MedicX fund grows post 8.3% NAV growth during the year
MedicX Fund has announced its interim results for the year ended 30 September 2015. During the period, the company’s EPRA NAV increased by 5.4p to 70.8p per share, an increase of 8.3%. The company’s EPRA earnings were £13.4m. This is an increase of £4.7m or 54% from prior year, which is equivalent to 3.7p per share. The company has announced a quarterly dividend of 1.475p per share, which brings the total dividends for the year to 5.9p per share. The company says that Dividend and underlying dividend cover at 63.3% and 68.0% respectively are improvements over the prior year (30 September 2014: 53.6% and 67.1%)7.
In terms of portfolio activity, the company has made new committed and approved investments of £41.2m during the year (acquired at a cash yield of 5.78%). The company has also made its first investment made in the Republic of Ireland of €10.1m. As at 4 December 2015, the company had £559.5m of committed investment in 148 primary healthcare properties as at 4 December 2015. This is an increase of 8.0% over the year (8 December 2014: £518.2 million, 137 properties). The company says that its annualised rent roll, at 4 December 2015, was £35.8 million with 88.3% of rents reimbursed by the NHS, an increase of £3.0 million, or 9.1%, since 8 December 2014. The company also say that it has a strong pipeline of approximately £126.0m of acquisition opportunities.
In terms of funding, the company raised net proceeds of £6.9m from 8.3m shares issued during the year at an average issue price of 83.1p per share. Furthermore, it has issued a new £50m loan note with an agreed term of thirteen years and five months with an all-in fixed rate of 3.838%, whilst the maturity on an existing £50 million loan note was extended nine years and three months to mature in December 2028. The company now has total drawn debt facilities of £338.3m with an average all-in fixed rate cost of debt of 4.45% and an average unexpired term of 15.0 years. The company says that this is close to the average unexpired lease term of the investment properties of 15.8 years and compares against 4.35% and 13.3 years for the prior year. Net debt was £281.4m as at 30 September 2015, equating to 50.2% adjusted gearing (30 September 2014: £255.2 million; 49.9%).
In terms of outlook, the company says that the current year has seen growing demand for primary care, with political support to provide greater local community patient choice, as consultations and the range of services offered continue to increase. To respond to the challenge, GP practices are merging, forming federations or joining larger provider groups. The formation of larger practices is driving the need for large, modern purpose built facilities to replace the older existing premises. The company says that it is looking to invest in properties that will generate returns for shareholders well beyond their original lease term by acquiring assets that are not only tailored to the current needs of our tenants but also their expected needs as they respond to increasing pressure and demand for primary care services.
The company says that the UK market has become increasingly competitive with relatively high values being paid for assets of variable quality. The changes brought about by the abolition of PCTs and the lack of clarity on the new estate strategy and premises funding in the UK have negatively impacted the number of available and suitably priced projects within the primary healthcare market during the year. However, the Fund has secured five developments in the UK in the that meet its criteria but, as a result of the current conditions in the UK market, the Fund has looked further afield, seeking new investment opportunities in related markets including the Republic of Ireland primary healthcare sector. The company say that the Irish primary healthcare market has a well-defined strategy whereby the Health Service Executive (the Republic of Ireland’s equivalent of the NHS) is seeking to procure space in new dominant properties offering a wide range of primary healthcare and complimentary services which fully meet the Fund’s investment criteria.
MedicX fund grows post 8.3% NAV growth, now looking beyond the UK : MXF