Interim Management Statement

RNS Number : 9274V

The MedicX Fund Limited

20 January 2012

 



For immediate release                                                                                              20 January 2012

MedicX Fund Limited

("MedicX Fund", "the Fund" or "the Company")

Interim Management Statement

MedicX Fund Limited (LSE: MXF), the specialist primary care infrastructure investor in modern purpose-built primary healthcare properties in the United Kingdom, today announces its Interim Management Statement for the period from 1 October 2011 to today's date.

Financial position

Since 30 September 2011, the Company has continued to invest successfully in new acquisitions and properties currently under construction. 

The quarterly valuation of the portfolio undertaken by Jones Lang LaSalle LLP as at 31 December 2011 stood at £246.7 million reflecting a net initial yield of 5.87%, resulting in a capital value increase during the quarter of £0.9 million on a like-for-like basis. 

The Company drew £7.0 million on the £37.1 million Deutsche Postbank facility on 25 November 2011.  The interest rate of the total £7.5 million drawn to date was fixed for the life of the facility at 3.14% at the time of the drawing.  This reduced the weighted average fixed cost of debt for the Company to 4.88% as at 31 December 2011 from 5.01% as at 30 September 2011.  Cash at 31 December 2011 was £15.0 million and the balance of the Deutsche Postbank facility will be used to fund committed investment.

The Company has also agreed terms on a new £50 million debt facility with Aviva for a 20-year term.  The interest rate on this facility will be fixed on completion.

Incorporating the December valuation, the unaudited adjusted net asset value at 31 December 2011 is estimated to be £127.4 million equivalent to 65.8p per share, compared with 66.0p per share as at 30 September 2011. Long-term interest rates have decreased further since 30 September 2011 and, including the cost of the £100 million fixed rate debt, the unaudited adjusted net asset value plus the mark to market cost of fixed rate debt is estimated now to be £124.8 million equivalent to 64.4p per share, compared with 68.0p per share at 30 September 2011.

Discounted cash flow valuation of assets and debt

On the Fund's behalf the Investment Adviser has carried out a discounted cash flow ("DCF") valuation of the Group assets and associated debt at each period end. The basis of preparation is similar to that calculated by infrastructure funds.  The values of each investment are derived from the present value of the property's expected future cash flows, after allowing for debt and taxation, using reasonable assumptions and forecasts based on the predominant lease at each property.  The total of the present values of each property and associated debt cash flows so calculated is then aggregated with the surplus cash position of the Group.

At 31 December 2011, the DCF valuation was £172.4 million or 89.0p per share, compared with 88.2p per share as at 30 September 2011.

The discount rates used are 7% for completed and occupied properties and 8% for properties under construction.  The weighted average discount rate is 7.18% which represents a 4.13% risk premium relative to the 20 year gilt rate of 3.05% as at 31 December 2011.  The 20 year gilt rate as at 30 September 2011 was 3.54%.

The discounted cash flows assume an average 2.5% per annum increase in individual property rents at their respective review dates.  Residual values continue to be based upon capital growth at 1% per annum from the current valuation until the expiry of leases, (when the properties are notionally sold), and also assuming the current level of borrowing facilities.

Rent reviews

During the period to 31 December 2011, six leases and rents of £0.9 million were reviewed and the equivalent of a 3.3% per annum increase was achieved.  Following these reviews, the net initial yield of the portfolio has moved to 5.87%, which compares with a benchmark 20-year gilt rate of 3.05%.  Reviews of £4.8 million of passing rent are currently under negotiation.

Investment activity

The portfolio, which consists of 65 properties, continues to perform in line with long-term objectives.  The two properties at Woolwich Royal Arsenal and Hounslow were completed on time and within budget during October and November respectively, whilst two new properties at Monkseaton and Methil were acquired during December.  Eight properties are now under construction at Clapham, Raynes Park, West Wirral, Rochdale, Hirwaun, Corby Glen, East Cowes, Monkseaton and Methil.  All of these properties are due to complete in the next year.

Share issues

On 22 December 2011, the Company issued 900,000 new Ordinary Shares of no par value for cash at an issue price of 75p.  The proceeds will be used to pursue further the investment objectives of the Company.

In addition, on 31 December 2011 the Company issued 141,770 shares pursuant to the Scrip Dividend Scheme, based on a scrip calculation price of 74.6 pence per share.

The total number of Ordinary Shares of the Company in issue is 193,645,780 with each share holding one voting right, compared with 192,604,010 Ordinary Shares at 30 September 2011.  No shares are held in treasury.

Dividends

On 31 December 2011 a quarterly dividend of 1.375p per Ordinary Share in respect of the period 1 July 2011 to 30 September 2011 was paid to ordinary shareholders on the register as at close of business on 18 November 2011.

The Company expects, subject to unforeseen circumstances, to pay dividends totalling 5.6p per Ordinary Share in respect of the financial year ending 30 September 2012, an increase of 0.1p per Ordinary Share from the 5.5p per Ordinary Share for the financial year ended 30 September 2011.

Fundraising

The spreads between the yields the Fund can acquire properties at, the cost of long term debt that we can fix, and Government gilts are unprecedented.  The pipeline of investment opportunities today is £86.5 million including already approved investments of £29.8 million.

The announcement of the Company's full year results on 8 December 2011 stated that, with access to further attractive opportunities available through the Investment Adviser, the Company was considering raising new equity capital in 2012. We are pleased to confirm that the Company intends to raise up to approximately £45 million through an issue of new ordinary shares through an open offer, placing and offer for subscription.  The Company intends to publish a prospectus relating to the proposed issue in late January 2012 and, conditional upon shareholder approval of the issue at an extraordinary general meeting to be convened for late February, expects dealings in the new ordinary shares to commence in late February 2012.  Collins Stewart Europe Limited is acting as sponsor and lead bookrunner to the proposed issue.

David Staples

Chairman

End

For further information please contact:

MedicX Group:                                                               [phone]

Keith Maddin, Chairman

Mike Adams, Chief Executive Officer

Mark Osmond, Chief Financial Officer

MedicX Fund:                                                                [phone]

David Staples, Chairman

Collins Stewart Europe Limited:                                       [phone]

Dominic Waters

Neil Brierley

Will Barnett

Buchanan:                                                                        [phone]

Charles Ryland/Suzanne Brocks

Information on MedicX Fund Limited

MedicX Fund Limited ("MXF", the "Fund" or the "Company", or together with its subsidiaries, the "Group") is the specialist primary care infrastructure investor in modern, purpose-built primary healthcare properties in the United Kingdom, listed on the London Stock Exchange, with a portfolio comprising 65 properties.

The Investment Adviser to the Company is MedicX Adviser Ltd, which is authorised and regulated by the Financial Services Authority and is a subsidiary of the MedicX Group. The MedicX Group is a specialist investor, developer and manager of healthcare properties with 26 people operating across the UK.  

The Company's website address is www.medicxfund.com.  Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement. 

Important information

Collins Stewart is acting as sponsor and lead bookrunner to the Company in relation to the proposed placing, open offer and offer for subscription (the "Offer") and is not acting for any other person and will not regard any other person (whether or not a recipient of this announcement) as its customer in relation to the Offer and will not be responsible for providing the protections afforded to customers of Collins Stewart to any other person or for providing advice to any other person in relation to the Offer.  Collins Stewart is authorised and regulated by the Financial Services Authority and is a member of London Stock Exchange plc. This announcement, and the information contained herein, is not for viewing, release, distribution or publication into or in the United States or any other jurisdiction where applicable laws prohibit its release, distribution or publication. All material contained in this announcement (including this disclaimer) shall be governed by and construed in accordance with the laws of England and Wales.  By accepting this announcement you agree to be bound by the above conditions and limitations.

 

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