 2021.

2. Appointed as a Director on 3 May 2022.

The Board has formal arrangements for the Directors, in the furtherance of their duties, to take independent professional advice

at the Company’s expense. The Company has also taken out a Directors’ and Officers’ liability insurance policy and is referred to

on page 99.

Tenure

In accordance with the AIC Code, the Directors are required to

retire at the first AGM following their appointment. Thereafter,

at each AGM, all Directors, including the Chair of the Board,

will seek annual re-election (see page 83). The Board has not

stipulated a maximum term of any directorship, except that

subject to ensuring business continuity, all Non-Executive

Directors will remain on the Board for a maximum period of

nine years in accordance with the AIC Code.

Engaging with our stakeholders

Details of how we engaged with our key stakeholders during

the year ended 31 December 2022 are set out in the strategic

report on pages 58 and 59.

Board operation

The Directors meet at regular Board meetings, held at least

four times a year, with additional meetings arranged as

necessary. Board members are notified between meetings of

any material events including, but not limited to, significant

transactions, litigation, mergers and acquisitions, and changes

in capital structure. There is regular contact between Board

members and the Investment Adviser, in addition to the formal

Board meetings.

The table below sets out the Directors’ attendance at both

regular and ad hoc Board and Committee meetings

during

the year ended 31 December 2022, against the number of

meetings each Board member was eligible to attend:

Life Science REIT plc Annual Report and Financial Statements 2022

Board and Committee evaluation

Towards the end of 2022 the Board conducted an evaluation

of the effectiveness of the Board itself, its Committees, the

Chair and the Directors. It is the Board’s current intention to

arrange an externally facilitated evaluation at least every three

years in accordance with the AIC Code.

The 2022 evaluation was an internal performance evaluation

by way of questionnaires completed by the Directors. The

results were collated and a report detailing the responses

was considered by the Board. This process was facilitated

by the Company Secretary. The scope of the questionnaire

was designed to cover all aspects of the Board’s operation,

including the management of meetings, the strengths

and independence of the Board and the Chair, individual

Directors and the performance of its Committees, each

Director’s perspective on the Board’s future priorities, training

requirements, and the way the Board works as a team.

The Board concluded that the evaluation demonstrated that

the composition of the Board continued to be appropriate and

it provided adequate supervision, oversight and challenge.

Independence of Directors

The Board has reviewed the independence of each Director

and the Board as a whole. The whole Board is independent of

the Investment Adviser and free from any business or other

relationships that could materially interfere with the exercise

of the Directors’ independent judgement.

The Board considers that all Directors are independent of the

Investment Adviser in both character and judgement.

Conflicts of interest

The Articles of Association permit the Board to consider and,

if it deems fit, to authorise situations where a Director has

an interest that conflicts, or may possibly conflict, with the

Group’s interests. The Board has a formal system to consider

such conflicts, with the Directors who have no interest in the

matter deciding whether to authorise the conflict and any

conditions to attach to such authorisation. Any such conflicted

Director would not be present during Board discussions

regarding the conflicting matter to ensure that the debate

remains unbiased and objective. A register of potential

conflicts of interests is maintained by the Company Secretary

and presented to the meeting for information at each Board

meeting. As at 24 March 2023, being the latest practicable

date of this report, no such conflicts were identified.

Election/re-election of Directors

Under the Company’s Articles of Association, Directors are

required to stand for election at the first AGM after their

appointment and each AGM thereafter for re-election. This is

also in accordance with the AIC Code therefore, each Director

will stand for election at the forthcoming AGM. The Board

considers that both during the year ended 31 December

2022 and from the end of the period to 24 March 2023,

being the latest practicable date of this report, each Director

has performed effectively and demonstrated excellent

commitment to their role at this early and important stage of

the Company’s development. It therefore believes that it is in

the best interests of shareholders that each Director is elected

at the AGM.

CORPORATE GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

CORPORATE GOVERNANCE STATEMENT CONTINUED

Board responsibilities and relationship

with the Investment Adviser

The Board’s main roles are to lead the Group and ensure

its long-term sustainable success, generating value for

shareholders and contributing to wider society, and to

approve the Group’s purpose, values and strategic objectives

and satisfy itself that these and its culture are aligned. The

Board annually maintains and reviews its schedule of matters

reserved for the Board of Directors which details its specific

responsibilities. Its responsibilities include:

• approving the Group’s investment and business strategy;

• approving the gearing policy;

• overseeing cash management;

• approving the Annual and Half-yearly Reports and Financial

Statements and accounting policies, prospectuses, circulars

and other shareholder communications;

• approving acquisitions and disposals which are within

the investment policy but have a value of 20% or more of

the GAV of the Group’s portfolio, and any acquisitions or

disposals outside the investment policy;

• raising new capital and approving major financing facilities;

• approving the valuation of the Group’s portfolio;

• approving and recommending dividends;

• approving Board appointments and removals;

• appointing or removing the Group’s external Auditor

following the recommendation of the Audit and Risk

Committee;

• appointing or removing the AIFM, Investment Adviser,

Depositary, Auditor, Company Secretary and other

service providers following the recommendation of the

Management Engagement Committee; and

• ensuring a satisfactory dialogue with shareholders and

other key stakeholders.

A copy of the schedule of matters reserved for the Board of

Directors is available on the Company’s website at

www.lifesciencereit.co.uk.

The Board has delegated its day-to-day functions to a number

of service providers, each engaged under separate legal

agreements. In particular, portfolio management and risk

management of the Group’s assets has been delegated to the

AIFM. The Investment Adviser provides recommendations to

the AIFM’s investment committee. These recommendations

cover acquisitions and sales of Group assets (where this

would be in line with the Group’s objectives and investment

policy), and recommendations on where the Group should

incur borrowings and give guarantees and securities (subject

to certain investment restrictions imposed by the Board and

the Board’s overall control and supervision). The Board, the

AIFM and the Investment Adviser operate in a fully supportive,

co-operative and open environment.

At each Board meeting, the Directors follow a formal

agenda, which is circulated in advance by the Company

Secretary following its approval by the Chair. The Company

Secretary and Investment Adviser regularly provide financial

information, together with briefing notes and papers in

relation to changes in the Group’s economic and financial

environment, statutory and regulatory changes and corporate

governance best practice to the Board. Representatives from

the Investment Adviser and the AIFM attend each Board

meeting and communicate with the Board between formal

meetings.

Board Committees

The Board has five Committees: the Audit and Risk

Committee, the Management Engagement Committee, the

Nomination Committee, the Remuneration Committee and the

Sustainability Committee.

The Committees’ terms of reference are available on the

Company’s website at www.lifesciencereit.co.uk.

Life Science REIT plc Annual Report and Financial Statements 2022

Audit and Risk Committee

The Audit and Risk Committee comprised Richard Howell

(Chair), Sally Ann Forsyth, Claire Boyle and Michael Taylor.

Themembers of the Audit and Risk Committee consider

that they collectively have the requisite skills and experience

to fulfil the Committee’s responsibilities and competence

relevant to the REIT sector. Richard Howell is a qualified

accountant, as is Claire Boyle.

As part of the planned succession process, Sally Ann Forsyth

stepped down as the Chair of the Audit and Risk Committee

and was replaced by Richard Howell on 24 June 2022.

Information about the composition, responsibility and

activities of the Audit and Risk Committee is set out in the

report from the Chair of the Audit and Risk Committee on

pages 91 to 93.

Management Engagement Committee

The Management Engagement Committee during the year

comprised of Michael Taylor (Chair), Claire Boyle, Sally Ann

Forsyth and Richard Howell, all of whom are independent

Non-Executive Directors. The Chair of the Board was also the

Chair of the Committee until 11 March 2022 when she stepped

down and was replaced by Michael Taylor.

A report from the Chair of the Management Engagement

Committee is set out on pages 89 and 90.

Nomination Committee

The Nomination Committee was established during the year,

following the Company’s migration from AIM to the premium

segment of the London Stock Exchange on 1 December 2022.

Membership consists of the whole Board and the Committee

is chaired by Sally Ann Forsyth.

There were no meetings of the Nomination Committee during

the year.

Remuneration Committee

The Remuneration Committee was established during

the year, following the Company’s migration from AIM to

the premium segment of the London Stock Exchange.

Membership consists of the whole Board and the Committee

is chaired by Michael Taylor.

There were no meetings of the Remuneration Committee

during the year.

Sustainability Committee

This committee was set up post year end, the first meeting

being held in February 2023. The full Board sits on

theCommittee, with Sally Ann Forsyth being appointed Chair.

The Committee will meet a minimum of twice a year to cover

the following main duties:

• approval and oversight of the implementation of the

sustainability strategy;

• tracking progress and effectiveness of the strategy; and

• review of ESG risks (including climate-related risks and

opportunities) to recommend updates to the Audit and

Risk Committee as appropriate.

Company Secretary

The Board has direct access to the advice and services of the

Company Secretary, Link Company Matters Limited, which

is responsible for ensuring that the Board and Committee

procedures are followed and that applicable regulations are

complied with. The Company Secretary is also responsible

to the Board for ensuring timely delivery of information and

reports and for ensuring that the Company meets its statutory

obligations.

How governance supports the delivery of the

Group’s strategy

As noted on page 84, the approval of the strategy and

overseeing its implementation is one of the Board’s core

responsibilities. Set out on the next page are the Board’s

activities in respect of each element of the strategy set out

onpages 20 to 21 of this report.

CORPORATE GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

CORPORATE GOVERNANCE STATEMENT CONTINUED

Strategy Board governance role Board key activities during the year

Investment

strategy

Overseeing the selection of acquisitions,

against the backdrop of current market and

economic conditions.

Approving acquisitions which are within the

investment policy but have a value of 20%

ormore of the Group’s GAV.

Approving any acquisitions outside the

investment policy.

Reviewed acquisition pipeline tracker at each

quarterly meeting.

Reviewed and approved acquisitions of

Herbrand Street and OTP in H1 2022.

Asset

management

strategy

Overseeing the portfolio.

Overseeing the Investment Adviser’s asset

management activities.

Approving disposals of 20% or more of the

GAV of the Group’s portfolio.

Approving any disposals outside the

investment policy.

Reviewed quarterly portfolio updates from

the Investment Adviser, including lease events,

capital expenditure works and development

updates.

Approved the annual budget for the year

ended 31 December 2023.

Financial

strategy

Approving any changes to the Group’s capital

structure.

Approving the Group’s gearing policy,

dividend policy and treasury policy.

Approved external debt facility with HSBC

inH1 2022.

Monitored the Group’s debt levels and interest

rate hedging.



Read more about the acquisitions in the year

in the Investment Adviser’s report on page 30.

Read more about asset management during

the year in the Investment Adviser’s report

onpage 33.

Read more about financing activity during

the year in the Investment Adviser’s report

onpage 35.

Life Science REIT plc Annual Report and Financial Statements 2022

Internal controls

The Directors are responsible for the Group’s system of

internal control and for reviewing its effectiveness.

Internal control systems are designed to manage, but not to

eliminate, the risk of failure of the Group to meet its business

objectives, and as such, only provide reasonable but not

absolute assurance against material misstatement or loss.

Thekey components designed to provide effective internal

control are outlined below:

• the Group has a clearly defined organisational structure;

• the Group has policies and procedures for internal controls

of key matters;

• an annual budgeting process is in place;

• detailed quarterly reporting occurs;

• the Directors intend to implement a whistleblowing policy

where any concerns are reported directly to the Chair of the

Board to deal with any issues should they arise;

• the Directors have considered the Bribery Act and will

implement an Anti-Bribery and Corruption Policy in 2023;

• at least annually the Board conducts a review of the

effectiveness of the Group’s internal controls, covering all

material controls;

• the Directors actively respond to any external audit

recommendations on internal control deficiencies and

demonstrate how they are actioned. A follow-up process

is in place for actions arising from audits and the risk

management process, which ensures that actions are

implemented effectively;

• a delegated authority matrix has been developed to cover

key commercial and financial activities, investment and

disposal transactions, and management of disputes or legal

challenges; and

• the Directors have documented key controls which mitigate

risk of inaccurate reporting.

The Audit and Risk Committee undertakes the annual review

of the effectiveness of internal controls and reports the results

of this to the Board for consideration. The Audit and Risk

Committee also receives reports from the Investment Adviser,

AIFM and the external Auditor concerning the system of

internal control and any material control weaknesses. It may

also seek external reviews and advice. Any significant issues

identified are to be referred to the Board for consideration.

Where any material control deficiencies are identified,

remedial actions are agreed and implemented, and the Board

updated on its progress.

Risk management

The Group has a Risk Management Framework, which is

approved by the Board and subject to annual review (as

a minimum) by the Audit and Risk Committee. A detailed

risk register has been compiled, identifying key risks and

mitigations, and evaluating the exposure for each risk, using

a standardised evaluation matrix. The Investment Adviser

regularly reviews the risk register, and it is provided to the

Audit and Risk Committee for discussion at each meeting.

Theframework is included on page 62 of the strategic report.

Internal audit

The Group is not considered sufficient in size or complexity

to warrant the establishment of an internal audit function.

The Audit and Risk Committee reviews the requirement for

an internal audit function at least annually. If that threshold

has been attained, the Audit and Risk Committee will

approach the Board of Directors to request approval for the

establishment or outsource of an internal audit function.

Equally, if the Group’s Investment Adviser or AIFM determines

that it is appropriate to establish an internal audit function,

they will approach the Board of Directors for approval to

establish, or outsource, an internal audit function.

To gain assurance over the control environment of the Group

without an internal audit function, the Group has regular

informal contact with the Investment Adviser, will review

Board papers which are received in a timely manner, seek

information from the external Auditor, review the risk register

and progress with any actions arising.

Where relevant, the Board reviews controls reports provided

by third-party service providers and receives summaries of

those reports from the Investment Adviser.

External audit scope

The Group is subject to an annual audit of its consolidated

financial statements and its component entities by its external

Auditor, Deloitte LLP. The Group produces its consolidated

financial statements in accordance with IFRS.

CORPORATE GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

CORPORATE GOVERNANCE STATEMENT CONTINUED

Segregation of duties and authorisation limits

As occurs with other organisations of its size and which have

a similar business, the Group faces challenges in implementing

segregation of duties. The Group operates an outsourced

model of suppliers and has no direct employees.

The Group has considered the risk around segregation of

duties within the processing of payments and transactions

and has identified and put in place a delegated authority

matrix for acquisitions, disposals, property and occupier

related activities and capital expenditure. In addition, the

following authorisation controls are in place for the processing

of payments:

• the payments themselves are made by the Administrator

of the Group, based upon the approvals received from the

Investment Adviser, with a primary authorised signatory and

secondary authorised signatories;

• each payment or transaction is signed off by one signatory,

up to a total of £100,000. Payments or transactions above

this figure require authorisation by two signatories and to

be in line with the Group’s delegated authority matrix and

acquisition/disposal protocols (as applicable) as approved

by the Board; and

• the Administrator has a clearly defined set of processes

in place to manage payment risks. It produces an ISAE

3402 controls report to the Investment Adviser, providing

assurance over the adequacy and operation of key controls.

Insider information and Market Abuse Regulation

The Company has an Insider Dealing Policy and a Share

Dealing Protocol. The Board and the Investment Adviser are

responsible for ensuring that information is properly assessed

to ascertain whether it is market sensitive, and advice is

sought in complex areas.

The Company Secretary is responsible for ensuring that open

and closed periods are recognised and communicated to all

PDMRs and insiders of the Company. In accordance with the

Share Dealing Protocol, all share dealings for both Directors of

the Company and employees of the Investment Adviser must

be approved in advance.

Whistleblowing

The Group has no employees, being wholly supported by

third-party service providers. However, it has a Whistleblowing

Policy setting out the procedures that any third party could

follow to raise any concerns. Third-party service providers are

expected to comply with all the relevant laws and regulations

as a contractual requirement, and adequate whistleblowing

procedures are included within that expectation. In particular,

the Investment Adviser Whistleblowing Policy offers staff, or

others raising concerns, the opportunity to raise them direct

with the Chair of the Group.

Principal and emerging risks

The principal and emerging risks that the Board has identified

are set out on pages 64 to 69.

Shareholder relations

Communication with shareholders is a high priority for both

the Board and the Investment Adviser, and the Directors are

available to discuss the Group’s progress and performance

with shareholders. The Investment Adviser, in conjunction

with its joint Corporate Brokers, Panmure Gordon and Jeffries

International, are in regular contact with the major institutional

investors and regularly report the results of meetings and the

views of those shareholders to the Board. The Chair and the

other Directors are available to attend these meetings with

shareholders if required.

All shareholders are encouraged to attend and vote at

the AGM, during which the Chair of the Board, the Chair

of each respective Committee, the Board as a whole and

representatives of the Investment Adviser will be available to

discuss issues affecting the Group and answer any questions.

Shareholders wishing to communicate directly with the

Board or to lodge a question in advance of the AGM should

contact the Company Secretary at the address on the inner

back cover. The Company makes sure to always respond to

correspondence from its shareholders.

For more information on the Group’s approach to

stakeholder engagement please see pages 58 and 59 of the

strategicreport.

The Board and its advisers will prepare the Group’s Annual

and Half-yearly Reports to present a full and readily

understandable review of the Group’s performance.

Copies will be released through a Regulatory News

Service, dispatched to shareholders depending on their

communication preference and made available from the

Company Secretary or by downloading from the Company’s

website at www.lifesciencereit.co.uk.

Life Science REIT plc Annual Report and Financial Statements 2022

The Committee is comprised of all the Directors of the

Company and chaired by Michael Taylor.

The Committee is responsible for evaluating the performance

of the Group’s key service providers and satisfying itself that

the continuation of such service provider appointments are in

the best interests of shareholders as a whole.

The Committee reviews the Investment Adviser and AIFM’s

agreements including the methodology used for calculating

fees, to ensure that the terms remain fair and in the best

interests of shareholders.

The Committee is required to meet at least once a year

and met twice during the year ended 31 December 2022

toperform its duties as detailed in the activities section on

thenext page.

THE MANAGEMENT

ENGAGEMENT COMMITTEE

REVIEWS THE PERFORMANCE

AND ONGOING APPOINTMENT

OF THIRD PARTY SERVICE

PROVIDERS TO ENSURE

THEY ARE OPERATING IN

THE SHAREHOLDERS BEST

INTERESTS.

MICHAEL TAYLOR

Chair of the Management Engagement Committee

MANAGEMENT ENGAGEMENT

COMMITTEE REPORT

Committee members:

Name Attendance

Michael Taylor (Chair)

Claire Boyle

Sally Ann Forsyth

Richard Howell

1. With effect from 3 May 2022.

CORPORATE GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

Role of the Management Engagement

Committee

The Committee operates within defined terms of reference,

which are regularly reviewed and at least on an annual

basis, to ensure they remain fit for purpose. The terms

ofreferenceare available on the Company’s website at

www.lifesciencereit.co.uk. The Committee’s primary

responsibilities are to:

• keep under review the performance of all service providers

with the exception of the Auditor;

• reasonably satisfy itself that the Investment Management

Agreement is fair and that the terms remain competitive;

• satisfy itself that the systems put in place by the AIFM,

Investment Adviser, Administrator and Depositary meet

legal and regulatory requirements;

• satisfy itself that matters of compliance are under proper

review, including access to the Company’s AIFM;

• consider whether continued employment of the Investment

Adviser is in the interests of shareholders as a whole; and

• produce an annual report of the Committee’s activities to be

included in the Annual Report.

Activities

The Committee’s activities during the year ended

31 December 2022 were as follows:

Investment Adviser and AIFM

The Committee considered the performance of the

Investment Adviser and AIFM against their obligations under

the Investment Advisory and AIFM Agreements during the

year, and whether it was appropriate to recommend the

continuing appointments of the Investment Adviser and AIFM

to the Board.

In reaching its recommendation to the Board, the Committee’s

deliberations included consideration of:

• the investment advisory and AIFM fees as detailed

onpage 98;

• whether the terms of the agreements remained fair,

complied with all regulatory requirements, conformed

with market and industry practice and were in the best

interests of shareholders; and

• the execution of the Group’s investment strategy by the

Investment Adviser during the year.

Following the review, the Committee agreed that the

Investment Adviser and AIFM had performed their duties

to a high standard and recommended to the Board that the

continuing appointments of the Investment Adviser and AIFM

was in the best interests of the shareholders.

Other key service providers

The Committee reviewed the ongoing performance and the

continuing appointment of the Group’s other key service

providers, including the Administrator, Auditor, Corporate

Broker, Financial PR & Investor Relations Adviser, Legal

Adviser, Property Manager, Registrar, Company Secretary,

Depositary, and Valuer. The Committee recognises that

ensuring excellent support and performance by service

providers is critical for the Group’s continuing operation

asanexternally managed Real Estate Investment Trust.

Michael Taylor

Chair of the Management Engagement Committee

24 March 2023

MANAGEMENT ENGAGEMENT

COMMITTEE REPORT CONTINUED

Life Science REIT plc Annual Report and Financial Statements 2022

Introduction and composition of the Committee

The Committee is chaired by Richard Howell, who is a

qualified chartered accountant, has a degree in Accounting

and Finance from Kingston University, as well as having

recent and relevant financial experience. Given the size of the

Board, it is considered both proportionate and practical for

all Directors to be members. The Chair of the Board is also a

member of the Audit and Risk Committee, as permitted by the

AIC Code. This is considered appropriate given Claire Boyle

is a Fellow of the ICAEW, has a diverse background in equity

investment, and her recent and relevant financial experience,

having chaired audit committees herself. All members of

the Committee are considered independent Non-Executive

Directors by the Board on appointment.

THE AUDIT AND RISK

COMMITTEE (THE

“COMMITTEE”) PLAYS A

KEY ROLE IN THE GROUP’S

CORPORATE GOVERNANCE

FRAMEWORK AND I WAS

PLEASED TO BECOME

COMMITTEE CHAIR

DURING2022.

RICHARD HOWELL

Chair of the Audit and Risk Committee

AUDIT AND RISK COMMITTEE REPORT

Committee members:

Name Attendance

Richard Howell

(Chair)

Claire Boyle

Michael Taylor

Sally Ann Forsyth

1. With effect from 3 May 2022.

The Committee as a whole has competence relevant to the

sector in which the Group operates. For more information on

the individual background of each Committee member, please

see pages 74 and 75 to view their biographies.

Role of the Audit and Risk Committee

The Audit and Risk Committee is responsible for the

effectiveness of internal control, risk management and

auditing processes.

The Committee’s primary responsibilities are to:

• consider the appointment, compensation, terms of

engagement of, independence and objectivity, resignation

or dismissal of the external Auditor;

• meet and discuss with the external Auditor the nature and

scope of the audit, the findings from the audit, including

accounting and internal controls;

• review the independence of the Auditor and provide

recommendations to the Board with regard to audit

engagement terms;

• review the Group’s financial statements, annual accounts

and accompanying reports to shareholders and

announcements relating to financial information;

• review the Group’s internal financial controls, the policies

and overall process for identifying and assessing business

risks;

• review the Group’s risk register, in particular with regard to

the potential impact of principal and emerging risks;

CORPORATE GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

Role of the Audit and Risk Committee continued

• review, on an annual basis, whether there should be an

internal audit function;

• review the procedures for whistleblowing, detecting

fraud and prevention of bribery of the outsourced service

providers; and

• produce an annual report of the Committee’s activities to be

included in the Annual Report.

The Committee has direct access to the Group’s Auditor,

Deloitte LLP, and provides a forum through which the Auditor

reports to the Board. Representatives of the Auditor attend

Committee meetings at least annually.

The Committee operates within defined terms of reference,

which are regularly reviewed and updated as necessary.

Theterms of reference are available on the Company’s

website.

Activities

The Committee met four times during the year under review.

At the meetings, the Committee has:

• reviewed the internal controls and risk management

systems of the Group and its third-party service providers;

• agreed the audit plan with the Auditor, including the

principal areas of focus, and agreed the audit fee;

• received and discussed with the Auditor its report on the

results of the audit;

• reviewed the Group’s interim and annual financial

statements and discussed the appropriateness of the

accounting policies adopted;

• reviewed the valuation of the Group’s investment properties

and recommended this to the Board;

• reviewed the performance of the Group’s auditors; and

• reviewed the Company’s compliance with the AIC Code.

During the year, the Committee has reviewed and updated,

where appropriate, the corporate risk register. This will

be completed at least half-yearly, in conjunction with the

Investment Adviser and AIFM. During the year, the addition

of new risks to the register and, more recently, minor changes

to the principal risks which demonstrated the strength of the

business, are described on pages 62 to 69.

The Committee reviewed the requirement for an internal

audit function following the year end and concluded that

this would provide minimal added comfort at considerable

extra cost to the Group. The Committee receives reports on

internal controls and compliance from the Investment Adviser

in conjunction with a third-party risk and internal audit adviser

and discusses these with the Investment Adviser. This report

also covers the internal controls of the Group’s other key

service providers. No significant matters of concern were

identified.

The Committee monitors and reviews the effectiveness of

the external audit process for the Annual Report, including a

detailed review of the audit plan and the audit results report.

This review takes into account the experience and tenure of

the audit partner and team, the nature and level of services

provided, and confirmation that the Auditor has complied

with independence standards. The Committee met with the

external auditor twice during the year. Any concerns with the

effectiveness of the external audit process would be reported

to the Board. No concerns were raised in respect of the year

ended 31 December 2022.

Fair, balanced and understandable reporting

The Committee reviewed drafts of this Annual Report and

Financial Statements to consider whether it is fair, balanced

and understandable and provides the information necessary

for shareholders to assess the Group’s performance, business

model and strategy. The Committee also gained assurance

that there is a robust process of review and challenge at

different levels within the Group to ensure balance and

consistency.

Following the consideration of the above matters and its

detailed review, the Committee was of the opinion that the

Annual Report and Financial Statements, taken as a whole,

is fair, balanced and understandable and provides the

information necessary for shareholders to assess the Group’s

position and performance, business model and strategy.

Look ahead to 2023

The Committee has agreed several areas of focus, including:

• ensuring continued integrity and balance in the Group’s

financial reporting;

• to review the documentation and evidence around key

procedures and processes;

• monitoring proposals for UK Corporate Governance reform

and consider appropriate processes;

• consideration of new and emerging risks; and

• looking at specific implications of the current UK economic

downturn on the Group’s portfolio value including macro

and life science industry specific impacts and assessing

resulting financial impacts.

AUDIT AND RISK COMMITTEE REPORT CONTINUED

Life Science REIT plc Annual Report and Financial Statements 2022

Significant issues

The Committee considered the following key issues in relation to the Group’s financial statements during the year:

Valuation of

investment

property:

The Committee considered and discussed the valuation of the Group’s investment properties as

at 31 December 2022. The valuer attended the Committee meeting in March 2023 to enable a full

discussion of the valuation and underlying assumptions and to enable the Directors to challenge as

appropriate.

Maintenance of

REIT status:

The UK REIT regime affords the Group a beneficial tax treatment for income and capital gains,

provided certain criteria are met. There is a risk that these REIT conditions may not be met and

additional tax becomes payable by the Group. The Committee therefore monitored the Group’s

compliance status and considered each of the requirements for the maintenance of the REIT status

throughout the year ended 31 December 2022.

Going concern

and long-term

viability:

The Committee considered the Group’s financial requirements for the next 12 months and

concluded that it has sufficient resources to meet its commitments and any outstanding financing

covenants. Consequently, the financial statements have been prepared on a going concern basis.

The Committee also considered the long-term viability statement within the annual report, for

the three year period to 31 December 2025, and the underlying factors and assumptions which

contributed to the Committee concluding that three years was an appropriate length of time to

consider the Group’s long-term viability.

The Group’s going concern and viability statement can be found on pages 70 and 71.

Internal controls

Please see page 87 for an overview of the internal controls of

the Group.

Audit fees and non-audit services

An audit fee of £177,000 has been agreed in respect of the

audit for the year ended 31 December 2022 (period ended

31December 2021: £130,000) for auditing the Annual Report

and consolidated financial statements.

Total fees for the year ended 31 December 2022, in

consideration of both the audit fee and non-audit services,

were £177,000 (period ended 31 December 2021: £301,000).

Further information on the fees paid to the Auditor is set out

in note 6 to the financial statements on page 118.

Auditor independence and objectivity

The Committee has considered the Auditor’s independence

and objectivity and reviewed the non-audit services which

the Auditor provided during the year. The Committee is

required to pre-approve all non-audit services prior to any

work commencing and considers the safeguards in place

to maintain their independence, such as the use of separate

teams to mitigate the risk of any self-review, are effective.

The Committee also receives an annual assurance from the

Auditor that its independence is not compromised by the

provision of such non-audit services.

The Committee is satisfied that the Auditor’s objectivity and

independence has not been impaired in the performance of

these non-audit services and that the Auditor has fulfilled its

obligations to the Group and the Company’s shareholders.

Deloitte LLP has been the Auditor since the Company’s launch

in November 2021. The Committee will regularly consider

the need to put the audit out to tender, the Auditor’s fees

and independence, and the matters raised during each audit.

Siobhan Durcan, the current audit partner, has served for a

tenure of one year and will step down as audit partner after

they have served for five years.

Re-appointment of the Auditor

The Committee has recommended to the Board the

re-appointment of Deloitte LLP as Auditor to the Group.

The approval of Deloitte LLP as the Group’s Auditor will

be put to shareholders as an ordinary resolution at the

forthcomingAGM.

Richard Howell

Chair of the Audit and Risk Committee

24 March 2023

CORPORATE GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

DIRECTORS’ REMUNERATION REPORT

The Board has prepared this report in accordance with the

requirements of the Large and Medium-sized Companies and

Groups (Accounts and Reports) (Amendment) Regulations

2013. As the Company has migrated its listing from the

AIM market of London Stock Exchange plc to the premium

segment of the London Stock Exchange, the Company

is required to put the Directors’ remuneration report to

shareholders for approval in order to allow shareholder input

on the Company’s remuneration arrangements. An ordinary

resolution to approve the Directors’ remuneration report will

therefore be put to shareholders at the forthcoming AGM.

Statement from the Chair

Following the migration of the Company’s ordinary shares

from AIM to premium listing of the London Stock Exchange,

the Board established a Remuneration Committee chaired by

Michael Taylor and comprising all Directors on the Board. The

Board consists entirely of Non-Executive Directors and the

Group has no employees. We have not, therefore, reported

on those aspects of remuneration that relate to Executive

Directors. Furthermore, the Company intends to report on

Remuneration disclosures in line with the listing rules in its

Annual Report for the year ended 31 December 2023.

The Board/Remuneration Committee sets the levels of

remuneration for its Non-Executive Directors, including the

Chair, and remuneration is considered in reflection of the time

commitment and responsibilities of the role. Remuneration for

all Non-Executive Directors does not include share options

or any other performance-related or variable elements. No

Director, including myself in my role as Chair, is involved in

setting their own levels of remuneration.

Directors’ fees are set at a level of £55,000 per annum for

the Chair and £40,000 per annum for the independent

Non-Executive Directors. The Chair of the Audit and Risk

Committee will receive an additional £5,000 per annum.

The Board reviewed the Directors’ fees during the year

and does not recommend any increase for the year ended

31December2023. The Directors are also entitled to

out-of-pocket expenses incurred in the proper performance

oftheir duties.

Directors are not eligible for bonuses, share options or

long-term incentive schemes or other performance-related

benefits, as the Board does not believe that this is appropriate

for Non-Executive Directors. There are no pension

arrangements in place for the Directors.

Directors’ Remuneration Policy

The Directors’ Remuneration Policy (the “Policy”), detailed

below, is put to shareholders’ vote at least once every three

years and in any year if there is to be a change in Policy.

In determining the Policy, the Board takes into account

all factors which it deems necessary including relevant

legal and regulatory requirements and the provisions and

recommendations of the AIC Code. The appropriateness and

relevancy of the Policy is reviewed annually, particularly to

ensure that the Policy supports the long-term success of the

Group. As a binding vote on the Policy is necessary every

three years, an ordinary resolution to approve the Policy will

next be put to shareholders at the 2025 AGM. The Board does

not propose to make any changes to the existing Policy, which

is set out below.

The Company has no employees other than its Directors, who

are all non-executive and independent of Ironstone Asset

Management Limited.

The remuneration of the Directors is determined within the

limits set out within the Company’s Articles of Association

and the total aggregate annual fees payable to the Directors

in respect of any financial period shall not exceed £400,000,

subject to shareholders’ approval at the next AGM.

Life Science REIT plc Annual Report and Financial Statements 2022

Remuneration report

Directors’ fees received for the year

The Directors who served in the year to 31 December 2022 received the following emoluments (gross of any tax or National

Insurance contributions):

Year ended Period ended

31 December 31 December

2022 2021

Fees Total Fees Total

£’000 £’000 £’000 £’000

Claire Boyle 55 55 12 12

Sally Ann Forsyth

42 42 10 10

Michael Taylor 40 40 8 8

Richard Howell

29 29 — —

Total 166 166 30 30

1. Sally Ann was Chair of the Audit and Risk Committee until 23 June 2022, receiving a pro rata share of the £5,000 per annum fee.

2. Richard joined the Board as a Director on 3 May 2022, receiving his pro rata share of the £40,000 per annum fee. In addition he became Chair of the Audit and Risk

Committee on 24 June 2022, receiving his pro rata share of the £5,000 per annum fee.

Directors’ beneficial and family interests

There is no requirement under the Company’s Articles of Association for Directors to hold shares in the Company.

The interests of the Directors and any connected persons in the ordinary shares of the Company are set out below:

31 December 31 December

2022 2021

Number Number

of shares of shares

Claire Boyle 30,000 30,000

Sally Ann Forsyth 20,342 20,000

Michael Taylor 20,000 20,000

Richard Howell

30,000 —

1. Appointed as a Director on 3 May 2022.

There have been no changes to these holdings between 31 December 2022 and the date of this report.

On behalf of the Board

Michael Taylor

Chair of the Remuneration Committee

24 March 2023

CORPORATE GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

The Directors present the Annual Report and Financial

Statements of Life Science REIT plc (the “Company”)

(registered number 13532483) for the year ended

31December 2022. The corporate governance report forms

part of this Directors’ report and can be found at page 78.

Please refer to the Chair’s statement on pages 9 to 11 and the

Investment Adviser’s report on pages 30 to 37 for information

about future developments and important events that have

occurred since the year end. For further information on the

going concern and longer term viability of the Group please

see pages 70 and 71.

Status of Life Science REIT plc

The Company is an investment company, as defined in section

833 of the Companies Act 2006, and qualifies as a UK Real

Estate Investment Trust (“REIT”) as defined under section

527(2) of the Corporation Tax Act 2010.

Investment portfolio

A comprehensive analysis of the property portfolio can

be found at page 31 and a summary of the valuation of the

property portfolio can be found in note 13 on page 122.

The investment policy can be found at page 151.

Directors

Biographies of each Director appointed to the Company can

be found at pages 74 and 75.

Directors’ authority to purchase own shares

The Company did not purchase any of its own shares during

theyear.

The Company will seek the authority to make market

purchases of up to 14.99% of the issued ordinary share capital

at the 2023 AGM via resolution 13 as included in the Notice

ofMeeting.

Current share capital

As at 31 December 2022 and the date of the report, there

were 350,000,000 ordinary shares of £0.01 in issue, none of

which were held in treasury. The share capital comprises one

class of ordinary shares.

Results and dividends

A summary of the Group’s performance during the year and

the outlook for the coming year is set out in the strategic

report on pages 20 and 21.

In respect of the year ended 31 December 2022,

asecond interim dividend of 3.0 pence (period ended

31December2021: nil pence) per ordinary share has been

declared, with a paymentdate of 15 May 2023. This is in line

with the Group’s obligation as a REIT to distribute 90.0% of

the Group’s aggregate UK property rental business profits as

calculated for tax purposes that the Group receives during the

year. The Company paid a first interim dividend of 1.0pence

per ordinary share in respect of the six-month period to

30June 2022 on 31 October 2022.

The Group’s dividend policy can be found at page 20 of the

strategic report.

DIRECTORS’ REPORT

Life Science REIT plc Annual Report and Financial Statements 2022

Substantial shareholdings

As at 31 December 2022, the following shareholders had notified the Company of their shareholdings under their DTR 5 obligations:

Percentage

Ordinary of voting

Shareholder shares held

rights (%)

Investec Wealth & Investment Limited 49,605,405 14.2

Sarasin and Partners LLP 34,981,983 10.0

Schroders PLC 30,213,720 8.6

Hazelview Investments Inc. 23,504,655 6.7

Cerno Capital Partners LLP 17,293,200 4.9

The London and Amsterdam Trust 15,800,000 4.5

1. As at date of notification to the Company.

Interests disclosed to the Company occurring between the year end and 24 March 2023, being the latest practicable date:

Percentage

Ordinary of voting

Shareholder shares held

rights (%)

Connor Broadley Limited 1,046,044 0.3

1. As at date of notification to the Company.

Powers of the Board of Directors

The powers of the Directors are set out in the Articles of

Association of the Company at section 104. This section states

that the business of the Group shall be managed by the Board,

which may exercise all the powers of the Group, whether

relating to the management of the business or not, subject to

any limitations imposed by legislation, the Articles and/or any

directions given by special resolution of the shareholders of

the Company.

Management arrangements

The Company and the AIFM have appointed Ironstone as

Investment Adviser to the Group.

The Company is an alternative investment fund for the

purposes of the UK AIFM Regime and, as such, is required

to have an AIFM who is duly authorised to undertake that

role. Pursuant to an agreement dated 21 October 2021

(the“Alternative Investment Fund Management Agreement”),

the Company appointed G10 Capital Limited as its AIFM. G10

Capital Limited is authorised and regulated by the Financial

Conduct Authority with firm reference number 648953.

CORPORATE GOVERNANCE

Life Science REIT plc Annual Report and Financial Statements 2022

The AIFM is responsible for overall portfolio management,

risk management and compliance with the Group’s

investment policy and the requirements of the UK AIFM

Regime that apply to the Group. The Investment Adviser is

an Appointed Representative of the AIFM. As an Appointed

Representative, the Investment Adviser is responsible for

working with and advising the Group and the AIFM in respect

of sourcing investment opportunities which meet the Group’s

investmentpolicy.

As an appointed representative, Ironstone is exempt from the

requirement to be authorised by the FCA as a pre-requisite to

giving investment advice and arranging deals in investments.

Ironstone is also responsible for managing the underlying real

estate assets within the Group’s investment portfolio, which

does not constitute a regulated activity.

The AIFM has, and shall maintain, the necessary expertise

and resource to supervise the delegated tasks effectively.

Under the terms of the Investment Advisory Agreement, the

Investment Adviser is entitled to a fee payable quarterly in

arrears calculated at the rate of one quarter of 1.1% per quarter

on that part of the NAV up to and including £500 million; one

quarter of 0.9% per quarter on that part of the NAV in excess

of £500 million and up to £1 billion; and one quarter of 0.75%

per quarter on NAV in excess of £1 billion.

The Investment Advisory Agreement is terminable on 24

months’ notice in writing by either party and also by the AIFM,

with the consent of the Company; such notice not to be given

prior to the four-year anniversary of the date of Admission.

The Alternative Investment Fund Management Agreement

may be terminated by the Company or the AIFM giving not

less than six months’ written notice. In addition, it is terminable

on 30 days’ notice by either party in writing in the event

that the other party is found liable for material breach of

duty, negligence, wilful default, fraud or a material breach of

applicable requirements in connection with the performance

of its duties under this Agreement or a material or persistent

breach of this Agreement, which is either irremediable or, if

capable of remedy, not remedied within 30 days of receipt

by the defaulting party of a notice signed on behalf of the

non-defaulting party requiring such breach to be rectified.

The Company is also entitled to terminate the agreement

with immediate effect in the event that the AIFM ceases to

maintain its permission to act as the AIFM or such permission

is suspended.

The Group pays to the AIFM, exclusive of VAT, a fixed monthly

fee of £3,000 in respect of risk management and portfolio

management services, a fixed quarterly fee of £4,000 for the

provision of Annex IV AIFM Directive regulatory reporting

and other fees for the provision of additional ad hoc services

and maintaining the Key Information Documents (“KIDs”).

TheGroup will also reimburse the AIFM for costs and

expenses properly incurred by the AIFM in the performance

ofits obligations under the AIFM Agreement.

Continuing appointment of

theInvestmentAdviser

The Board keeps the performance of the Investment Adviser

under continual review. The Management Engagement

Committee conducts an annual appraisal of the Investment

Adviser’s performance and makes a recommendation to the

Board about the continuing appointment of the Investment

Adviser. It is the opinion of the Directors that the continuing

appointment of the Investment Adviser is in the interests of

shareholders as a whole. The reasons for this view are that

the Investment Adviser executed the investment strategy, at

this early stage of the Group’s development, according to the

Board’s expectations and on terms in which the Board is of

the view continue to remain commercial and reasonable.

NMPI

On 1 January 2014, certain changes to the FCA rules regarding

the restrictions on the retail distribution of unregulated

collective investment schemes and close substitutes

(“non-mainstream pooled investments”, or “NMPIs”) came

into effect. Since the Company obtained approval as a UK

REIT, with effect from Admission to AIM on 19 November

2021, its ordinary shares of nominal value of 0.01 pence each

(the “shares”) are excluded from these rules and therefore the

restrictions relating to NMPIs do not apply to its shares. It is

the Board’s intention that the Group will continue to conduct

its affairs in such a manner that it maintains its approved REIT

company status and that, accordingly, the Company’s shares

will continue to be excluded from the FCA’s rules relating to

NMPIs and can be recommended by financial advisers to retail

investors in accordance with the FCA’s rules in relation to

NMPI products.

DIRECTORS’ REPORT CONTINUED

Life Science REIT plc Annual Report and Financial Statements 2022

Related party transactions

On 19 May 2022, the Company signed an agreement with

Chapel Road Farm Estates Limited, which is a company

associated with the Founder and Vice Chairman of Ironstone

and therefore a related party of the Company. Chapel Road

Farm Estates provided introduction and facilitation services in

relation to the acquisitions of the pipeline properties that the

Group has acquired since the Company’s IPO.

Under the terms of the agreement, the Company incurred a

fee and disbursements of £635,593 (excluding VAT). This was

a one-off agreement, and the Board anticipates that future

investment propositions, and their associated costs, will all be

conducted via the Group’s Investment Adviser.

The agreement with Chapel Road Farm Estates constituted

a related party transaction under AIM Rule 13. Following

consultation with the Group’s Nominated Adviser (at the time

under the AIM listing rules), Panmure Gordon, the Directors

considered that the terms of the agreement were fair and

reasonable insofar as the Company’s shareholders were

concerned.

Post balance sheet events

Disclosures relating to post balance sheet events can be found

in note 31 to the financial statements on page 136.

Directors’ indemnities and Directors’ and

Officers’ liability insurance

The Company’s agreement to indemnify each Director against

any liability incurred in the course of their tenure, to the extent

permitted by law, remains in place.

The Directors were covered throughout the year under review.

Greenhouse gas emissions

During the year under review, the Group met the criteria

for reporting greenhouse gas emissions as per SECR

disclosure requirements (see table on page 54). The Group

have developed a sustainability strategy and an action plan

for 2023. Please see pages 42 to 45 for our approach and

page54 for greenhouse gas emissions disclosure in our EPRA

sBPR reporting.

Auditor

The Directors holding office at the date of this Annual Report

confirm that, so far as they are each aware, there is no relevant

audit information of which the Group’s Auditor is unaware.

Each Director has taken all the steps that they ought to have

taken as a Director to make themselves aware of any relevant

audit information and to establish that the Group’s Auditor is

aware of that information.

Deloitte LLP has expressed its willingness to be appointed as

Auditor of the Group and resolutions for its appointment and

to authorise the Audit and Risk Committee to determine its

remuneration will be proposed at the forthcoming AGM.

Financial risk management

Please see note 24 to the financial statements on pages

132 and 133 for information on financial risk management

objectives and policies in relation to the Group’s market risk,

interest risk, credit risk and liquidity risk.

The Group’s approach to hedging is included in the

investment policy on page 152.

Research and development activities

The Company and its subsidiaries did not carry out any

activities in the field of research and development over

theyear.

Donations

The Company and its subsidiaries made £17,095 (period

ended 31 December 2021: £nil) of political or charitable

donations during the year to organisations either within or

outside of the UK.

Annual General Meeting

The Company’s AGM will be held on 25 May 2023. TheNotice

of the AGM will be circulated to shareholders separately.

For and on behalf of the Board

Link Company Matters Limited

Company Secretary

24 March 2023

Company number: 13532483

FINANCIAL STATEMENTS

100

Life Science REIT plc Annual Report and Financial Statements 2022

The Directors are responsible for preparing the Annual

Report and United Kingdom adopted Financial Statements

in accordance with applicable UK law and in compliance with

the requirements of the Companies Act 2006. Company law

requires the Directors to prepare financial statements for each

financial year. Under that law the Directors are required to

prepare the Group financial statements in accordance with

United Kingdom adopted international accounting standards

and International Financial Reporting Standards (“IFRS”)

as issued by the International Accounting Standards Board

(“IASB”). The Directors have chosen to prepare the parent

company financial statements in accordance with United

Kingdom Generally Accepted Accounting Practice (United

Kingdom Accounting Standards and applicable law), including

FRS 101 “Reduced Disclosure Framework”.

Under company law, the Directors must not approve the

financial statements unless they are satisfied that they present

fairly the financial position, financial performance and cash

flows of the Group for that year. In preparing the financial

statements, the Directors are required to:

• select suitable accounting policies in accordance with IAS 8

Accounting Policies, Changes in Accounting Estimates and

Errors and apply them consistently;

• present information, including accounting policies, in a

manner that provides relevant, reliable, comparable and

understandable information;

• provide additional disclosures when compliance with

specific requirements in IFRS is insufficient to enable users

to understand the impact of particular transactions, other

events and conditions on the Group’s financial position and

financial performance;

• state that the Group has complied with IFRS, subject to any

material departures disclosed and explained in the financial

statements;

• state whether the Company financial statements have been

prepared in accordance with Financial Reporting Standard

101 Reduced Disclosure Framework (“FRS 101”) subject

to any material departures disclosed and explained in the

Company financial statements; and

• make judgements and estimates that are reasonable

andprudent.

The Directors are responsible for keeping adequate

accounting records that are sufficient to show and explain

the Company’s transactions and disclose with reasonable

accuracy at any time the financial position of the Group and

enable them to ensure that the financial statements comply

with the Companies Act 2006 and Article 4 of the IAS

Regulation.

They are also responsible for safeguarding the assets of

the Group and hence for taking reasonable steps for the

prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are

also responsible for preparing a strategic report, Directors’

report, Directors’ remuneration report and corporate

governance statement that comply with that law and those

regulations, and for ensuring that the Annual Report includes

information, where applicable, for the Disclosure Guidance

and Transparency Rules of the FCA.

The Directors are responsible for the maintenance and

integrity of the corporate and financial information included

on the Company’s website. The work carried out by the

Auditor does not involve consideration of the maintenance

and integrity of this website and, accordingly, the Auditor

accepts no responsibility for any changes that have occurred

to the financial statements since they were initially presented

on the website. Visitors to the website need to be aware

that legislation in the UK covering the preparation and

dissemination of the financial statements may differ from

legislation in their jurisdiction.

We confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with IFRS

and in conformity with the requirements of the Companies

Act 2006, give a true and fair view of the assets, liabilities,

financial position and profit of the Company (and Group as

a whole); and

• this Annual Report includes a fair review of the

development and performance of the business and the

position of the Company (and Group as a whole), together

with a description of the principal risks and uncertainties

that it faces.

The Directors consider that the Annual Report and Financial

Statements, taken as a whole, are fair, balanced and

understandable and provide the information necessary

for shareholders to assess the Company’s position and

performance, business model and strategy.

For and on behalf of the Board

Claire Boyle

Chair

24 March 2023

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS

101

Life Science REIT plc Annual Report and Financial Statements 2022

Report on the audit of the

financialstatements

1. Opinion

In our opinion:

• the financial statements of Life Science REIT Plc (the

‘Company’) and its subsidiaries (the ‘Group’) give a true and

fair view of the state of the Group’s and of the Company’s

affairs as at 31 December 2022 and of the Group’s loss for

the year then ended;

• the Group financial statements have been properly

prepared in accordance with United Kingdom adopted

international accounting standards and International

Financial Reporting Standards (“IFRSs”) as issued by the

International Accounting Standards Board (“IASB”);

• the Company financial statements have been properly

prepared in accordance with United Kingdom

Generally Accepted Accounting Practice, including

Financial Reporting Standard 101 “Reduced Disclosure

Framework”;and

• the financial statements have been prepared in accordance

with the requirements of the Companies Act 2006.

We have audited the financial statements which comprise:

• the consolidated statement of profit or loss and other

comprehensive income;

• the consolidated and Company statements of financial

position;

• the consolidated and Company statements of changes

inequity;

• the consolidated statement of cash flows; and

• the related notes 1 to 37.

The financial reporting framework that has been applied in

thepreparation of the Group financial statements is applicable

law, United Kingdom adopted international accounting

standards and IFRSs as issued by the IASB. The financial

reporting framework that has been applied in the preparation

of the Company financial statements is applicable law and

United Kingdom Accounting Standards, including FRS 101

“Reduced Disclosure Framework” (United Kingdom Generally

Accepted Accounting Practice).

2. Basis for opinion

We conducted our audit in accordance with International

Standards on Auditing (UK) (ISAs (UK)) and applicable

law. Our responsibilities under those standards are further

described in the auditor’s responsibilities for the audit of the

financial statements section of our report.

We are independent of the Group and the Company in

accordance with the ethical requirements that are relevant to

our audit of the financial statements in the UK, including the

Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as

applied to listed public interest entities, and we have fulfilled

our other ethical responsibilities in accordance with these

requirements. We confirm that we have not provided any

non‑audit services prohibited by the FRC’s Ethical Standard

tothe Group or the Company.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF LIFE SCIENCE REIT PLC

FINANCIAL STATEMENTS

102

Life Science REIT plc Annual Report and Financial Statements 2022

3. Summary of our audit approach

Key audit

matters

The key audit matter that we identified in the current year was:

• Valuation of investment properties measured at Fair Value through Profit or Loss (“FVTPL”)

Within this report, key audit matters are identified as follows:

Similar level of risk

Materiality The materiality that we used for the Group financial statements was £3,195,000 which wasdetermined

on the basis of 1% of total equity (net asset value).

Further to net assets, we considered EPRA earnings to be critical financial performance measure for the

Group and we applied a lower materiality of £74,000 for items affecting EPRA earnings on the basis of

5% of EPRA earnings.

Scoping We have performed full scope audit procedures on all components which account for 100% of the

Group’s revenue, profit before tax and net assets.

Significant

changes in our

approach

We applied a lower materiality of £74,000 for items affecting EPRA performance measures. TheGroup

completed its first full year of business operations and is able to provide key real estate specific

performance measures. The Group presented EPRA Best Practices Recommendations as Alternative

Performance Measures (“APM”) to assist stakeholders in assessing performance alongside the Group’s

statutory accounts reported under IFRS. We consider it appropriate to apply a lower materiality in order

to assess consistency of the EPRA performance measures with the audited financial statements. Other

than the lower materiality, there is no other significant change.

4. Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the

preparation of the financial statements is appropriate.

Our evaluation of the Directors’ assessment of the Group’s and Company’s ability to continue to adopt the going concern basis

of accounting included:

• challenging management’s going concern assessment by comparing this against our knowledge of the business, results of

our audit testing as well as prevailing macroeconomic conditions;

• assessing a forecast budget for the next 12 months including consideration of the Group’s financing arrangements and

evaluating management’s stress testing and mitigating actions available to the Group; and

• assessing the appropriateness of going concern disclosures included in the financial statements.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,

individually or collectively, may cast significant doubt on the Group’s and Company’s ability to continue as a going concern for

aperiod of at least 12 months from when the financial statements are authorised for issue.

In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add

or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it

appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections

of this report.

INDEPENDENT AUDITOR’S REPORT CONTINUED

TO THE MEMBERS OF LIFE SCIENCE REIT PLC

103

Life Science REIT plc Annual Report and Financial Statements 2022

5. Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial

statements of the current period and include the most significant assessed risks of material misstatement (whether or not

due to fraud) that we identified. These matters included those which had the greatest effect on the overall audit strategy, the

allocation of resources in the audit and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion

thereon, and we do not provide a separate opinion on these matters.

5.1. Valuation of investment properties measured at FVTPL

Key audit matter

description

The Group’s investment properties totalled £387.6 million (31 December 2021: £192.2 million). The Group

measures the investment properties at FVTPL in accordance with IAS 40 and are classified as Level 3

in the fair value hierarchy in accordance with IFRS 13. The Group’s accounting policy for the investment

properties is specified in Note 13 of the financial statements.

The valuation of the Group’s investment properties, as explained in Note 23 of the financial statements,

involves significant judgement and assumptions, for example applying capitalisation yields to current

and future rental streams that could materially affect the financial statements. Therefore, we identified

the valuation of investment properties as a key audit matter.

Management appoints an external valuer, CBRE Limited; chartered surveyors, to perform the valuations

in accordance with the appropriate sections of the RICS Red Book and in line with the requirements of

IAS 40 Investment Properties. The valuer has issued a valuation report on the entire property portfolio

as at the year end. The property portfolio is valued on the basis of up‑to‑date tenancy information

supplied by management and publicly available market information.

In determining the fair value, the external valuers make a number of key estimates and assumptions, in

particular assumptions in relation to market comparable yields and estimates in relation to increases or

decreases in future rental income. These estimates and assumptions require input from management,

whilst others are subject to market forces and will change over time. Manipulation of these accounting

estimates could result in material misstatements, and therefore we identified a potential fraud risk in this

key audit matter.

How the scope

of our audit

responded to

the key audit

matter

In response to the above key audit matter, we:

• obtained an understanding and tested the relevant controls over investment property valuations;

• involved our real estate valuation specialists to assist us in independently evaluating the

appropriateness of the inputs and assumptions used in the valuation methodology (including yield

and estimated rental values) for the properties;

• benchmarked valuation assumptions to relevant market evidence including specific property

transactions and other external data;

• assessed the accuracy and completeness of data provided by management to the Group’s valuer;

• assessed other available market information to identify any contradictory evidence to assumptions

made;

• assessed the independence, competence, capabilities and objectivity of the Group’s valuer by

assessing whether the valuers are RICS approved and that there are no conditions or specific

assumptions in the letter of engagement; and

• assessed the adequacy and completeness of disclosures presented in the financial statements.

Key

observations

Based on the work performed we concluded that the valuation of investment properties measured at

FVTPL is appropriate.

FINANCIAL STATEMENTS

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6. Our application of materiality

6.1. Materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic

decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the

scope of our audit work and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Group financial statements Company financial statements

Materiality £3,195,000 (2021: £3,391,000). £3,172,000 (2021: £3,357,000).

Basis for

determining

materiality

1% (2021: 1%) of the Group’s total equity (net asset

value).

1% (2021: 1%) of the Company’s total equity (net

asset value).

Rationale for

the benchmark

applied

We determined materiality based on total

equity (net assets value), which is deemed

appropriate due to the nature of the Group’s

business. Investors are most likely to focus on the

performance of their investment and the returns

on the investments; this is represented by the net

assets value of the Group.

We determined materiality based on total equity

(net assets value), which is deemed appropriate

due to the nature of the Company’s business.

Further, it does not generate any revenue in

its own capacity, as this is done through the

investee companies that are owned by it. Investors

are most likely to focus on the returns on the

investments and this is represented by the net

assets value of the Company.

A lower materiality threshold of £74,000 (31 December 2021: £nil) based on 5% of EPRA earnings has also been used.

Weconsider EPRA Earnings as a critical performance measure for the Group and a measure which is widely used within the

Real Estate industry. This has been applied for testing all balances impacting that measure. Refer to pages 142 to 149 for the

Group’sEPRA performance measures.

6.2. Performance materiality

We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and

undetected misstatements exceed the materiality for the financial statements as a whole.

NAV

£319,451,000

Group materiality

£3,195,000

Component materiality

£3,172,000

Audit and Risk Committee

reporting threshold

£160,000

NAV

Group

materiality

INDEPENDENT AUDITOR’S REPORT CONTINUED

TO THE MEMBERS OF LIFE SCIENCE REIT PLC

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Life Science REIT plc Annual Report and Financial Statements 2022

7.3. Our consideration of climate-related risks

In planning our audit, we have considered the potential impact

of climate change on the Group’s business and its financial

statements.

The Group continues to develop its assessment of the

potential impacts of climate change, including physical and

transitional risks and is scenario‑based, as explained in the

Strategic Report on pages 48 to 50.

As a part of our audit, we have obtained management’s

climate‑related risk assessment and held discussions with

management to understand the process of identifying

climate‑related risks, the determination of mitigating

actions and the impact on the Group’s financial statements.

Management has assessed that there is currently no material

impact arising from climate change on the judgements and

estimates determining the valuations within the financial

statements.

We performed our own assessment of the potential impact

of climate change on the Group’s account balances and

classes of transaction, and did not identify any reasonably

possible risks of material misstatement. Our procedures also

included reading disclosures included in the strategic report

to consider whether they are materially consistent with the

financial statements and our knowledge obtained in the audit.

6.3. Error reporting threshold

We agreed with the Audit and Risk Committee (“Committee”)

that we would report to the Committee all audit differences in

excess of £160,000 (31 December 2021: £170,000), aswell as

differences below that threshold that, in our view, warranted

reporting on qualitative grounds. We also report to the

Committee on disclosure matters that we identified when

assessing the overall presentation of the financial statements.

7. An overview of the scope of our audit

7.1. Identification and scoping of components

Our Group audit was scoped by obtaining an understanding

of the Group and its environment, including Group‑wide

controls, and assessing the risks of material misstatement

at the Group level. Audit work to respond to the risks of

material misstatement was performed directly by Group

audit engagement team. We have performed full scope audit

procedures on all components which account for 100% of the

Group’s revenue, profit before tax and net assets.

7.2. Our consideration of the control environment

We did not take a controls reliance approach on the general

IT controls during the audit for the Group due to the simple

control environment and financial reporting system. We

obtained an understanding and tested the relevant controls

over the investment property valuation.

Group financial statements Company financial statements

Performance

materiality

70% (2021: 70%) of Group materiality. 70% (2021: 70%) of Company materiality.

Basis and

rationale for

determining

performance

materiality

In determining performance materiality, we considered the following factors:

a. the quality of the control environment; we were able to rely on controls on investment property

valuation; and

b. low level of corrected and uncorrected misstatements identified in the prior year.

FINANCIAL STATEMENTS

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Life Science REIT plc Annual Report and Financial Statements 2022

10. Auditor’s responsibilities for the

auditofthefinancial statements

Our objectives are to obtain reasonable assurance about

whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and

to issue an Auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not

a guarantee that an audit conducted in accordance with

ISAs (UK) will always detect a material misstatement when

it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they

could reasonably be expected to influence the economic

decisions of users taken on the basis of these financial

statements.

A further description of our responsibilities for the audit of

the financial statements is located on the FRC’s website at:

www.frc.org.uk/auditorsresponsibilities. This description

forms part of our Auditor’s report.

8. Other information

The other information comprises the information included in

the annual report, other than the financial statements and our

Auditor’s report thereon. The Directors are responsible for the

other information contained within the annual report.

Our opinion on the financial statements does not cover

the other information and, except to the extent otherwise

explicitly stated in our report, we do not express any form of

assurance conclusion thereon.

Our responsibility is to read the other information and, in

doing so, consider whether the other information is materially

inconsistent with the financial statements or our knowledge

obtained in the course of the audit, or otherwise appears to be

materially misstated.

If we identify such material inconsistencies or apparent

material misstatements, we are required to determine whether

this gives rise to a material misstatement in the financial

statements themselves. If, based on the work we have

performed, we conclude that there is a material misstatement

of this other information, we are required to report that fact.

We have nothing to report in this regard.

9. Responsibilities of Directors

As explained more fully in the Directors’ responsibilities

statement, the Directors are responsible for the preparation

of the financial statements and for being satisfied that they

give a true and fair view, and for such internal control as the

Directors determine is necessary to enable the preparation of

financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the financial statements, the Directors are

responsible for assessing the Group’s and the Company’s

ability to continue as a going concern, disclosing as

applicable, matters related to going concern and using the

going concern basis of accounting unless the Directors either

intend to liquidate the Group or the Company or to cease

operations, orhave no realistic alternative but to do so.

INDEPENDENT AUDITOR’S REPORT CONTINUED

TO THE MEMBERS OF LIFE SCIENCE REIT PLC

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Life Science REIT plc Annual Report and Financial Statements 2022

We also obtained an understanding of the legal and

regulatory framework that the Group operates in, focusing

on provisions of those laws and regulations that had a

direct effect on the determination of material amounts

and disclosures in the financial statements. The key laws

and regulations we considered in this context included the

UK Companies Act, Listing Rules, REIT conditions and tax

legislation.

In addition, we considered provisions of other laws and

regulations that do not have a direct effect on the financial

statements but compliance with which may be fundamental

to the Group’s ability to operate or to avoid a material penalty.

These included the Group’s compliance with health and safety

matters, including fire safety and fire cladding.

11.2. Audit response to risks identified

As a result of performing the above, we identified valuation

of investment properties measured at FVTPL as a key

audit matter related to the potential risk of fraud. The key

audit matters section of our report explains the matter in

more detail and also describes the specific procedures we

performed in response to this key audit matter.

In addition to the above, our procedures to respond to risks

identified included the following:

• reviewing the financial statement disclosures and testing

to supporting documentation to assess compliance with

provisions of relevant laws and regulations described as

having a direct effect on the financial statements;

• enquiring of management, the Committee and external

legal counsel concerning actual and potential litigation and

claims;

• performing analytical procedures to identify any unusual or

unexpected relationships that may indicate risks of material

misstatement due to fraud;

• reading minutes of meetings of those charged with

governance; and

• in addressing the risk of fraud through management

override of controls, testing the appropriateness of journal

entries and other adjustments; assessing whether the

judgements made in making accounting estimates are

indicative of a potential bias; and evaluating the business

rationale of any significant transactions that are unusual or

outside the normal course of business.

We also communicated relevant identified laws and

regulations and potential fraud risks to all engagement team

members including internal specialists, and remained alert

to any indications of fraud or non‑compliance with laws and

regulations throughout the audit.

11. Extent to which the audit was considered

capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non‑compliance

with laws and regulations. We design procedures in line

with our responsibilities, outlined above, to detect material

misstatements in respect of irregularities, including fraud.

The extent to which our procedures are capable of detecting

irregularities, including fraud is detailed below.

11.1. Identifying and assessing potential risks related

to irregularities

In identifying and assessing risks of material misstatement in

respect of irregularities, including fraud and non‑compliance

with laws and regulations, we considered the following:

• the nature of the industry and sector, control environment

and business performance including the design of the

Group’s remuneration policies, key drivers for Directors’

remuneration, bonus levels and performance targets;

• results of our enquiries of management, the Directors

and the Committee about their own identification and

assessment of the risks of irregularities, including those that

are specific to the Group’s sector;

• any matters we identified having obtained and reviewed

the Group’s documentation of their policies and procedures

relating to:

• identifying, evaluating and complying with laws and

regulations and whether they were aware of any instances

of non‑compliance;

• detecting and responding to the risks of fraud and

whether they have knowledge of any actual, suspected or

alleged fraud;

• the internal controls established to mitigate risks of fraud

or non‑compliance with laws and regulations; and

• the matters discussed among the audit engagement

team and relevant internal specialists, including valuations

specialists regarding how and where fraud might occur

in the financial statements and any potential indicators

offraud.

As a result of these procedures, we considered the

opportunities and incentives that may exist within the

organisation for fraud, and identified the greatest potential for

fraud in the following area:

• Valuation of investment properties measured at FVTPL.

In common with all audits under ISAs (UK), we are also

required to perform specific procedures to respond to the risk

of management override.

FINANCIAL STATEMENTS

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Life Science REIT plc Annual Report and Financial Statements 2022

INDEPENDENT AUDITOR’S REPORT CONTINUED

TO THE MEMBERS OF LIFE SCIENCE REIT PLC

Report on other legal and

regulatoryrequirements

12. Opinions on other matters prescribed by the

Companies Act 2006

In our opinion the part of the Directors’ remuneration report

to be audited has been properly prepared in accordance with

the Companies Act 2006.

In our opinion, based on the work undertaken in the course of

the audit:

• the information given in the strategic report and the

Directors’ report for the financial year for which the financial

statements are prepared is consistent with the financial

statements; and

• the strategic report and the Directors’ report have been

prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the

Group and the Company and their environment obtained in

the course of the audit, we have not identified any material

misstatements in the strategic report or the Directors’ report.

13. Corporate Governance Statement

The Listing Rules require us to review the Directors’ statement

in relation to going concern, longer‑term viability and that

part of the Corporate Governance Statement relating to the

Group’s compliance with the provisions of the UK Corporate

Governance Code specified for our review.

Based on the work undertaken as part of our audit, we

have concluded that each of the following elements of the

Corporate Governance Statement is materially consistent with

the financial statements and our knowledge obtained during

the audit:

• the Directors’ statement with regards to the

appropriateness of adopting the going concern basis of

accounting and any material uncertainties identified set out

on page 96;

• the Directors’ explanation as to its assessment of the

Group’s prospects, the period this assessment covers and

why the period is appropriate set out on pages 70 and 71;

• the Directors’ statement on fair, balanced and

understandable set out on page 92;

• the board’s confirmation that it has carried out a robust

assessment of the emerging and principal risks set out on

pages 87 and 88;

• the section of the annual report that describes the review

of effectiveness of risk management and internal control

systems set out on page 87; and

• the section describing the work of the Committee set out

onpages 91 to 93.

14. Matters on which we are required to report

byexception

14.1. Adequacy of explanations received and

accounting records

Under the Companies Act 2006 we are required to report to

you if, in our opinion:

• we have not received all the information and explanations

we require for our audit; or

• adequate accounting records have not been kept by the

Company, or returns adequate for our audit have not been

received from branches not visited by us; or

• the Company financial statements are not in agreement

with the accounting records and returns.

We have nothing to report in respect of these matters.

14.2. Directors’ remuneration

Under the Companies Act 2006 we are also required to report

if in our opinion certain disclosures of Directors’ remuneration

have not been made or the part of the Directors’ remuneration

report to be audited is not in agreement with the accounting

records and returns.

We have nothing to report in respect of these matters.

15. Other matters which we are required

to address

15.1. Auditor tenure

Following the recommendation of the Committee, we were

appointed by the Board on 11 February 2022 to audit the

financial statements for the period ended 31 December

2021 and subsequent financial periods. The period of total

uninterrupted engagement including previous renewals and

reappointments of the firm is two years, covering the periods

ended 31 December 2021 and 31 December 2022.

15.2. Consistency of the audit report with

theadditional report to the Committee

Our audit opinion is consistent with the additional report to

the Committee we are required to provide in accordance

withISAs (UK).

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Life Science REIT plc Annual Report and Financial Statements 2022

16. Use of our report

This report is made solely to the Company’s members,

as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so

that we might state to the company’s members those matters

we are required to state to them in an Auditor’s report and for

no other purpose. To the fullest extent permitted by law, we

do not accept or assume responsibility to anyone other than

the Company and the Company’s members as a body, for our

audit work, for this report, or for the opinions we have formed.

As required by the Financial Conduct Authority (“FCA”)

Disclosure Guidance and Transparency Rule (“DTR”) 4.1.14R,

these financial statements form part of the European Single

Electronic Format (“ESEF”) prepared Annual Financial Report

filed on the National Storage Mechanism of the UK FCA in

accordance with the ESEF Regulatory Technical Standard

(“ESEF RTS”). This auditor’s report provides no assurance

over whether the annual financial report has been prepared

using the single electronic format specified in the ESEF RTS.

Siobhan Durcan, BA, ACA, FCCA

For and on behalf of Deloitte LLP

Statutory Auditor

Saint Helier, Jersey

24 March 2023

FINANCIAL STATEMENTS

Life Science REIT plc Annual Report and Financial Statements 2022

110

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER

COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2022

Period from

1 August

Year ended 2021 to

31 December 31 December

2022 2021

Continuing operations Notes £’000 £’000

Gross property income 3 13 ,1 24 532

Service charge income 3 2, 582 —

Revenue 15 ,70 6 5 32

Recoverable service charges 4 (2 , 58 2) —

Property operating expenses 4 (2 ,187) —

Gross profit 10, 93 7 532

Administration expenses 4 (6 , 5 6 5) (834)

Operating gains/(losses) before (losses)/gains on investment properties 4, 37 2 (3 02)

Fair value (losses)/gains on investment properties 13 (31,312) 8 ,036

Operating (loss)/profit (26,940) 7,7 3 4

Finance income 7 3, 2 55 7

Finance expenses 8 (3,782) —

(Loss)/profit before tax (2 7, 4 6 7) 7 ,7 41

Taxation 9 (146) —

(Loss)/profit after tax for the period and total comprehensive (loss)/

income attributable to equity holders (2 7 ,613) 7 ,7 41

(Loss)/profit per share (basic and diluted) (pence) 12 (7. 9) 2. 2

All items in the above statement derive from continuing operations. No operations were discontinued during the period.

There is no other comprehensive income and as such a separate statement is not present. The profit after tax is therefore also

the total comprehensive profit.

The accompanying notes on pages 114 to 136 form an integral part of these Financial Statements.

Life Science REIT plc Annual Report and Financial Statements 2022

111

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2022

31 December 31 December

2022 2021

Notes £’000 £’000

Assets

Non-current assets

Investment property 13 3 8 7, 5 5 0 1 9 2 , 170

Interest rate derivatives 16 3, 87 1 —

Trade and other receivables 14 2 , 701 —

39 4 ,1 22 1 9 2, 170

Current assets

Trade and other receivables 14 7 ,665 3, 268

Cash and cash equivalents 15 45 ,6 06 1 65 , 9 62

Interest rate derivatives 16 432 —

53 , 703 1 69, 23 0

Total assets 4 47, 8 2 5 361,40 0

Liabilities

Non-current liabilities

Interest‑bearing loans and borrowings 17 (74 , 0 8 8) —

Other payables and accrued expenses 18 (3,844) —

(77 ,932) —

Current liabilities

Interest‑bearing loans and borrowings 17 (35,7 43) —

Other payables and accrued expenses 18 (1 4 , 6 9 9) (1 0 , 8 2 0)

(5 0, 4 42) (1 0 , 8 2 0)

Total liabilities (12 8,37 4) (1 0 , 8 2 0)

Net assets 319,4 51 350,5 80

Equity

Share capital 19 3, 500 3,500

Share premium 20 — 339, 339

Capital reduction reserve 335 , 823 —

Retained earnings 21 (19, 872) 7 ,7 41

Total equity 319,451 350, 5 80

Number of shares in issue (thousands) 350,000 350,000

Net asset value per share (basic and diluted) (pence) 22 91. 3 100. 2

These Financial Statements were approved by the Board of Directors of Life Science REIT plc on 24 March 2023 and signed on

its behalf by:

Claire Boyle

Company number: 13532483

The accompanying notes on pages 114 to 136 form an integral part of these Financial Statements.

FINANCIAL STATEMENTS

Life Science REIT plc Annual Report and Financial Statements 2022

112

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2022

Capital

Share Share reduction Retained

capital premium reserve earnings Total

Notes £’000 £’000 £’000 £’000 £’000

Balance at 1 January 2022 3 , 5 0 0 3 39 , 3 39 — 7 ,7 41 35 0, 5 8 0

Loss for the year and total comprehensive loss — — — (27,613) (27,613)

Ordinary shares issued 19, 20 — — — — —

Cancellation of share premium 20 — (33 9, 32 3) 3 39 , 32 3 — —

Share issue costs 20 — (16) — — (1 6)

Dividends paid 11 — — (3, 50 0) — (3 , 50 0)

Balance at 31 December 2022 3 , 50 0 — 3 35 , 82 3 (1 9, 872) 3 1 9, 4 51

Capital

Share Share reduction Retained

capital premium reserve earnings Total

Notes £’000 £’000 £’000 £’000 £’000

Balance at 1 August 2021 — — — — —

Profit for the year and total comprehensive profit — — — 7 ,7 41 7 ,7 41

Ordinary shares issued 19, 20 3 , 5 0 0 34 6 , 5 0 0 — — 3 5 0, 0 0 0

Share issue costs 20 — (7 ,1 6 1) — — (7 ,1 6 1)

Dividends paid 11 — — — — —

Balance at 31 December 2021 3 , 5 0 0 33 9, 3 3 9 — 7 ,7 41 35 0, 5 8 0

The accompanying notes on pages 114 to 136 form an integral part of these Financial Statements.

Life Science REIT plc Annual Report and Financial Statements 2022

113

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2022

Year ended Period ended

31 December 31 December

2022 2021

Notes £’000 £’000

Cash flows from operating activities

Operating profit (26,940) 7,7 3 4

Adjustments to reconcile profit for the period to net cash flows:

Changes in fair value of investment properties 13 31,312 (8 ,0 3 6)

Adjustment for non‑cash items — (8 2)

Operating cash flows before movements in working capital 4, 37 2 (3 8 4)

Increase in other receivables and prepayments (8 ,1 4 4) (3 , 1 6 9)

Increase in other payables and accrued expenses 2 ,68 4 7,0 9 1

Net cash flow (used in)/generated from operating activities (1 , 08 8) 3 ,538

Cash flows from investing activities

Acquisition of investment properties (17 9 , 4 1 4) (1 8 1 , 524)

Capital expenditure (7, 6 4 1) —

Interest received 67 7 7

Net cash used in investing activities (18 6 , 378) (1 8 1 , 5 17)

Cash flows from financing activities

Proceeds from issue of ordinary shares 19,20 — 350 ,000

Share issuance costs paid (1 ,1 1 8) (6 , 0 5 9)

Bank loans drawn down 17 1 01, 260 —

Bank loans repaid 17 (26, 260) —

Loan interest and other finance expenses paid (2 , 0 6 9) —

Loan issue costs paid (1, 203) —

Dividends paid in the period (3 , 50 0) —

Net cash flow generated from financing activities 67, 1 1 0 3 43 , 941

Net (decrease)/increase in cash and cash equivalents (120, 35 6) 16 5 , 9 62

Cash and cash equivalents at start of the period 1 65, 9 62 —

Cash and cash equivalents at end of the period 15 45 ,60 6 16 5 , 9 62

The accompanying notes on pages 114 to 136 form an integral part of these Financial Statements.

FINANCIAL STATEMENTS

Life Science REIT plc Annual Report and Financial Statements 2022

114

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

1. General information

Life Science REIT plc (the “Company”) is a closed‑ended Real Estate Investment Trust (“REIT”) incorporated in England and

Wales on 27 July 2021. The Company began trading on 19 November 2021 when the Company’s shares were admitted to trading

on AIM, a market operated by the London Stock Exchange. On 1 December 2022 the Company moved to the Main Market of the

London Stock Exchange. The registered office of the Company is located at 65 Gresham Street, London, EC2V 7NQ.

The Group’s consolidated Financial Statements for the year ended 31 December 2022 comprise the results of the Company and

its subsidiaries (together constituting the “Group”) and were approved by the Board and authorised for issue on 24 March 2023.

The nature of the Group’s operations and its principal activities are set out in the strategic report on pages 2 to 71.

2. Basis of preparation

These Financial Statements are prepared in accordance with United Kingdom adopted International Financial Reporting

Standards and in conformity with the requirements of the Companies Act 2006. The Financial Statements have been prepared

under the historical cost convention, except for the revaluation of investment properties and financial instruments that are

measured at revalued amounts or fair values at the end of each reporting period, as explained in the accounting policies below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. The audited

Financial Statements are presented in Pound Sterling and all values are rounded to the nearest thousand pounds (£’000),

except when otherwise indicated.

The Company was incorporated on 27 July 2021 and a set of accounts to 31 July 2021 were filed, therefore the five‑month

period from 1 August 2021 to 31 December 2021 has been presented as the comparative. The Company did not commence

trading until 19 November 2021, thus the comparative information may not present a representative comparative.

2.1 Going concern

The Directors have made an assessment of the Group’s ability to continue as a going concern. They carefully considered areas

of potential financial risk and reviewed cash flow forecasts, evaluating a number of scenarios which included extreme downside

sensitivities in relation to rental cash collection, making no acquisitions or discretionary capital expenditure and minimum

dividend distributions under the REIT rules. Accordingly, based on this information, and in light of mitigating actions available

and the reasonable expectation that the Group refinancing will be available when required, the Directors have a reasonable

expectation that the Group and the Company have adequate resources to continue in business for a period at least 12 months

from the date of approval of the Annual Report and Financial Statements (see pages 70 and 71 for full details of the going

concern assessment).

Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Group’s ability

to continue as a going concern. Therefore, the financial statements have been prepared on the going concern basis.

2.2 New standards and interpretations effective in the current period

The following amendments to existing standards that are required for the Group’s accounting period beginning on

1 January 2022, have been considered and applied:

• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);

• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);

• Annual Improvements to IFRS Standards 2018‑2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and

• References to Conceptual Framework (Amendments to IFRS 3).

There was no material effect from the adoption of the above‑mentioned amendments to IFRS effective in the period. They have

no significant impact to the Group as they are either not relevant to the Group’s activities or require accounting which is already

consistent with the Group’s current accounting policies.

Life Science REIT plc Annual Report and Financial Statements 2022

115

2.3 New and revised accounting standards not yet effective

There are a number of new standards and amendments to existing standards which have been published and are mandatory

for the Group’s accounting periods beginning on or after 1 January 2023 or later. The Group is not adopting these standards

early. The following are the most relevant to the Group:

• Amendments to IAS 1 Presentation of Financial Statements clarifies that liabilities are classified as either current or

non‑current, depending on the rights that exist at the end of the reporting period and not expectations of, or actual events

after, the reporting date. The amendments also give clarification to the definition of settlement of a liability;

• Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors clarifies the distinction between

accounting policies and accounting estimates and also replaces the definition of accounting estimates. Under the new

definition, estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”; and

• IFRS 17: Insurance contracts is a new requirement from 1 January 2023 covering insurance and re‑insurance contracts and

will not be relevant to the Group.

The amendments are not expected to have a significant impact on the preparation of the Financial Statements.

2.4 Significant accounting judgements and estimates

The preparation of these Financial Statements in accordance with IFRS requires the Directors of the Company to make

judgements, estimates and assumptions that affect the reported amounts recognised in the Financial Statements.

However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment

to the carrying amount of the asset or liability in the future.

Judgements

In the course of preparing the Financial Statements, the Investment Adviser has made the following judgements in the process

of applying the Group’s accounting policies which have had a significant effect on the amounts recognised in the Financial

Statements.

Business combinations

The Group acquires subsidiaries that own investment properties. At the time of acquisition, the Group considers whether each

acquisition represents the acquisition of a business or the acquisition of an asset. Management considers the substance of the

assets and activities of the acquired entity in determining whether the acquisition represents the acquisition of a business.

The Group accounts for an acquisition as a business combination where an integrated set of activities is acquired in addition

to the property. Where such acquisitions are not judged to be the acquisition of a business, they are not treated as business

combinations. Rather, the cost to acquire the corporate entity is allocated between the identifiable assets and liabilities of the

entity based upon their relative fair values at the acquisition date. Accordingly, no goodwill or additional deferred tax arises.

All corporate acquisitions made during the period have been treated as asset purchases rather than business combinations

because no integrated set of activities was acquired.

Estimates

In the process of applying the Group’s accounting policies, the Investment Adviser has made the following estimates which have

the most significant risk of material change to the carrying value of assets recognised in the consolidated Financial Statements:

Valuation of property

The valuations of the Group’s investment property are at fair value as determined by the external valuer on the basis of market

value in accordance with the internationally accepted RICS Valuation – Professional Standards January 2022 (incorporating

the International Valuation Standards) and in accordance with IFRS 13. The key estimates made by the valuer are the ERV and

equivalent yields of each investment property.

Onsite developments are valued by applying the ‘residual method’ of valuation, which is the investment method described

above with a deduction for all costs necessary to complete the development, with a further allowance for remaining risk and

developers’ profit. Properties and land held for future development are valued using the highest and best use method, by

adopting the residual method allowing for all associated risks, the investment method, or a value per acre methodology.

See notes 13 and 23 for further details.

FINANCIAL STATEMENTS

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116

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

2. Basis of preparation continued

2.5 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these Financial Statements are stated in the notes to the

Financial Statements.

a) Basis of consolidation

The Company does not meet the definition of an investment entity and therefore does not qualify for the consolidation

exemption under IFRS 10. The consolidated Financial Statements comprise the Financial Statements of the Company and its

subsidiaries as at 31 December 2022. Subsidiaries are consolidated from the date of acquisition, being the date on which the

Group obtained control, and will continue to be consolidated until the date that such control ceases. An investor controls an

investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability

to affect those returns through its power over the investee. In preparing these Financial Statements, intra‑group balances,

transactions and unrealised gains or losses have been eliminated in full. All subsidiaries have the same year end as the Company.

Uniform accounting policies are adopted in the Financial Statements for like transactions and events in similar circumstances.

b) Functional and presentation currency

The overall objective of the Group is to generate returns in Pound Sterling and the Group’s performance is evaluated in Pound

Sterling. Therefore, the Directors consider Pound Sterling as the currency that most faithfully represents the economic effects

of the underlying transactions, events and conditions and have therefore adopted it as the functional and presentation currency.

All values are rounded to the nearest thousand pounds (£’000), except when otherwise stated.

c) Segmental reporting

The Directors are of the opinion that the Group is engaged in a single segment of business, being the investment and

management of premises relating to the life science sector.

d) Derivative financial instruments

Derivative financial instruments, comprising interest rate derivatives for mitigating interest rate risks, are initially recognised

at fair value and are subsequently measured at fair value, being the estimated amount that the Group would receive or pay

to terminate the agreement at the period end date, taking into account current interest rate expectations and the current

credit rating of the Group and its counterparties. Premiums payable under such arrangements are initially capitalised into the

statement of financial position.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to

measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs significant

to the fair value measurement as a whole. Changes in fair value of interest rate derivatives are recognised within finance

expenses in profit or loss in the period in which they occur.

e) Exceptional costs

Items are classified as exceptional by virtue of their size, nature or incidence, where their inclusion would otherwise distort

the underlying recurring earnings of the Group. Examples include, but are not limited to, business transformation costs, early

redemption costs of financial instruments and tax charges specific to disposals. Exceptional costs are excluded from the

Group’s adjusted earnings.

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117

3. Revenue

Year ended Period ended

31 December 31 December

2022 2021

£’000 £’000

Rental income 11,007 428

Rental income straight‑line adjustment 1,240 82

Other income 722 22

Insurance recharged 155 —

Gross property income 13,124 532

Service charge income 2,582 —

Total 15,706 532

Accounting policy

Rental income arising from operating leases on investment property is accounted for on a straight‑line basis over the lease

term and is included in gross rental income in the Group statement of comprehensive income. Initial direct costs incurred

in negotiating and arranging an operating lease are recognised as an expense over the lease term on the same basis as the

lease income. Rental income is invoiced in advance and for all rental income that relates to a future period, this is deferred and

appears with current liabilities on the Group statement of financial position.

For leases which contain fixed or minimum uplifts, the rental income arising from such uplifts is recognised on a straight‑line

basis over the lease term.

Tenant lease incentives are recognised as an adjustment of rental revenue on a straight‑line basis over the term of the lease.

The lease term is the non‑cancellable period of the lease together with any further term for which the tenant has the option to

continue the lease where, at the inception of the lease, the Directors are reasonably certain that the tenant will exercise that option.

Amounts received from occupiers to terminate leases or to compensate for dilapidations are recognised in the Group statement

of comprehensive income when the right to receive them arises.

Service charge income is recognised when the related recoverable expenses are incurred. The Group acts as the principal in service

charge transactions as it directly controls the delivery of the services at the point at which they are provided to the occupier.

4. Property operating and administration expenses

Year ended Period ended

31 December 31 December

2022 2021

£’000 £’000

Recoverable service charges 2,582 —

Rates 526 —

Premises expenses

928 —

Service charge void costs 571 —

Insurance expense 162 —

Property operating expenses 2,187 —

Investment Adviser fees 3,787 455

Other administration expenses 1,458 217

Cost associated with moving to Main Market 957 —

Directors’ remuneration (see note 5) 186 32

Audit fees (see note 6) 177 130

Administration expenses 6,565 834

Total 11,334 834

1. Includes doubtful debts provided for as at 31 December 2022 of £0.7 million (31 December 2021: £nil) .

FINANCIAL STATEMENTS

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118

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

4. Property operating and administration expenses continued

Accounting policy

All property operating expenses and administration expenses are charged to the consolidated statement of comprehensive

income and are accounted for on an accruals basis.

Property expenses are costs incurred by the Group that are not directly recoverable from an occupier, as well as professional

fees relating to the letting of our estates.

Further information on the calculation of the Investment Adviser fees is set out in note 28.

5. Directors’ remuneration

Year ended Period ended

31 December 31 December

2022 2021

£’000 £’000

Claire Boyle 55 12

Sally Ann Forsyth 42 10

Michael Taylor 40 8

Richard Howell 29 —

Employers’ National Insurance contributions 20 2

Total 186 32

A summary of the Directors’ emoluments, including the disclosures required by the Companies Act 2006, is set out in the

Directors’ remuneration report on pages 94 and 95. The Group had no employees in the period.

6. Auditor’s remuneration

Year ended Period ended

31 December 31 December

2022 2021

£’000 £’000

Audit fee 177 130

Total 177 130

The Group reviews the scope and nature of all proposed non‑audit services before engagement, to ensure that the

independence and objectivity of the Auditor are safeguarded. Audit fees are comprised of the following items:

Year ended Period ended

31 December 31 December

2022 2021

£’000 £’000

Group Annual Report and Financial Statements 177 130

Total 177 130

Non‑audit fees payable to the Group’s Auditor comprised of the following:

Year ended Period ended

31 December 31 December

2022 2021

£’000 £’000

Services provided as reporting accountant on equity raise — 171

Total — 171

The Auditor has not undertaken any non‑audit services during the year. The Audit and Risk Committee has considered the

independence and objectivity of the Auditor and has conducted a review of services which the Auditor has provided during

the period under review. The Audit and Risk Committee receives an annual assurance from the Auditor that its independence

is not compromised.

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119

7. Finance income

Year ended Period ended

31 December 31 December

2022 2021

£’000 £’000

Change in fair value of interest rate derivatives 2,047 —

Income from cash and short‑term deposits 771 7

Interest receivable from interest rate derivatives 329 —

Change in fair value of deferred consideration on interest rate derivatives 108 —

Total 3,255 7

Accounting policy

Interest income is recognised on an effective interest rate basis and shown within the Group statement of comprehensive

income as finance income.

8. Finance expenses

Year ended Period ended

31 December 31 December

2022 2021

£’000 £’000

Loan interest 4,961 —

Loan arrangement fees amortised 416 —

Loan expenses 201 —

Gross interest costs 5,578 —

Capitalisation of finance costs (1,796) —

Total 3,782 —

Accounting policy

Any finance costs that are separately identifiable and directly attributable to an asset which takes a period of time to complete

are amortised as part of the cost of the asset. All other finance costs are expensed in the period in which they occur. Finance

costs consist of interest and other costs that an entity incurs in connection with bank and other borrowings. Finance costs have

been capitalised in the period in accordance with the accounting policy detailed in note 17.

FINANCIAL STATEMENTS

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120

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

9. Taxation

Corporation tax has arisen as follows:

Year ended Period ended

31 December 31 December

2022 2021

£’000 £’000

Corporation tax on residual income 146 —

Total 146 —

Reconciliation of tax charge to profit before tax:

Year ended Period ended

31 December 31 December

2022 2021

£’000 £’000

(Loss)/profit before tax (27,467) 7,741

Corporation tax at 19% (2021: 19.0%) (5,219) 1,471

Change in value of investment properties 5,949 (1,527)

Change in value of interest rate derivatives (389) —

Tax‑exempt property rental business (195) 56

Total 146 —

The Company served notice to HM Revenue & Customs that the Company, and its Group subsidiaries, qualified as a Real Estate

Investment Trust with effect from 30 November 2021. The Group did not have any taxable profits arising prior to this date.

The United Kingdom Government has announced that it intends to increase the main rate of corporation tax from 19% to 25%

from April 2023. As the Company is a REIT it is not anticipated that the change in the corporation tax will have a material impact

on the Group, however tax charges on any non‑property income will increase.

Accounting policy

Corporation tax is recognised in the consolidated statement of comprehensive income except where in certain circumstances

corporation tax may be recognised in other comprehensive income.

As a REIT, the Group is exempt from corporation tax on the profits and gains from its property rental business, provided it

continues to meet certain conditions as per the REIT regulations.

Non‑qualifying profits and gains of the Group continue to be subject to corporation tax. Therefore, current tax is the expected

tax payable on the non‑qualifying taxable income for the period, if applicable, using tax rates enacted or substantively enacted

at the balance sheet date.

10. Operating leases

Operating lease commitments – as lessor

The Group has entered into commercial property leases on its investment property portfolio. These non‑cancellable leases have

a remaining term of up to 22 years.

Future minimum rentals receivable under non‑cancellable operating leases as at 31 December 2022 are as follows:

As at As at

31 December 31 December

2022 2021

£’000 £’000

Within one year 12,602 6,397

Between one and five years 41,784 27,194

More than five years 30,044 21,080

Total 84,430 54,671

Life Science REIT plc Annual Report and Financial Statements 2022

121

11. Dividends

Pence

For the year ended 31 December 2022 per share £’000

First interim dividend for year ended 31 December 2022, paid on 31 October 2022 1.0 3,500

Total 1.0 3,500

Paid as:

Property income distribution — —

Non‑property income distribution 1.0 3,500

Total 1.0 3,500

No dividends were declared for the period to 31 December 2021.

A second interim dividend of 3.0 pence per share was declared on 27 March 2023 and is due to be paid on 15 May 2023.

Accounting policy

Dividends due to the Company’s shareholders are recognised when they become payable.

12. Earnings per share

Basic EPS is calculated by dividing profit for the period attributable to ordinary shareholders of the Company by the weighted

average number of ordinary shares during the period. As there are no dilutive instruments in issue, basic and diluted EPS are

identical.

Year ended Period ended

31 December 31 December

2022 2021

£’000 £’000

IFRS earnings (27,613) 7,741

EPRA earnings adjustments:

Fair value losses/(gains) on investment properties 31,312 (8,036)

Changes in fair value of interest rate derivatives and deferred consideration (2,155) —

EPRA earnings 1,544 (295)

Group‑specific earnings adjustments:

Cost associated with moving to Main Market 957 —

Adjusted earnings 2,501 (295)

Year ended Period ended

31 December 31 December

2022 2021

Pence Pence

Basic IFRS EPS (7. 9) 2.2

Diluted IFRS EPS (7.9) 2.2

EPRA EPS 0.4 (0.1)

Adjusted EPS 0.7 (0.1)

Year ended Period ended

31 December 31 December

2022 2021

Number Number

of shares of shares

Weighted average number of shares in issue (thousands) 350,000 350,000

FINANCIAL STATEMENTS

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122

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

13. UK investment property

Completed Development Total

investment property investment

property and land property

£’000 £’000 £’000

Investment property valuation brought forward as at 1 January 2022 192,170 — 192,170

Acquisitions in the year 130,971 82,440 213,411

Additional capital expenditure 641 9,565 10,206

Finance costs capitalised — 1,796 1,796

Fair value losses on investment property (15,060) (16,252) (31,312)

Movement in rent incentives 1,247 32 1,279

Fair value at 31 December 2022 309,9 69 77, 581 387,550

Completed Development Total

investment property investment

property and land property

£’000 £’000 £’000

Investment property valuation brought forward as at 1 August 2021 — — —

Acquisitions in the year 184,052 — 184,052

Fair value gain on investment property 8,036 — 8,036

Movement in rent incentives 82 — 82

Fair value at 31 December 2021 192,170 — 192,170

Accounting policy

Investment property comprises property held to earn rental income or for capital appreciation, or both. Investment property

is recognised upon legal completion of the contract, where costs are reliably measured and future economic benefits that are

associated with the property flow to the entity. Investment property is measured initially at cost including transaction costs.

Transaction costs include transfer taxes and professional fees to bring the property to the condition necessary for it to be

capable of operating. The carrying amount also includes the cost of replacing part of an existing investment property at the

time that cost is incurred if the recognition criteria are met.

All corporate acquisitions made during the period have been treated as asset purchases rather than business combinations

because no integrated set of activities was acquired.

Development property and land is where the whole or a material part of an estate is identified as having potential for

development. Assets are classified as such until development is completed, and they have the potential to be fully income

generating. Development property and land is measured at fair value if the fair value is considered to be reliably determinable.

Where the fair value cannot be determined reliably but where it is expected that the fair value of the property will be reliably

determined when construction is completed, the property is measured at cost less any impairment until the fair value becomes

reliably determinable or construction is completed, whichever is earlier. It is the Group’s policy not to capitalise overheads

or operating expenses and no such costs were capitalised in either the year ended 31 December 2022 or the period ended

31 December 2021, however £1,796,000 (2021: £nil) of finance costs have been capitalised in the period to 31 December 2022.

Refer to note 17 for more details.

Subsequent to initial recognition, investment property is stated at fair value (see note 23). Gains or losses arising from changes

in the fair values are included in the consolidated statement of profit or loss and other comprehensive income in the period in

which they arise under IAS 40 Investment Property.

Investment properties cease to be recognised when they have been disposed of or withdrawn permanently from use and no

future economic benefit is expected. Gains or losses on the disposal of investment property are determined as the difference

between net disposal proceeds and the carrying value of the asset.

Movements in rent incentives are presented within the total portfolio valuation.

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123

14. Trade and other receivables

31 December 31 December

2022 2021

£’000 £’000

Prepayments and other receivables 3,531 362

Amounts due from/(due to) property manager 2,200 (5)

Tenant deposits

2,701 —

Rent and insurance receivable 1,133 635

Escrow account 470 1,279

Interest receivable 331 —

VAT receivable — 897

Payments in advance of property acquisition — 100

Total 10,366 3,268

1. Tenant deposits are reflected as non‑current receivables.

Accounting policy

Rent and other receivables are recognised at their original invoiced value and become due based on the terms of the underlying

lease or at the date of invoice.

The Group carries out an assessment of expected credit losses at each period end, using the IFRS 9 simplified approach, where

a lifetime expected loss allowance is recognised over the expected life of the financial instrument. Adjustments are recognised

in the income statement as an impairment gain or loss. The rent and insurance receivable represents gross receivables of

£1.9 million (31 December 2021: £0.6 million) and a provision for doubtful debts of £0.8 million (31 December 2021: £nil).

The Group considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Group in

full. The Group writes off trade receivables when there is no reasonable expectation of recovery.

15. Cash and cash equivalents

31 December 31 December

2022 2021

£’000 £’000

Cash 10,606 21,962

Cash equivalents 35,000 144,000

Total 45,606 165,962

Cash equivalents includes £35.0 million (2021: £144.0 million) of cash held by various banks on short‑term deposits.

Accounting policy

Cash and cash equivalents comprise cash at bank and short‑term deposits with banks and other financial institutions,

with an initial maturity of three months or less.

FINANCIAL STATEMENTS

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124

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

16. Interest rate derivatives

31 December 31 December

2022 2021

£’000 £’000

At the start of the period — —

Additional premiums paid and accrued 2,256 —

Changes in fair value of interest rate derivatives 2,047 —

Balance at the end of the period 4,303 —

Current 432 —

Non‑current 3,871 —

Balance at the end of the period 4,303 —

To mitigate the interest rate risk that arises as a result of entering into variable rate linked loans, the Group entered into interest

rate derivatives.

The instrument entered into in August 2022 has a notional value of £75.0 million at a strike rate of 2.00% and a termination date

of 31 March 2025.

On 13 May 2022, the Company acquired the issued share capital of Oxford Technology Park Holdings Limited (“OTPHL”)

including its two subsidiaries, Oxford Technology Park Limited (“OTPL”) and Oxford Technology Park Investments Limited

(“OTPIL”). OTPL has an existing loan facility and SONIA interest rate cap in place at 0.75% until the loan expiry date for

£29.3 million of the drawn facility. This cap is due to expire in June 2023 and is therefore shown in current liabilities.

Accounting policy

Interest rate derivatives are initially recognised at fair value and are subsequently measured at fair value, being the estimated

amount that the Group would receive or pay to terminate the agreement at the period end date, taking into account current

interest rate expectations and the current credit rating of the Group and its counterparties. Premiums payable under such

arrangements are initially capitalised into the statement of financial position.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to

measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs significant

to the fair value measurement as a whole. Changes in fair value of interest rate derivatives are recognised within finance

expenses in profit or loss in the period in which they occur.

Life Science REIT plc Annual Report and Financial Statements 2022

125

17. Interest-bearing loans and borrowings

31 December 31 December

2022 2021

Non-current £’000 £’000

At the beginning of the period — —

Drawn in the period 101,260 —

Repaid in the period (26,260) —

Interest-bearing loans and borrowings 75,000 —

Unamortised fees at the beginning of the period — —

Loan arrangement fees paid in the period (1,203) —

Amortisation charge for the period 291 —

Unamortised loan arrangement fees (912) —

Loan balance less unamortised loan arrangement fees 74,088 —

31 December 31 December

2022 2021

Current £’000 £’000

At the beginning of the period — —

Acquired in the period 33,582 —

Drawn in the period — —

Repaid in the period — —

Interest and commitment fees incurred in the period 2,251 —

Interest-bearing loans and borrowings 35,833 —

Unamortised fees at the beginning of the period — —

Loan arrangement fees paid in the period (215) —

Amortisation charge for the period 125 —

Unamortised loan arrangement fees (90) —

Loan balance less unamortised loan arrangement fees 35,743 —

On 29 March 2022, a direct subsidiary of the Company, Ironstone Life Science Holdings Limited, entered into a £150.0 million

single currency term and revolving facility agreement (“HSBC facility”) with HSBC UK Bank plc, comprising a £75.0 million

three‑year term loan facility and an equally sized revolving credit facility. The HSBC facility has an interest rate in respect of

drawn amounts of 225 basis points over SONIA. As at 31 December 2022, the £75.0 million three‑year term loan facility was

fully drawn and there was £75.0 million available to draw on the revolving facility.

In August 2022, additional protection was secured against potential future interest rate rises through capping the SONIA rate at

2.0% until 31 March 2025 on the full amount of the HSBC term loan at a premium of £2.3 million.

The HSBC facility is secured on Rolling Stock Yard, Cambourne Business Park, 7‑11 Herbrand Street, Lumen House and the

Merrifield Centre within the portfolio.

On 13 May 2022, the Company acquired the issued share capital of Oxford Technology Park Holdings Limited (“OTPHL”)

including its two subsidiaries, Oxford Technology Park Limited (“OTPL”) and Oxford Technology Park Investments Limited

(“OTPIL”). OTPL has an existing loan facility with Fairfield REF ECS II GEN No.2 Designated Activity Company (“Fairfield”) of

£53.4 million, of which £35.8 million is currently drawn. The Fairfield facility has an interest rate in respect of drawn amounts of

712 basis points over SONIA.

There is an existing SONIA interest rate cap in place at 0.75% until the loan expiry date for £29.3 million of the drawn facility.

The Fairfield debt is due to expire in June 2023 and is therefore shown in current liabilities.

The debt facilities include LTV and interest cover covenants that are measured at entity level where the debt facilities have been

drawn. The Group is in full compliance with all loan covenants as at 31 December 2022.

FINANCIAL STATEMENTS

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126

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

17. Interest-bearing loans and borrowings continued

Accounting policy

Loans and borrowings are initially recognised at the proceeds received net of directly attributable transaction costs. Loans

and borrowings are subsequently measured at amortised cost. Interest on the HSBC facility is charged to the consolidated

statement of comprehensive income at the effective interest rate and shown within finance costs. Interest on the Fairfield

facility is capitalised as part of the loan principal at the effective interest rate and reflected within finance costs. The effective

interest rate is calculated as the daily SONIA rate plus the facility margin. Transaction costs are amortised over the term of

the loan.

Where a property is being developed or undergoing major refurbishment, finance costs associated with direct expenditure on

the property are capitalised. Capitalisation commences when the activities to develop the property start and continues until the

property is substantially ready for its intended use, normally practical completion.

Capitalised finance costs are calculated at the Group’s weighted average interest rate.

18. Other liabilities – other payables and accrued expenses, provisions and deferred income

31 December 31 December

2022 2021

£’000 £’000

Capital expenses payable 5,481 2,628

Deferred income 3,692 4,937

Administration and other expenses payable 2,588 1 ,429

Loan interest payable 1,027 —

Deferred consideration on interest rate caps 820 —

VAT payable 759 —

Property operating expenses payable 332 92

Share issue costs payable — 1,101

Current other payables and accrued expenses 14,699 10,820

Tenant deposits payable to tenant 2,701 633

Deferred consideration on interest rate caps 1,143 —

Non-current other payables and accrued expenses 3,844 633

Total other payables and accrued expenses 18,543 10,820

Accounting policy

Other payables and accrued expenses are initially recognised at fair value and subsequently held at amortised cost.

Deferred income is rental income invoiced to the tenant but relates to future accounting periods. The income is deferred and is

unwound to revenue on a straight‑line basis over the period in which it is earned.

Life Science REIT plc Annual Report and Financial Statements 2022

127

19. Share capital

Share capital is the nominal amount of the Company’s ordinary shares in issue.

31 December 31 December

2022 2021

Ordinary shares of £0.01 each Number £’000 Number £’000

Authorised, issued and fully paid:

Shares issued 350,000,000 3,500 350,000,000 3,500

Balance at the end of the period 350,000,000 3,500 350,000,000 3,500

The share capital comprises one class of ordinary shares. At general meetings of the Company, ordinary shareholders

are entitled to one vote on a show of hands and on a poll, for every share held. There are no restrictions on the size

of a shareholding or the transfer of shares, except for the UK REIT restrictions.

Accounting policy

Share capital is the nominal amount of the Company’s ordinary shares in issue.

20. Share premium

Share premium comprises the following amounts:

31 December 31 December

2022 2021

£’000 £’000

At the start of the period 339,339 —

Shares issued — 346,500

Share issue costs (16) (7,161)

Transfer to capital reduction reserve (339,323) —

Share premium — 339,339

Accounting policy

Share premium represents the excess over nominal value of the fair value of the consideration received for equity shares net of

direct issue costs.

On 12 April 2022, the share premium account was cancelled in accordance with the provisions of the Companies Act 2006 in

order to create distributable reserves, the capital reduction reserve. This is capable of being applied in any manner in which the

Company’s profits available for distribution are able lawfully to be applied.

21. Retained earnings

Retained earnings comprise the following cumulative amounts:

31 December 31 December

2022 2021

£’000 £’000

Total unrealised (loss)/gain on investment properties (23,276) 8,036

Total unrealised gain on interest rate derivatives and deferred consideration 2,155 —

Total realised gain/(loss) 1,249 (295)

Retained earnings (19,872) 7,741

Accounting policy

Retained earnings represent the profits of the Group less dividends paid from revenue profits to date. Unrealised gains/(losses)

on the revaluation of investment properties, interest rate derivatives and deferred consideration contained within this reserve

are not distributable until any gains crystallise on the sale of the investment property and interest rate caps.

As at 31 December 2022, the Company had distributable reserves available of £337.1 million (2021: £nil).

FINANCIAL STATEMENTS

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128

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

22. Net asset value per share

Basic NAV per share amounts are calculated by dividing net assets attributable to ordinary equity holders of the Company

in the statement of financial position by the number of ordinary shares outstanding at the end of the period. As there are no

dilutive instruments in issue, basic and diluted NAV per share are identical.

EPRA net tangible assets (“EPRA NTA”) is calculated using property values in line with IFRS, where values are net of real estate

transfer tax (“RETT”) and other purchasers’ costs. EPRA NTA is considered to be the most relevant measure for the Group’s

operating activities.

31 December 31 December

2022 2021

£’000 £’000

IFRS net assets attributable to ordinary shareholders 319,451 350,580

IFRS net assets for calculation of NAV 319,451 350,580

Adjustment to net assets:

Fair value of interest rate derivatives (4, 303) —

EPRA NTA 315,148 350,580

31 December 31 December

2022 2021

Pence Pence

IFRS basic and diluted NAV per share (pence) 91.3 100.2

EPRA NTA per share (pence) 90.0 100.2

31 December 31 December

2022 2021

Number Number

of shares of shares

Number of shares in issue (thousands) 350,000 350,000

Life Science REIT plc Annual Report and Financial Statements 2022

129

23. Fair value

IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date. The following methods and assumptions were used to

estimate the fair values.

The fair value of cash and short‑term deposits, trade receivables, trade payables and other current liabilities approximate their

carrying amounts due to the short‑term maturities of these instruments.

Interest‑bearing loans and borrowings are disclosed at amortised cost. The carrying values of the loans and borrowings

approximate their fair value due to the contractual terms and conditions of the loan. The HSBC debt facility has an interest rate

of 225 basis points over SONIA in respect of drawn amounts. The Fairfield debt facility has an interest rate in respect of drawn

amounts of 712 basis points over SONIA.

The fair value of the interest rate contracts is recorded in the statement of financial position and is revalued quarterly by an

independent valuations specialist, Chatham Financial.

Six‑monthly valuations of investment property are performed by CBRE, accredited external valuers with recognised and

relevant professional qualifications and recent experience of the location and category of the investment property being

valued, on a variable fee basis. The valuations are the ultimate responsibility of the Directors however, who appraise these every

six months.

The valuation of the Group’s investment property at fair value is determined by the external valuer on the basis of market value

in accordance with the internationally accepted RICS Valuation – Professional Standards January 2020 (incorporating the

International Valuation Standards).

Completed investment properties are valued by adopting the ‘income capitalisation’ method of valuation. This approach

involves applying capitalisation yields to current and future rental streams, net of income voids arising from vacancies or

rent‑free periods and associated running costs. These capitalisation yields and future rental values are based on comparable

property and leasing transactions in the market using the valuer’s professional judgement and market observations. Other

factors taken into account in the valuations include the tenure of the property, tenancy details and ground and structural

conditions.

Onsite developments are valued by applying the ‘residual method’ of valuation, which is the investment method described

above with a deduction for all costs necessary to complete the development, with a further allowance for remaining risk and

developers’ profit. Properties and land held for future development are valued using the highest and best use method, by

adopting the residual method allowing for all associated risks, the investment method, or a value per acre methodology.

The following table shows an analysis of the fair values of investment properties recognised in the statement of financial

position by level of the fair value hierarchy

31 December 2022

Level 1 Level 2 Level 3 Total

Assets and liabilities measured at fair value £’000 £’000 £’000 £’000

Investment properties — — 387,550 387,550

Interest rate derivatives — 4,303 — 4,303

Deferred consideration on interest rate caps — (1,963) — (1,963)

Total — 2,340 387,550 389,890

31 December 2021

Level 1 Level 2 Level 3 Total

Assets and liabilities measured at fair value £’000 £’000 £’000 £’000

Investment properties — — 192,170 192,170

Total — — 192,170 192,170

1. Explanation of the fair value hierarchy:

• Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 – use of a model with inputs (other than quoted prices included in Level 1) that are directly or indirectly observable market data; and

• Level 3 – use of a model with inputs that are not based on observable market data.

There have been no transfers between Level 1 and Level 2 during either period, nor have there been any transfers in or out of Level 3 .

FINANCIAL STATEMENTS

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130

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

23. Fair value continued

Sensitivity analysis to significant changes in unobservable inputs within the valuation of investment

properties

The following table analyses:

• the fair value measurements at the end of the reporting period;

• a description of the valuation techniques applied;

• the inputs used in the fair value measurement, including the ranges of rent charged to different units within the same

building; and

• for Level 3 fair value measurements, quantitative information about significant unobservable inputs used in the fair value

measurement.

Key

Fair value Valuation unobservable

31 December 2022 £’000 technique inputs Range

Completed investment property £309,969 Income ERV £18.9-£110.0

capitalisation per sq ft

Equivalent 4.25%-7.00%

yield

Development property £41,241 Income ERV £20.0-£25.0

capitalisation per sq ft

/residual method

Equivalent 5.00%-5.05%

yield

Development land £36,340 Comparable Sales rate per sq ft £138.6

method/residual

method

Total £387, 550

Key

Fair value Valuation unobservable

31 December 2021 £’000 technique inputs Range

Completed investment property £192,170 Income ERV £23.0‑£67.9

capitalisation per sq ft

Equivalent 3.81%‑7.00%

yield

Total £192,170

Life Science REIT plc Annual Report and Financial Statements 2022

131

Significant increases/decreases in the ERV (per sq ft per annum) and rental growth per annum in isolation would result in a

significantly higher/lower fair value measurement. Significant increases/decreases in the long‑term vacancy rate and discount

rate (and exit yield) in isolation would result in a significantly higher/lower fair value measurement.

Generally, a change in the assumption made for the ERV (per sq ft per annum) is accompanied by:

• a similar change in the rent growth per annum and discount rate (and exit yield); and

• an opposite change in the long‑term vacancy rate.

The table below sets out a sensitivity analysis for each of the key sources of estimation uncertainty with the resulting increase/

(decrease) in the fair value of completed investment property:

As at 31 December 2022 Increase in Decrease in

sensitivity sensitivity

Completed investment property £’000 £’000

Change in ERV of 10% 30,997 (30,997)

Change in net equivalent yields of 50 basis points (31,177) 38,491

Increase in Decrease in

sensitivity sensitivity

Development property £’000 £’000

Change in ERV of 10% 4,124 (4,124)

Change in net equivalent yields of 50 basis points (4,632) 5,654

Increase in Decrease in

sensitivity sensitivity

Development land £’000 £’000

Change in sales rate per sq ft of 10% 3,634 (3,634)

Increase in Decrease in

sensitivity sensitivity

As at 31 December 2021 £’000 £’000

Change in ERV of 10% 19,217 (19,217)

Change in net equivalent yields of 50 basis points (20,207) 25,380

Gains and losses recorded in profit or loss for recurring fair value measurements categorised within Level 3 of the fair value

hierarchy amount to a loss of £31.3 million (31 December 2021: gain of £8.0 million) and are presented in the consolidated

statement of comprehensive income in line item ‘fair value gains/(losses) on investment properties’.

All gains and losses recorded in profit or loss for recurring fair value measurements categorised within Level 3 of the fair

value hierarchy are attributable to changes in unrealised gains or losses relating to investment property held at the end of the

reporting period.

The carrying amount of the Group’s other assets and liabilities is considered to be the same as their fair value.

FINANCIAL STATEMENTS

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132

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

24. Financial risk management objectives and policies

The Group has trade and other receivables, trade and other payables and cash and short‑term deposits that arise directly from

its operations.

The Group is exposed to market risk, interest rate risk, credit risk and liquidity risk. The Board of Directors reviews and agrees

policies for managing each of these risks, which are summarised below.

Market risk

Market risk is the risk that future values of investments in property and related investments will fluctuate due to changes in

market prices. The total exposure at the statement of financial position date is £387.6 million and to manage this risk, the Group

diversifies its portfolio across a number of assets. The Group’s investment policy is to invest in UK‑located life science assets.

The Group will invest and manage its portfolio with an objective of spreading risk and, in doing so, will maintain the following

investment restrictions:

• no individual building will represent more than 35% of gross asset value, reducing to 25% of gross asset value by

31 December 2023;

• the Company will target a portfolio with no one tenant accounting for more than 20% (but subject to a maximum of 30%)

of the higher of either (i) gross contracted rents or (ii) the valuer’s ERV of the Company’s portfolio including developments

under forward‑funding agreements, as calculated at the time of investing or leasing;

• the aggregate maximum exposure to assets under development, including forward fundings, will not exceed 50% of

gross asset value, reducing to 30% of gross asset value by 31 December 2023. Within this limit, the maximum exposure to

developments, as measured by the expected gross development cost, which are not under forward‑funded arrangements,

will not exceed 15% of gross asset value at the commencement of the relevant development; and

• no more than 10% of gross asset value will be invested in properties that are not life science properties.

Credit risk

Credit risk is the risk that a counterparty or tenant will cause a financial loss to the Group by failing to meet a commitment it has

entered into with the Group.

All cash deposits are placed with approved counterparties, all of whom have a credit rating of AA‑ or above. In respect of

property investments, in the event of a default by a tenant, the Group will suffer a shortfall and additional costs concerning

re‑letting of the property. The Investment Adviser monitors the tenant arrears in order to anticipate and minimise the impact of

defaults by occupational occupiers.

The following table analyses the Group’s maximum exposure to credit risk:

31 December 31 December

2022 2021

£’000 £’000

Cash and cash equivalents 45,606 165,962

Trade and other receivables

10,027 2,361

Total 55,633 168,323

1. Excludes prepayments and VAT receivable .

Interest rate risk

Interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market interest

rates. The Group’s exposure to the risk of changes in market interest rates relates to its variable rate bank loans. To mitigate

the interest rate risk that arises as a result of entering into variable rate linked loans, the Group has entered into interest rate

derivatives. As at 31 December 2022 there were two interest rate derivatives in place. In August 2022 additional protection

was secured against potential future interest rate rises through capping the SONIA rate at 2.0% until 31 March 2025 on the full

amount of the HSBC term loan at a premium of £2.3 million. In addition, there is an existing SONIA interest rate cap in place

relating to the OTP acquired debt at 0.75% until the loan expiry date of June 2023 for £29.3 million of the drawn facility.

Life Science REIT plc Annual Report and Financial Statements 2022

133

Changes in interest rates may have an impact on consolidated earnings over the longer term. The table below provides

indicative sensitivity data.

2022 2021

Increase in Decrease in Increase in Decrease in

interest rates interest rates interest rates interest rates

by 1% by 1% by 1% by 1%

Effect on profit before tax £’000 £’000 £’000 £’000

Increase/(decrease) (1,554) 1,545 — —

Foreign exchange rate risk

Management have considered the risks but not deemed them material for the business as the Group’s exposure to foreign

exchange rate risk as at 31 December 2022 and 31 December 2021 was minimal.

Liquidity risk

Liquidity risk is defined as the risk that the Group will encounter difficulty in meeting obligations associated with financial

liabilities that are settled by delivering cash or another financial asset. Exposure to liquidity risk arises because of the possibility

that the Group could be required to pay its liabilities earlier than expected. The Group’s objective is to maintain a balance

between continuity of funding and flexibility through the use of bank deposits and loans.

Set out below is a comparison by class of the carrying amounts and fair value of the Group’s financial instruments that are

carried in the financial statements:

2022 2021

Fair Carrying Fair Fair Carrying Fair

value value value value value value

hierarchy £’000 £’000 hierarchy £’000 £’000

Held at amortised cost

Cash and cash equivalents n/a 45,606 45,606 n/a 165,962 165,962

Trade and other receivables

n/a 10,027 10,027 n/a 2,361 2,361

Other payables and accrued expenses

n/a (14,851) (14,851) n/a (5,883) (5,883)

Interest‑bearing loans and borrowings n/a (109,831) (109,831) — — —

Held at fair value

Interest rate derivatives n/a 4,303 4,303 — — —

1. Excludes prepayments.

2. Excludes deferred income.

The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:

Less Three

than three to 12 One to Two to More than

months months two years five years five years Total

Year ended 31 December 2022 £’000 £’000 £’000 £’000 £’000 £’000

Other payables and accrued expenses

10,874 2,753 739 485 — 14,851

Interest‑bearing loans and borrowings 973 40,475 3,947 150,951 — 196,346

Total 11,847 43,228 4,686 151,436 — 211,197

Less Three

than three to 12 One to Two to More than

months months two years five years five years Total

Year ended 31 December 2021 £’000 £’000 £’000 £’000 £’000 £’000

Other payables and accrued expenses

5,883 — — — — 5,883

Interest‑bearing loans and borrowings — — — — — —

Total 5,883 — — — — 5,883

1. Excludes deferred income.

FINANCIAL STATEMENTS

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134

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

25. Subsidiaries

Country of Company Number and class

incorporation Registration of share held Group

Company and operation Number by the Group holding

Ironstone Life Science Holdings Limited

UK 13390321 1,000 ordinary shares 100%

Ironstone Life Science Harwell Limited

1, 2, 6

UK 14047959 1 ordinary share 100%

Ironstone Life Science Cambourne Two Limited

1, 2

UK 13779806 1 ordinary share 100%

Ironstone Life Science Cambourne Limited

1, 2

UK 13763082 1 ordinary share 100%

Ironstone Life Science Oxford Limited

1, 2

UK 13467718 1 ordinary share 100%

Ironstone Life Science RSY Limited

1, 2

UK 13763039 1 ordinary share 100%

Ironstone Life Science Merrifield Limited

1, 2

UK 13763037 1 ordinary share 100%

Ironstone LS Cambourne One Limited

1, 3, 7

Jersey 108784 3,599.80 ordinary shares 100%

Deepdale Investment Holdings Limited

1, 4

BVI 1824411 400 A ordinary shares 100%

100 B ordinary shares

Merrifield Centre Limited

1, 2

UK 11118349 21,786,493 ordinary shares 100%

Ironstone Life Science Herbrand Limited

1, 2

UK 14044299 1 ordinary share 100%

Herbrand Properties Limited

1, 5

BVI 1908435 6,000 ordinary shares 100%

Oxford Technology Park Holdings Limited

UK 12434159 92 ordinary shares 100%

Oxford Technology Park Limited

1, 2

UK 08483449 100 ordinary shares 100%

Oxford Technology Park Investments Limited

1, 2

UK 12442240 1 ordinary share 100%

1. Indirect subsidiaries.

2. Registered office: Radius House, 51 Clarendon Road, Watford, WD17 1HP.

3. Registered office: 50 La Colomberie, St Helier, Jersey, JE2 4QB.

4. Registered office: Geneva Place, P.O. Box 3339, Road Town, Tortola, British Virgin Islands.

5. Registered office: Nerine Chambers, P.O. Box 905, Road Town, Tortola, 1110, British Virgin Islands.

6. This entity was dissolved on 7 March 2023.

7. This entity was dissolved on 28 February 2023.

The principal activity of all the subsidiaries relates to property investment.

The subsidiaries are exempt from the requirements of the Companies Act 2006 relating to the audit of individual accounts by

virtue of section 479A of the Act. The Company has provided a guarantee under s479C of the Companies Act 2006 in respect

of the financial period ended 31 December 2022 for a number of its subsidiary companies. The guarantee is over all outstanding

liabilities to which the subsidiary companies are subject at 31 December 2022 until they are satisfied in full.

The Group consists of a parent company, Life Science REIT plc, incorporated in England and Wales, and a number of

subsidiaries held directly by Life Science REIT plc, which operate and are incorporated in the UK, Jersey and the British

Virgin Islands.

The Group owns 100% equity shares of all subsidiaries listed above and has the power to appoint and remove the majority of

the Board of Directors of those subsidiaries. The relevant activities of the above subsidiaries are determined by the Board of

Directors based on the purpose of each company.

Therefore, the Directors concluded that the Group has control over all these entities and all these entities have been

consolidated within the consolidated Financial Statements.

A list of all related undertakings included within these consolidated Financial Statements is noted above.

Life Science REIT plc Annual Report and Financial Statements 2022

135

Accounting policy

Where property is acquired, via corporate acquisitions or otherwise, management considers the substance of the assets and

activities of the acquired entity in determining whether the acquisition represents the acquisition of a business.

Where such acquisitions are not judged to be an acquisition of a business, they are not treated as business combinations.

Rather, the cost to acquire the corporate entity is allocated between the identifiable assets and liabilities of the entity based

on their relative fair values at the acquisition date. Accordingly, no goodwill or additional deferred taxation arises. Otherwise,

acquisitions are accounted for as business combinations.

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate

of the consideration transferred, measured at acquisition date fair value, and the amount of any non‑controlling interest in

the acquiree.

For each business combination, the acquirer measures the non‑controlling interest in the acquiree at fair value of the

proportionate share of the acquiree’s identifiable net assets. Acquisition costs (except for costs of issue of debt or equity)

are expensed in accordance with IFRS 3 Business Combinations.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification

and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the

acquisition date.

Contingent consideration is deemed to be equity or a liability in accordance with IAS 32. If the contingent consideration is

classified as equity, it is not re‑measured, and its subsequent settlement shall be accounted for within equity. If the contingent

consideration is classified as a liability, subsequent changes to the fair value are recognised either in profit or loss or as a change

to other comprehensive income .

26. Capital management

The Group’s capital is represented by share capital and reserves.

The primary objective of the Group’s capital management is to ensure that it remains within its quantitative banking covenants

and maintains a strong credit rating. The Group’s capital policies are as follows:

• the Group will keep sufficient cash for working capital purposes with excess cash, should there be any, deposited at the best

interest rate available whilst maintaining flexibility to fund the Group’s investment programme;

• borrowings will be managed in accordance with the loan agreements and covenants will be tested quarterly and reported to

the Directors. Additionally, quarterly lender reporting will be undertaken in line with the loan agreement; and

• new borrowings are subject to Director approval. Such borrowings will support the Group’s investment programme but will

be subject to a maximum 55% LTV. The intention is to maintain borrowings at an LTV of between 30% and 40%.

The Group is not subject to externally imposed capital requirements.

27. Capital commitments

At 31 December 2022, the Group had contracted capital expenditure of £24.4 million (31 December 2021: £nil).

28. Related party transactions

Directors

The Directors (all Non‑Executive Directors) of the Company and its subsidiaries are considered to be the key management

personnel of the Group. Directors’ remuneration for the period totalled £186,450 (2021: £32,456) at 31 December 2022,

including £20,000 of employers’ National Insurance contributions; a balance of £nil (2021: £2,000) was outstanding relating

to employer NI. Further information is given in note 5 and in the Directors’ remuneration report on pages 94 and 95.

FINANCIAL STATEMENTS

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136

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

28. Related party transactions continued

Investment Adviser

The Company is party to an Investment Advisory Agreement with the AIFM and the Investment Adviser, pursuant to which

the Investment Adviser has been appointed to provide investment advisory services relating to the respective assets on a

day‑to‑day basis in accordance with their respective investment objectives and policies, subject to the overall supervision and

direction by the AIFM and the Board of Directors.

For its services to the Company, the Investment Adviser is entitled to a fee payable quarterly in arrears calculated at the rate

of one quarter of 1.1% per quarter on that part of the NAV up to and including £500 million; one quarter of 0.9% per quarter on

that part of the NAV in excess of £500 million and up to £1 billion; and one quarter of 0.75% per quarter on NAV in excess of

£1 billion. Refer to page 98 of the Directors’ report for further information.

During the year, the Group incurred £3,787,421 (2021: £454,903) in respect of investment advisory fees. As at

31 December 2022, £888,174 (2021: £454,903) was outstanding.

29. Reconciliation of changes in liabilities to cash flows generated from financing activities

Interest-bearing Interest-bearing

loans and loans and

borrowings borrowings

current non-current Total

£’000 £’000 £’000

Balance as at 1 January 2022 — — —

Changes from financing cash flows:

Bank loans drawn down — 101,260 101,260

Bank loans repaid — (26,260) (26,260)

Loan arrangement fees paid in the year — (1,203) (1,203)

Total changes from financing cash flows — 73,797 73,797

Loans acquired

33,582 — 33,582

Additional loan arrangement fees in year capitalised (215) — (215)

Additional interest and commitment fees capitalised 2,251 — 2,251

Amortisation charge for the year 125 291 416

Balance as at 31 December 2022 35,743 74,088 109,831

1. Comparative for the period end 31 December 2021 has not been shown as there were no loans in the prior period.

2. Acquired as part of the OTP acquisition in the year.

30. Ultimate controlling party

It is the view of the Directors that there is no ultimate controlling party.

31. Post balance sheet events

Refinancing

In February 2023 the OTP Fairfield facility was refinanced by drawing down £26.3 million from its existing £150.0 million HSBC

facility as well as utilising existing cash resources.

Dividend

A second interim dividend of 3.0 pence per share in respect of the year ended 31 December 2022 will be paid on 15 May 2023.

This will be paid as an ordinary dividend with an ex‑dividend date of 13 April 2023.

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137

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2022

31 December 31 December

2022 2021

Notes £’000 £’000

Assets

Non-current assets

Investment in subsidiary companies 34 65,138 1

Receivables 36 214,505 177, 827

279,643 177,828

Current assets

Cash and cash equivalents 35 39,614 165,962

Trade and other receivables 36 1,421 229

41,035 166,191

Total assets 320,678 344,019

Liabilities

Current liabilities

Other payables and accrued expenses 37 (5,004) (1,943)

Total liabilities (5,004) (1,943)

Net assets 315,674 342,076

Equity

Share capital 3,500 3,500

Share premium — 339,339

Capital reduction reserve 335,823 —

Retained earnings (23,649) (763)

Total equity 315,674 342,076

Number of shares in issue (thousands) 350,000 350,000

Net asset value per share (basic and diluted) (pence) 90.2 97.8

The Company reported a loss for the year ended 31 December 2022 of £22,886,000 (period ended 31 December 2021:

£763,000 loss).

These Financial Statements were approved by the Board of Directors of Life Science REIT plc on 24 March 2023 and signed on

its behalf by:

Claire Boyle

Company number: 13532483

The accompanying notes on pages 139 to 141 form an integral part of these Company Financial Statements.

FINANCIAL STATEMENTS

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138

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2022

Capital

Share Share reduction Retained

capital premium reserve earnings Total

£’000 £’000 £’000 £’000 £’000

Balance at 1 January 2022 3,500 339,339 — (763) 342,076

Loss for the year and total comprehensive loss — — — (22,886) (22,886)

Ordinary shares issued — — — — —

Share issue costs — (16) — — (16)

Cancellation of share premium — (339,323) 339,323 — —

Dividends paid — — (3,500) — (3,500)

Balance at 31 December 2022 3,500 — 335,823 (23,649) 315,674

Capital

Share Share reduction Retained

capital premium reserve earnings Total

£’000 £’000 £’000 £’000 £’000

Balance at start of period — — — — —

Loss for the year and total comprehensive loss — — — (763) (763)

Ordinary shares issued 3,500 346,500 — — 350,000

Share issue costs — (7,161) — — (7,161)

Dividends paid — — — — —

Balance at 31 December 2021 3,500 339,339 — (763) 342,076

Life Science REIT plc Annual Report and Financial Statements 2022

139

NOTES TO THE COMPANY FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

32. General information

Life Science REIT plc is a closed‑ended REIT incorporated in England and Wales on 27 July 2021. The Company began

trading on 19 November 2021. The registered office of the Company is located at 65 Gresham Street, London, EC2V

7NQ. TheCompany’s shares were admitted to trading on AIM, a market operated by the London Stock Exchange.

On1December2022 the Company moved to the Main Market of the London Stock Exchange.

33. Basis of preparation

These Financial Statements are prepared in accordance with United Kingdom Generally Accepted Accounting Practice

including Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”) and in conformity with the requirements

of the Companies Act 2006. The Financial Statements have been prepared under the historical cost convention. The audited

Financial Statements are presented in Pound Sterling and all values are rounded to the nearest thousand pounds (£’000),

except when otherwise indicated.

In preparing these Financial Statements the Company has taken advantage of all disclosure exemptions conferred by FRS 101.

Therefore, these Financial Statements do not include:

• certain disclosures regarding the Company’s capital;

• a statement of cash flows;

• the effect of future accounting standards not yet adopted;

• the disclosure of the remuneration of key management personnel; and

• disclosure of related party transactions with other wholly owned members of Life Science REIT plc.

In addition, and in accordance with FRS 101, further disclosure exemptions have been adopted because equivalent disclosures

are included in the Company’s consolidated Financial Statements. These Financial Statements do not include certain disclosures

in respect of:

• share‑based payments;

• financial instruments; and

• fair value measurement.

The Company has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its own

statement of comprehensive income.

The Financial Statements of the Company follow the accounting policies laid out on pages 114 to 116.

The key source of estimation uncertainty relates to the Company’s investment in Group companies and is stated in the

Company’s separate financial statements at cost less impairment losses, if any. Impairment losses are determined with reference

to the investment’s fair value less estimated selling costs. Fair value is derived from the subsidiaries’, and their subsidiaries’,

net assets at the balance sheet date. Investment properties held by the subsidiary companies are supported by independent

valuation. Judgements and assumptions associated with the property values of the investments held by the subsidiary

companies are detailed in the Group financial statements.

FINANCIAL STATEMENTS

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140

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

34. Investment in subsidiary companies

31 December 31 December

2022 2021

£’000 £’000

Investment in subsidiary companies

Total carrying value 65,138 1

Total 65,138

31 December 31 December

2022 2021

£’000 £’000

Investments in subsidiary companies

Ironstone Life Science Holdings Limited 1

Oxford Technology Park Holdings Limited 65,137 —

65,138

Following a review comparing cost of investments to the underlying net assets of subsidiary companies, an impairment

provision has been made of £21.3 million.

See note 25 for full list of subsidiary companies.

Accounting policy

Investments in subsidiary companies are included in the statement of financial position at cost less impairment. For a list of

subsidiary companies, see note 25.

35. Cash and cash equivalents

31 December 31 December

2022 2021

£’000 £’000

Cash equivalents 4,614 144,000

Cash 35,000 21,962

Total 39,614 165,962

Accounting policy

Cash equivalents include cash at bank and short‑term deposits with banks and other financial institutions, with an initial

maturity of three months or less.

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141

36. Trade and other receivables

A. Receivables: non-current assets

31 December 31 December

2022 2021

£’000 £’000

Amounts due from subsidiary companies 214,505 177,827

Total 214,505 177,827

Loans due from subsidiary companies are unsecured, interest free and repayable on demand.

B. Receivables: current assets

31 December 31 December

2022 2021

£’000 £’000

Prepayments and other receivables 1,421 229

Total 1,421 229

37. Other payables and accrued expenses

31 December 31 December

2022 2021

£’000 £’000

Capital expenses payable 2,837 —

Administration expenses payable 1,243 1,390

Other expenses payable 778 387

Provision for corporation tax 146 —

Insurance payable — 166

Total 5,004 1,943

ADDITIONAL INFORMATION

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Life Science REIT plc Annual Report and Financial Statements 2022

UNAUDITED SUPPLEMENTARY NOTES NOT PART OF THE

CONSOLIDATED FINANCIAL INFORMATION

FOR THE YEAR ENDED 31 DECEMBER 2022

The Group is a member of the European Public Real Estate Association (“EPRA”). EPRA has developed and defined the

following performance measures to give transparency, comparability, and relevance of financial reporting across entities which

may use different accounting standards. The following measures are calculated in accordance with EPRA guidance. These are

not intended as a substitute for IFRS measures.

Table 1: EPRA performance measures summary

Period from

1 August

Year to 2021 to

31 December 31 December

Notes 2022 2021

EPRA earnings (£’000) Table 2 1,544 (295)

EPRA EPS (pence) Table 2 0.4 (0.1)

EPRA cost ratio (including direct vacancy cost) Table 6 66.3% 163.5%

EPRA cost ratio (excluding direct vacancy cost) Table 6 57. 8% 163.5%

31 December 31 December

2022 2021

EPRA NDV per share (pence) Table 3 91.3 100.2

EPRA NRV per share (pence) Table 3 95.9 103.9

EPRA NTA per share (pence) Table 3 90.0 100.2

EPRA NIY Table 4 3.4% 4.4%

EPRA ‘topped‑up’ net initial yield Table 4 3.6% 4.5%

EPRA vacancy rate Table 5 18.0% 19.1%

EPRA loan to value Table 10 18.9% n/a

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Life Science REIT plc Annual Report and Financial Statements 2022

Table 2: EPRA income statement

Period from

1 August

Year to 2021 to

31 December 31 December

Notes 2022 2021

Revenue 3 15,706 532

Less: insurance recharged 3 (155) —

Less: service charge income 3 (2,582) —

Rental income 12,969 532

Property operating expenses (including recoverable service charges) 4 (4,769) —

Insurance recharged 3 155 —

Add back: service charge income 4 2,582 —

Gross profit 10,937 532

Administration expenses 4 (6,565) (834)

Operating profit/(loss) before interest and tax 4,372 (302)

Finance income 7 3,255 7

Finance expenses 8 (3,782) —

Less change in fair value of interest rate derivatives 7 (2,155) —

Adjusted profit/(loss) before tax 1,690 (295)

Tax on adjusted loss 9 (146) —

EPRA earnings 1,544 (295)

Company‑specific adjustments:

EPRA earnings 1,544 (295)

Cost associated with moving to Main Market 4 957 —

Adjusted earnings 2,501 (295)

Weighted average number of shares in issue (thousands) 19 350,000 350,000

EPRA EPS (pence) 12 0.4 (0.1)

Adjusted EPS (pence) 12 0.7 —

Adjusted earnings represents earnings from operational activities. It is a key measure of the Group’s underlying operational

results and an indication of the extent to which dividend payments are supported by earnings.

ADDITIONAL INFORMATION

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Life Science REIT plc Annual Report and Financial Statements 2022

UNAUDITED SUPPLEMENTARY NOTES NOT PART OF THE

CONSOLIDATED FINANCIAL INFORMATION

CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

Table 3: EPRA balance sheet and net asset value performance measures

EPRA net disposal value (“NDV”), EPRA net reinstatement value (“NRV”) and EPRA net tangible assets (“NTA”). A reconciliation

of the three new EPRA NAV metrics from IFRS NAV is shown in the table below. Total accounting return will now be calculated

based on EPRA NTA.

EPRA NDV EPRA NRV EPRA NTA

As at 31 December 2022 Notes £’000 £’000 £’000

Total properties

13 387,550 387,550 387,550

Net cash/(borrowings)

15, 17 (65,227) (65,227) (65,227)

Other net liabilities (2,872) (2,872) (2,872)

IFRS NAV 22 319,451 319,451 319,451

Include: real estate transfer tax

— 20,621 —

Exclude: fair value of interest rate derivatives 16 — (4,303) (4,303)

NAV used in per share calculations 319,451 335,769 315,148

Number of shares in issue (thousands) 19 350,000 350,000 350,000

NAV per share (pence) 22 91.3 95.9 90.0

EPRA NDV EPRA NRV EPRA NTA

As at 31 December 2021 Notes £’000 £’000 £’000

Total properties

13 192,170 192,170 192,170

Net cash

15, 17 165,962 165,962 165,962

Other net liabilities (7,552) (7,552) (7,552)

IFRS NAV 22 350,580 350,580 350,580

Include: real estate transfer tax

— 13,068 —

NAV used in per share calculations 350,580 363,648 350,580

Number of shares in issue (thousands) 19 350,000 350,000 350,000

NAV per share (pence) 22 100.2 103.9 100.2

1. Professional valuation of investment property.

2. Comprising interest‑bearing loans and borrowings (excluding unamortised loan arrangement fees) of £110,833,000 net of cash of £45,609,000.

3. EPRA NTA and EPRA NDV reflect IFRS values which are net of real estate transfer tax. Real estate transfer tax is added back when calculating EPRA NRV.

EPRA NDV details the full extent of liabilities and resulting shareholder value if Company assets are sold and/or if liabilities are

not held until maturity. Deferred tax and financial instruments are calculated as to the full extent of their liability, including tax

exposure not reflected in the statement of financial position, net of any resulting tax.

EPRA NTA assumes entities buy and sell assets, thereby crystallising certain levels of deferred tax liability.

EPRA NRV highlights the value of net assets on a long‑term basis and reflects what would be needed to recreate the Company

through the investment markets based on its current capital and financing structure. Assets and liabilities that are not expected

to crystallise in normal circumstances, such as the fair value movements on financial derivatives and deferred taxes on property

valuation surpluses, are excluded. Costs such as real estate transfer taxes are included.

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Table 4: EPRA net initial yield

31 December 31 December

2022 2021

Notes £’000 £’000

Total properties per external valuers’ report 13 387, 550 192,170

Less development property and land 13 (77,581) —

Net valuation of completed properties 309,969 192,170

Add estimated purchasers’ costs

20,621 13,068

Gross valuation of completed properties including estimated purchasers’ costs (A) 330,590 205,238

Gross passing rents

(annualised) 12,423 9,124

Less irrecoverable property costs

(1,104) (179)

Net annualised rents (B) 11,319 8,945

Add notional rent on expiry of rent‑free periods or other lease incentives

540 291

‘Topped-up’ net annualised rents (C) 11,859 9,236

EPRA NIY (B/A) 3.4% 4.4%

EPRA ‘topped-up’ net initial yield (C/A) 3.6% 4.5%

1. Estimated purchasers’ costs estimated at 6.7% (31 December 2021: 6.8%).

2. Gross passing rents and irrecoverable property costs assessed as at the balance sheet date for completed investment properties excluding development property

and land.

3. Adjustment for unexpired lease incentives such as rent‑free periods, discounted rent period and step rents. The adjustment includes the annualised cash rent that will

apply at the expiry of the lease incentive. Rent‑frees expire over a weighted average period of 12 months (31 December 2021: three months).

EPRA NIY represents annualised rental income based on the cash rents passing at the balance sheet date, less non‑recoverable

property operating expenses, divided by the market value of the property, increased with (estimated) purchasers’ costs. It is a

comparable measure for portfolio valuations designed to make it easier for investors to judge themselves how the valuation of

portfolio X compares with portfolio Y.

EPRA ‘topped‑up’ NIY incorporates an adjustment to the EPRA NIY in respect of the expiration of rent‑free periods (or other

unexpired lease incentives such as discounted rent periods and step rents).

NIY as stated in the Investment Adviser’s report calculates net initial yield on topped‑up annualised rents but does not deduct

non‑recoverable property costs.

Table 5: EPRA vacancy rate

31 December 31 December

2022 2021

£’000 £’000

Annualised ERV of vacant premises (D) 3,094 1,937

Annualised ERV for the investment portfolio (E) 17,181 10,129

EPRA vacancy rate (D/E) 18.0% 19.1%

EPRA vacancy rate represents ERV of vacant space divided by ERV of the completed investment portfolio, excluding

development property and land. It is a pure measure of investment property space that is vacant, based on ERV.

ADDITIONAL INFORMATION

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Life Science REIT plc Annual Report and Financial Statements 2022

UNAUDITED SUPPLEMENTARY NOTES NOT PART OF THE

CONSOLIDATED FINANCIAL INFORMATION

CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

Table 6: Total cost ratio/EPRA cost ratio

Period from

1 August

Year to 2021 to

31 December 31 December

2022 2021

Notes £’000 £’000

Property operating expenses (excluding service charge expenses) 4 1,616 —

Service charge expenses 4 3,153 —

Add back: service charge income 3 (2,582) —

Add back: insurance recharged 3 (155) —

Net property operating expenses 2,032 —

Administration expenses 4 6,565 834

Deduct: costs associated with move to Main Market 4 (957) —

Total cost including direct vacancy cost (F) 7,640 834

Direct vacancy cost (1,104) —

Total cost excluding direct vacancy cost (G) 6,536 834

Rental income

3 12,969 510

Gross rental income (H) 3 12,969 510

Less direct vacancy cost (1,104) —

Net rental income 11,865 510

Total cost ratio including direct vacancy cost (F/H) 58.9% 163.5%

Total cost ratio excluding direct vacancy cost (G/H) 50.4% 163.5%

1. Includes rental income, rental income straight‑line adjustment and other income as per note 3.

Period from

1 August

Year to 2021 to

31 December 31 December

2022 2021

Notes £’000 £’000

Total cost including direct vacancy cost (F) 7,640 834

Add back: costs associated with move to Main Market 4 957 —

EPRA total cost (I) 8,597 834

Direct vacancy cost (1,104) —

EPRA total cost excluding direct vacancy cost (J) 7,493 834

EPRA cost ratio including direct vacancy cost (I/H) 66.3% 163.5%

EPRA cost ratio excluding direct vacancy cost (J/H) 57.8% 163.5%

EPRA cost ratios represent administrative and operating costs (including and excluding costs of direct vacancy) divided by

gross rental income. They are a key measure to enable meaningful measurement of the changes in the Group’s operating costs.

It is the Group’s policy not to capitalise overheads or operating expenses and no such costs were capitalised in the year ended

31 December 2022.

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Table 7: Lease data

Year 1 Year 2 Years 3-5 Year 5+ Total

As at 31 December 2022 £’000 £’000 £’000 £’000 £’000

Passing rent of leases expiring in: 524 — 6,007 5,892 12,423

ERV of leases expiring in: 809 — 6,352 6,925 14,086

Passing rent subject to review in: 1,481 — 10,855 87 12,423

ERV subject to review in: 1,827 — 12,158 101 14,086

Year 1 Year 2 Years 3‑5 Year 5+ Total

As at 31 December 2021 £’000 £’000 £’000 £’000 £’000

Passing rent of leases expiring in: — 2,351 1,603 5,170 9,124

ERV of leases expiring in: — 3,570 1,884 4,675 10,129

Passing rent subject to review in: 428 1,753 3,264 3,679 9,124

ERV subject to review in: 439 2,653 4,081 2,956 10,129

WAULT to expiry is 6.2 years (31 December 2021: 6.6 years) and to break is 4.7 years (31 December 2021: 4.1 years).

Table 8: Capital expenditure

Period from

1 August

Year to 2021 to

31 December 31 December

2022

2021

Notes £’000 £’000

Acquisitions

13 213,411 184,052

Development spend

13 9,565 —

Completed investment properties:

No incremental lettable space – like‑for‑like portfolio 13 641 —

No incremental lettable space – other — —

Tenant incentives 13 1,279 —

Total capital expenditure 224,896 184,052

Debt acquired – OTP

17 (33,582)

Conversion from accruals to cash basis (4, 259) (2,528)

Total capital expenditure on a cash basis Page 113 187,055 181,524

1. Acquisitions include £131.0 million (31 December 2021: £181.5 million) completed investment property and £82.4 million (31 December 2021: £nil) development

property and land.

2. Expenditure on development property and land.

3. Expenditure on completed investment properties.

4. On acquisition of OTP in May 2022. £33.6 million of debt was acquired. See note 17 for further details.

ADDITIONAL INFORMATION

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UNAUDITED SUPPLEMENTARY NOTES NOT PART OF THE

CONSOLIDATED FINANCIAL INFORMATION

CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2022

Table 9: EPRA like-for-like rental income

Period from

1 August

Year to 2021 to

31 December 31 December

2022 2021

Notes £’000 £’000

EPRA like-for-like rental income — —

Other

— —

Adjusted like-for-like rental income — —

Development lettings — —

Properties acquired in current and prior period 3 12,969 532

Rental income 12,969 532

Service charge income 3 2,582 —

Insurance recharge 3 155 —

Revenue 15,706 532

1. Includes back rent and other items.

Table 10: Loan to value (“LTV”) and EPRA LTV

Gross debt less cash, short‑term deposits and liquid investments, divided by the aggregate value of properties and investments.

The Group has also opted to present the EPRA LTV which is defined as net borrowings divided by total property market value.

31 December 31 December

2022 2021

Notes £’000 £’000

Interest‑bearing loans and borrowings

17 110,833 n/a

Cash 15 (45,606) n/a

Net borrowings (A) 65,227 n/a

Investment property at fair value (B) 13 387,550 n/a

LTV (A/B) 16.8% n/a

EPRA LTV

31 December 31 December

2022 2021

Notes £’000 £’000

Interest‑bearing loans and borrowings

17 110,833 n/a

Net payables

8,177 n/a

Cash 15 (45,606) n/a

Net borrowings (A) 73,404 n/a

Investment properties at fair value 13 387, 550 n/a

Total property value (B) 387,550 n/a

EPRA LTV (A/B) 18.9% n/a

1. Excludes unamortised loan arrangement fees asset of £1.0 million (see note 17).

2. Net payables includes trade and other receivables, other payables and accrued expenses. See page 111 for a full breakdown.

3. Comparative figures for 31 December 2021 have been excluded as the Group had no interest‑bearing loans and borrowings as at this date.

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Life Science REIT plc Annual Report and Financial Statements 2022

Table 11: Total accounting return

The movement in EPRA NTA over a period plus dividends paid in the period, expressed as a percentage of the EPRA NTA at the

start of the period.

Period from

1 August

Year ended 2021 to

31 December 31 December

2022 2021

Pence Pence

Notes per share per share

Opening EPRA NTA (A) 22 100.2 —

Movement (B) (10.2) 100.2

Closing EPRA NTA 22 90.0 100.2

Dividend per share (C) 11 1.0 —

Total accounting return (B+C)/A (9.1)% n/a

Table 12: Interest cover

Adjusted operating profit before gains on investment properties, interest and tax, divided by the underlying net interest expense.

Period from

1 August

Year to 2021 to

31 December 31 December

2022

2021

Notes £’000 £’000

Adjusted operating profit/(loss) before gains on investment properties (A) 5,329 n/a

Adjusted interest expenses 8 3,782 —

Add back: capitalised finance costs 8 1,796 —

Less: adjusted interest income 7 (1,100) —

Loan interest (B) 4,478 n/a

Interest cover (A/B) 119.0% n/a

Comparative figures for 31 December 2021 have been excluded as the Group had no interest‑bearing loans and borrowings at

this date.

Table 13: Ongoing charges ratio

Ongoing charges ratio represents the costs of running the REIT as a percentage of NAV as prescribed by the Association of

Investment Companies.

Period from

1 August

Year to 2021 to

31 December 31 December

2022

2021

Notes £’000 £’000

Administration expenses 4 6,565 834

Less: cost associated with moving to Main Market 4 (957) —

Annualised ongoing charges (A) 5,608 834

Opening NAV as at start of period 350,580 —

NAV as at 30 June 357,461 —

Closing NAV as at 31 December 319,451 350,580

Average undiluted NAV during the period (B) 342,497 350,580

Ongoing charges ratio (A/B) 1.6% 0.2%

ADDITIONAL INFORMATION

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PROPERTY PORTFOLIO

AS AT 31 DECEMBER 2022

Property Town Postcode Area (sq ft)

Lumen House Oxford OX11 0SG 17,600

The Merrifield Centre Cambridge CB1 3LQ 12,600

Rolling Stock Yard London N7 9AS 53,900

Cambourne Business Park Cambridge CB23 6DW 231,700

7‑11 Herbrand Street London WC1N 1EX 68,600

Oxford Technology Park

Oxford OX5 1GN 492,400

1. Full build‑out area. Area practically complete as at 31 December 2022 was 104,300 sq ft.

151

Life Science REIT plc Annual Report and Financial Statements 2022

SHAREHOLDER INFORMATION

The Company was incorporated on 27 July 2021. This

Annual Report and Financial Statements covers the period

from 1 January 2022 to 31 December 2022.

The Company’s ordinary shares were admitted to trading

on AIM on 19 November 2021 following IPO and the Group’s

operations therefore commenced on this date. Following

the Company’s migration to the premium segment of the

London Stock Exchange (“LSE”), its shares were cancelled

from AIM on 1 December 2022 and admitted to trading on

the premium segment of the LSE.

Capital structure

The Company’s share capital consists of ordinary shares

of £0.01 each. At shareholder meetings, members present

in person or by proxy have one vote on a show of hands

and on a poll have one vote for each ordinary share held.

Shareholders are entitled to receive such dividends as the

Directors resolve to pay out of the assets attributable to

ordinary shares. Holders of ordinary shares are entitled to

participate in the assets of the Company attributable to

the ordinary shares in a winding up of the Company. The

ordinary shares are not redeemable. As at the date of this

report, there were 350,000,000 ordinary shares in issue,

none of which are held in treasury.

Investment objective

The Company’s investment objective is to provide

shareholders with an attractive level of total return.

Thefocus will be capital growth whilst also providing a

growing level of income by investing primarily in a diversified

portfolio of UK properties that are leased or intended to be

leased to tenants operating in the life sciencesector.

Investment policy

The Company seeks to achieve its investment objective

by investing in a diversified portfolio of properties across

the UK which are typically leased or intended to be leased

to tenants operating in, or providing a benefit to, the life

science sector (“life science properties”). Life science is the

branch of sciences concerned with all processes affecting

living organisms. This encompasses servicing and the

study of the breadth of life systems, and the structure

andbehaviour of living things.

Companies operating in the life science sector include,

but are not limited to, those involved in the innovation,

development and/or production of assets directly or

indirectly for human health purposes. These assets include

compounds, products and devices derived and designed

forapplication in numerous fields.

The Company does not limit itself in relation to the types

of properties it acquires or develops, but examples may

include wet and dry laboratories, offices, incubators and

co‑working space, manufacturing and testing facilities and

data centres. The Company retains flexibility to acquire

individual buildings, a group of buildings across a single

science park or the entirety of a science park.

This may include purchasing or developing buildings that

are leased or intended to be leased to tenants providing

ancillary services to employees of companies operating in,

or providing a benefit to, the life science sector.

The Company typically invests in income‑producing assets.

The Company focuses on investing where it believes that

the underlying property is consistent with the overarching

objective of providing shareholders with capital growth

whilst also providing a growing level of income. Investment

decisions are based on analysis and due diligence,

including, but not limited to, location, tenant profile and

demand, rental growth prospects, lease terms and/or asset

management/enhancement opportunities.

The Company may acquire properties either directly or

through corporate structures (whether onshore or offshore)

and also through joint venture or other shared ownership or

co‑investment arrangements. In circumstances where the

Company does not hold a controlling interest in the relevant

investment, the Company will seek, through contractual

and other arrangements to, inter alia, ensure that each

investment is operated and managed in a manner that is

consistent with the Company’s investment policy.

Any asset management or development opportunities

that the Company pursues are conducted in such a way

as to minimise any development risk, typically through

the use of forward funding or similar arrangements.

Assetmanagement opportunities may include, but are not

limited to, refurbishing or extending existing assets or where

the Company may seek to maximise or change alternative

use values of existing operational assets. The Company

may from time to time invest in development opportunities

without a forward‑funding arrangement including

pre‑developed land or land where planning permission

may be required, subject to a restriction that maximum

exposure to these developments will not exceed 15% of

gross assetvalue.

ADDITIONAL INFORMATION

152

Life Science REIT plc Annual Report and Financial Statements 2022

SHAREHOLDER INFORMATION CONTINUED

Investment policy continued

It is anticipated that properties will be held for the long

term. However, the Company may undertake opportunistic

disposals of properties considered to be in the best interests

of shareholders.

The Company invests in and actively manages its assets with

the objective of reducing and diversifying risk and, in doing so,

maintains the following investment restrictions:

• no individual building will represent more than 35% of

gross asset value, reducing to 25% of gross asset value by

31December 2023;

• the Company targets a portfolio with no one tenant

accounting for more than 20% (but subject to a maximum

of 30%) of the higher of either (i) gross contracted rents or

(ii) the valuer’s ERV of the Company’s portfolio including

developments under forward‑funding agreements, as

calculated at the time of investing or leasing;

• the aggregate maximum exposure to assets under

development, including forward fundings, will not exceed

50% of gross asset value, reducing to 30% of gross

asset value by 31 December 2023. Within this limit, the

maximum exposure to developments, as measured by the

expected gross development cost, which are not under

forward‑funded arrangements, will not exceed 15% of

gross asset value at the commencement of the relevant

development; and

• no more than 10% of gross asset value will be invested in

properties that are not life science properties.

In addition, the Company will not invest more than 10% of

gross asset value in other alternative investment funds or

closed‑ended investment companies.

Compliance with the above restrictions is calculated

immediately following investment and non‑compliance

resulting from changes in the price or value of assets following

investment is not considered as a breach of the investment

restriction.

The Company defines: (i) “gross asset value” as “the value of

the assets of the Company and its subsidiaries from time to

time, determined in accordance with the accounting policies

adopted by the Company”; (ii) “gross contracted rents” as

“the total rent receivable on a property plus rent contracted

from expiry of rent‑free periods and uplifts agreed under the

leases contracted on the Company’s portfolio of properties”;

and (iii) “ERV” as “the estimated annual open market rental

value of lettable space”.

Gearing

The level of gearing is on a prudent basis for the asset class,

and seeks to achieve a low cost of funds, whilst maintaining

flexibility in the underlying security requirements and the

structure of the Company. It is envisaged that a gross loan

to value (“LTV”) ratio of between 30% and 40% would be

the optimal capital structure for the Company over the

longer term. However, in order to finance value‑enhancing

opportunities, the Company may temporarily incur additional

gearing, subject to a maximum LTV ratio of 55% at the time of

an arrangement.

Debt is secured at asset level and potentially at Company

or special purpose vehicle level, depending on the optimal

structure for the Company and having consideration to key

metrics including lender diversity, debt type and maturity

profiles.

Use of derivatives

The Company may utilise derivatives for efficient portfolio

management only. In particular, the Company may engage

in full or partial interest rate hedging or otherwise seek to

mitigate the risk of interest rate increases on borrowings

incurred in accordance with the gearing limits as part of

theCompany’s portfolio management.

Cash management policy

The Company may hold cash on deposit and may invest in

cash equivalent investments, which may include short‑term

investments in money market type funds (“cash and cash

equivalents”).

There is no restriction on the amount of cash and cash

equivalents that the Company may hold and there may

be times when it is appropriate for the Company to have a

significant cash and cash equivalents position.

REIT status

The Company intends to continue conducting its affairs so as

to enable it to remain qualified as the principal company of a

REIT group for the purpose of Part 12 of the Corporation Tax

Act 2010 (and the regulations made thereunder).

Changes to, and breach of, the investment policy

Any material change to the Company’s investment policy set

out above will require the prior approval of shareholders by

way of an ordinary resolution at a general meeting.

In the event of a breach of the investment guidelines and the

investment restrictions set out above, the AIFM shall inform

the Board upon becoming aware of the same and if the Board

considers the breach to be material, notification will be made

to a Regulatory Information Service.

153

Life Science REIT plc Annual Report and Financial Statements 2022

Share dealing and share prices

Shares can be traded through your usual stockbroker.

TheCompany’s shares are admitted to trading on the LSE.

Share register enquiries

The register for the ordinary shares is maintained by Link

Group. In the event of queries regarding your holding, please

contact the Registrar on 0371 664 0300. You can also email

enquiries@linkgroup.co.uk. Changes of address and mandate

details can be made over the telephone, but all other changes

to the register must be notified in writing to the Registrar:

LinkGroup, Shareholder Services, 10th Floor, Central Square,

29 Wellington Street, Leeds LS1 4DL.

Electronic communications from the Company

Shareholders have the opportunity to be notified by email

when the Company’s Annual Report, Half‑yearly Report and

other formal communications are available on the Company’s

website, instead of receiving printed copies by post. This has

environmental benefits in the reduction of paper, printing,

energy and water usage, as well as reducing costs to the

Company. If you have not already elected to receive electronic

communications from the Company and wish to do so, please

contact the Registrar using the details shown on the inner

back cover. Please have your investor code to hand.

Share capital and net asset value information

Ordinary 1p shares 350,000,000

SEDOL Number BP5X4Q2

ISIN GB00BP5X4Q29

Sources of further information

Copies of the Company’s Annual and Half‑yearly Reports are

available from the Company Secretary, who can be contacted

at LABS_CoSec@Linkgroup.co.uk and, together with stock

exchange announcements and further information on the

Company, are also available on the Company’s website,

www.lifesciencereit.co.uk.

Association of Investment Companies

The Company is a member of the AIC.

Financial calendar

27 March 2023

Announcement of final results

15 May 2023

Proposed payment of second interim 2022 dividend

25 May 2023

Annual General Meeting

30 June 2023

Half‑year end

September 2023

Announcement of half‑yearly results

31 December 2023

Year end

ADDITIONAL INFORMATION

154

Life Science REIT plc Annual Report and Financial Statements 2022

GLOSSARY

EPRA earnings

IFRS profit after tax excluding movements relating to

changes in fair value of investment properties, gains/losses

on property disposals, changes in fair value of financial

instruments and the related tax effects

EPRA earnings per share (“EPRA EPS”)

A measure of EPS on EPRA earnings designed to present

underlying earnings from core operating activities based

on the weighted average number of shares in issue during

theperiod

EPRA guidelines

The EPRA Best Practices Recommendations Guidelines

October 2019

EPRA like-for-like rental income

The increase/decrease in rental income on properties owned

throughout the current and previous year under review.

This growth rate includes revenue recognition and lease

accounting adjustments but excludes development property

and land in either year and properties acquired or disposed of

in eitheryear

EPRA NAV/EPRA NDV/EPRA NRV/EPRA NTA

pershare

The EPRA net asset value measures figures divided by the

number of shares outstanding at the balance sheet date

EPRA net asset value (“EPRA NAV”)

The value of net assets, adjusted to include properties and

other investment interests at fair value and to exclude items

not expected to be realised in a long‑term property business,

such as the fair value of any financial derivatives and deferred

taxes on property valuation surpluses

EPRA net disposal value (“EPRA NDV”)

The net asset value measure detailing the full extent of

liabilities and resulting shareholder value if company assets

are sold and/or if liabilities are not held until maturity. Deferred

tax and financial instruments are calculated as to the full

extent of their value or liability, net of any resulting tax

EPRA net initial yield (“EPRA NIY”)

The annualised passing rent generated by the portfolio,

lessestimated non‑recoverable property operating expenses,

expressed as a percentage of the portfolio valuation (adding

notional purchasers’ costs), excluding development property

and land

Adjusted earnings per share (“Adjusted EPS”)

EPRA EPS adjusted to exclude one‑off costs, divided by the

weighted average number of shares in issue during the period

Admission

The admission of Life Science REIT plc onto the AIM of the

London Stock Exchange on 19 November 2021

AGM

Annual General Meeting

AIC

The Association of Investment Companies

AIFM

Alternative Investment Fund Manager

AIM

A market operated by the London Stock Exchange

BREEAM

Building research establishment environmental

assessmentmethod

Company

Life Science REIT plc

Contracted rent

Gross annual rental income currently receivable on a property

plus rent contracted from expiry of rent‑free periods and

uplifts agreed at the balance sheet date less any ground rents

payable under head leases

Development property and land

Whole or a material part of an estate identified as having

potential for development. Such assets are classified as

development property and land until development is

completed and they have the potential to be fully income

generating

EPC

Energy performance certificate

EPRA

The European Public Real Estate Association, the industry

body for European REITs

EPRA cost ratio

The sum of property expenses and administration expenses as

a percentage of gross rental income calculated both including

and excluding direct vacancy cost

155

Life Science REIT plc Annual Report and Financial Statements 2022

Fitwell

A real estate certification that measures a building against

sevenhealth impact categories

GAV

Gross asset value

GHG

Greenhouse gas

GRESB

Global real estate sustainability benchmark

Group

Life Science REIT plc and its subsidiaries

IASB

International Accounting Standards Board

IFRS

International Financial Reporting Standards

IFRS earnings per share (“EPS”)

IFRS earnings after tax for the year divided by the weighted

average number of shares in issue during the period

IFRS NAV per share

IFRS net asset value divided by the number of shares

outstanding at the balance sheet date

Interest cover

Adjusted operating profit before gains on investment

properties, interest and tax divided by the underlying net

interest expense

Investment portfolio

Completed buildings excluding development property

andland

IPO

Initial public offering

Like-for-like rental income movement

The increase/decrease in contracted rent of properties

owned throughout the period under review, expressed

as a percentage of the contracted rent at the start of the

period, excluding development property and land and units

undergoing refurbishment

Like-for-like valuation movement

The increase/decrease in the valuation of properties

owned throughout the period under review, expressed as a

percentage of the valuation at the start of the period, net of

capital expenditure

EPRA net reinstatement value (“EPRA NRV”)

The net asset value measure to highlight the value of net

assets on a long‑term basis and reflect what would be

needed to recreate the Company through the investment

markets based on its current capital and financing structure.

Assets and liabilities that are not expected to crystallise in

normal circumstances, such as the fair value movements on

financial derivatives and deferred taxes on property valuation

surpluses, are excluded. Costs such as real estate transfer

taxes are included

EPRA net tangible assets (“EPRA NTA”)

The net asset value measure assuming entities buy and sell

assets, thereby crystallising certain levels of deferred tax

liability. Adjustments are also made for the fair value of certain

financial derivatives

EPRA sBPR

European public real estate association sustainable best

practice recommendations

EPRA ‘topped-up’ net initial yield

The annualised passing rent generated by the portfolio,

topped up for contracted uplifts, less estimated

non‑recoverable property operating expenses, expressed

as a percentage of the portfolio valuation (adding notional

purchasers’ costs), excluding development property and land

EPRA vacancy rate

Total open market rental value of vacant units divided by

total open market rental value of the portfolio excluding

development property and land

EPS

Earnings per share

Equivalent yield

The weighted average rental income return expressed as

a percentage of the investment property valuation, plus

purchasers’ costs, excluding development property and land

ERV

The estimated annual open market rental value of lettable

space as assessed by the external valuer

EU taxonomy

A classification system that aims to provide a clear definition

of what should be considered as ‘sustainable’ economic

activity

FCA

Financial Conduct Authority

ADDITIONAL INFORMATION

156

Life Science REIT plc Annual Report and Financial Statements 2022

GLOSSARY CONTINUED

RCF

Revolving credit facility

Real Estate Investment Trust (“REIT”)

A listed property company which qualifies for, and has elected

into, a tax regime which is exempt from corporation tax on

profits from property rental income and UK capital gains on

the sale of investment properties

Scope 1 and 2 emissions

GHGs released directly and indirectly from the Group e.g.

company offices, company vehicles and energy purchased

bythe Group

Scope 3 emissions

All other GHGs released indirectly by the Group, upstream

anddownstream of the Group’s business

SECR

Streamlined energy and carbon reporting

SFDR

Sustainable Finance Disclosure Regulation

SONIA

Sterling Overnight Index Average

Task Force on Climate-related Financial

Disclosures(“TCFD”)

An organisation established with the goal of developing a

set of voluntary climate‑related financial risk disclosures to

be adopted by companies to inform investors and the public

about the risks they face relating to climate change

Total accounting return

The movement in EPRA NTA over a period plus dividends paid

in the period, expressed as a percentage of the EPRA NTA at

the start of the period

Total cost ratio

EPRA cost ratio excluding one‑off costs calculated both

including and excluding vacant property costs

UK AIFM Regime

The Alternative Investment Fund Managers Regulations 2013

(as amended by The Alternative Investment Fund Managers

(Amendment etc.) (EU Exit) Regulations 2019) and the

Investment Funds Sourcebook forming part of the FCA

Handbook

Weighted average unexpired lease term (“WAULT”)

Average unexpired lease term to first break or expiry

weighted by contracted rent across the portfolio, excluding

development property and land

Loan to value ratio (“LTV”)

Gross debt less cash, short‑term deposits and liquid

investments, divided by the aggregate value of properties

andinvestments

Main Market

The premium segment of the London Stock Exchange’s

MainMarket

MEES legislation

Minimum Energy Efficiency Standards Legislation

NAV

Net asset value

Net initial yield (“NIY”)

Contracted rent at the balance sheet date, expressed as

a percentage of the investment property valuation, plus

purchasers’ costs, excluding development property and land

Net rental income

Gross annual rental income receivable after deduction of

ground rents and other net property outgoings including void

costs and net service charge expenses

Net reversionary yield (“NRY”)

The anticipated yield to which the net initial yield will rise

(orfall) once the rent reaches the ERV

Occupancy

Total open market rental value of the units leased divided

by total open market rental value excluding development

property and land, equivalent to one minus the EPRA

vacancyrate

Ongoing charges ratio

Ongoing charges ratio represents the costs of running the

Group as a percentage of IFRS NAV as prescribed by the

Association of Investment Companies

Passing rent

Gross annual rental income currently receivable on a property

as at the balance sheet date less any ground rents payable

under head leases

Property income distribution (“PID”)

Profits distributed to shareholders which are subject to tax

in the hands of the shareholders as property income. PIDs

are usually paid net of withholding tax (except for certain

types of tax‑exempt shareholders). REITs also pay out normal

dividends called non‑PIDs

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CONTACT DETAILS OF THE ADVISERS

Financial PR and IR Adviser

Buchanan Communications Limited

107 Cheapside

London EC2V 6DN

Legal Adviser

Gowling WLG (UK) LLP

4 More London Riverside

London SE1 2AU

Property Manager

Savills plc

33 Margaret Street

London W1G 0JD

Registrar

Link Asset Services

Shareholder Services Department

10th Floor, Central Square

29 Wellington Street

Leeds LS1 4DL

Email: enquiries@linkgroup.co.uk

Website: www.linkgroup.com

Company Secretary and registered office

Link Company Matters Limited

6th Floor, 65 Gresham Street

London EC2V 7NQ

Email: LABS_CoSec@Linkgroup.co.uk

Depositary

Crestbridge Property Partnerships Limited

8 Sackville Street

London W1S 3DG

Valuer

CBRE Limited

St Martins Court

10 Paternoster Row

London EC4M 7HP

Alternative Investment Fund Manager

G10 Capital Limited

(part of IQ-EQ)

4th Floor, 3 More London Riverside

London SE1 2AQ

Investment Adviser

Ironstone Asset Management Limited

Registered office

First Floor Radius House

51 Clarendon Road

Watford

Hertfordshire WD17 1HP

London office

55 Wells Street

London W1T 3PT

Investor enquiries: investments@lifesciencereit.co.uk

Company website

www.lifesciencereit.co.uk

Administrator

Link Alternative Fund Administrators Limited

(trading as Link Asset Services)

Broadwalk House, Southernhay West

Exeter EX1 1TS

Auditor

Deloitte LLP

Gaspe House, 66-72 Esplanade

St Helier, Jersey

Channel Islands JE4 8WA

Joint Corporate Broker and Financial Adviser

Panmure Gordon (UK) Limited

New Change

London EC4M 9AF

Joint Corporate Broker and Financial Adviser

Jefferies International Limited

100 Bishopsgate

London EC2N 4JL

Life Science REIT plc

investments@lifesciencereit.co.uk

contact@lifesciencereit.co.uk

020 3102 9465

www.lifesciencereit.co.uk

Life Science REIT plcAnnual Report and Financial Statements 2022