MedicX buying twelve primary care centres – MedicX Fund has today completed the off-market acquisition of a portfolio of 12 operational and fully let primary care medical centres for a price of GBP63.8 million, adding 8.9% to the portfolio.
The acquired portfolio has a gross rent roll of approximately GBP3.0 million per annum and a weighted average unexpired lease term of 14 years with an average lot size of GBP5.3 million. The purchase was made by way of a corporate acquisition of One Medical Property Holdings Limited and its subsidiaries for consideration of GBP27.3 million (including working capital of GBP0.5m and excluding a retention of GBP0.2m), and the assumption of existing third-party debt facilities at fair value of approximately GBP36.7 million. Deal costs were GBP1.5m. The GBP27.3 million consideration was settled through the issuance to the vendor of 3.75 million shares in MedicX out of treasury at a price per share of 80.0 pence, and GBP24.3 million in cash, of which GBP23.0 million was drawn by the company under its accordion facility with RBS at a margin of 2% over LIBOR.
They say that this portfolio is located throughout Northern England with approximately 25% of the rent profile benefiting from RPI indexed reviews. Ten of the twelve properties within the acquired portfolio are modern, purpose built (representing 95% by value) with an average age of under 5.5 years. This addition will increase MedicX’s total portfolio to 166 properties, of which 163 are complete and operational, and three are under construction. Following this transaction, the Fund’s total annualised rent roll for all properties will increase by 7.3%, from GBP40.9 million to GBP43.9 million.
Taking on £30m of debt
The acquired debt has a face value of GBP29.8 million, an average unexpired term of 11.7 years and a weighted average cost of 5.49%. Under the deal terms MedicX will take and record this debt at its fair value of GBP36.7 million, (the c. GBP6.9 million adjustment reflecting current break costs and accrued interest), thereby reducing the effective interest rate to a current market rate. Following the acquisition, MedicX will have total debt facilities of GBP436.0 million with an estimated weighted average cost of 4.26% and term of 11.5 years. The company’s adjusted gearing (percentage of net debt to gross assets less cash) has increased to 53.7%.
Helen Mahy, Chairman of MedicX, said “I am delighted to announce this significant acquisition of a portfolio of high quality, purpose-built primary care centres. It is in line with our strategy of focusing on larger and locally strategic premises, which will deliver primary care services beyond the term of the existing occupational leases. This off-market transaction is testament to the depth and quality of our relationships within the sector. The Company has further pipeline opportunities at various stages of legal due diligence which it expects to complete in the coming months. These will bring further scale benefits and complement the acquired portfolio which provides care for over 150,000 patients.”
Michael Beverley, majority shareholder of One Medical Property Holdings, said “I am pleased to have completed the sale of our portfolio to a specialist primary care investor who takes a long-term view and focusses on high quality, purpose-built medical centres. At the same time, I welcome the opportunity to take a stake in MedicX as it continues to grow and I have confidence in the management team to continue delivering shareholder value.”
MXF : MedicX buying twelve primary care centres