Medicx Share Discussion Threads

[chucko1] 22/5/2018 15:38

If they move to 71p or so, I would consider reinvesting. I think 5% is more appropriate on this one.

[spectoacc] 22/5/2018 15:27

I have fewer qualms buying them at a discount in truth, but can't blame anyone giving up & moving on. Won't be adding more unless/until they move lower.

Views of previous tipsters (eg IC) will be interesting. I see Peel Hunt d/g from Hold to Reduce (ie from sell to sell, so hardly a tipster of it).

Edit: IC's veiw is out already, also pointing out that rent review uplifts are lagging behind inflation atm:

"IC View

The shares were already down from our buy tip (86p, 3 Mar 2016) even before the markdown that accompanied these figures. With a lower forecast dividend yield, and a challenging fund raise, there is better value elsewhere. Hold.
Last IC View: Buy, 83p, 12 Dec 2017"

Google it for full article.

[chucko1] 22/5/2018 15:23

The higher yielding Irish surgeries were supposed to give some boost to yield. The extent, though, is so far pretty minor and I saw nothing in the statement to alter that in the near term . I do agree with the majority of comments made here, and that the leverage as compared with other REITs leaves an unappealing projected dividend yield.

So, on that basis, I sold a significant part of my holding.

[spectoacc] 22/5/2018 15:20

Certainly a sector thing going on - possibly as much an internet sector thing - eg WHR reported very strong numbers this morning (warehouses). MXF ought to be fairly immune but I'd not like to see it under a Marxist govnt.

[keith95] 22/5/2018 15:01

... I bailed RDI today as well .... NAV 41p dividend 7% covered but even though RDI is reducing its retail exposure in the UK ... M&S news this morning does not bode well ... and it is moving into business lets which with Brexit is just as risky ... and no doubt going to become a pretty full space ...

Not keen on what is happening in the UK ... too much Gammon on the plate ;)

[stevie blunder] 22/5/2018 14:50

"Our Investment Adviser believes that yields are likely to remain stable for high quality, modern, purpose-built primary healthcare properties meeting our investment criteria and, consequently, this necessitated a review of the Company's dividend distribution policy."

I think that means that they expect no or little growth in rental, so the dividend gap was never going to close.

Their debt isn't particularly cheap at 4.17% given the good covenant they claim on the properties. (MCKS which I hold and invests on offices has average debt at 4.06%)

Anyway I have sold out and taken a small loss.

[spectoacc] 22/5/2018 13:37

@keith95 - my point too - previous divi showed a level of confidence ("growing into it") that's seemingly no longer there. Seems to be as much about the cost of further purchases (ie yield compression) as future interest rate rises.

[keith95] 22/5/2018 13:27

"A 4.5% dividend is reasonable"

.... MXF always traded at a premium on the basis that it took into account future growth with the dividend catching up ....

... so there is a deeper message in these results namely, that the directors no longer foresee that justification for its premium giving the hidden message that growth will be much slower.

The poor dividend cover with cash earnings was always a risk ... but going forwards one is looking at higher interest rates.

I traded this down from 90p ... average price was around 74p to include dividends collected so .. bailing with a smaller profit than hoped.

Shame .... but there you go.

4.5% given the level of debt is not attractive to me.

[chucko1] 22/5/2018 13:19

The div yield going forward will, if I understand correctly, be roughly 3.5/79 = 4.43% with a little bit extra for the next 6 months.

And then all will be fine, they say. Benefit from a fully covered dividend and some growth potential.

PHP currently yields 4.80% and has been around for 21 years. In that time, the dividend has never been cut and has in general terms been fully covered (a few pluses and a few minuses). I know which risk and consequent reward I would like to be exposed to.

[keith95] 22/5/2018 11:39

Indeed ... I'm sold out for now .. 79p

[badtime] 22/5/2018 11:29

Sp recovering a tad from today's shock

[keith95] 22/5/2018 11:03

"At best it’s a naive claim, at worst it is taking us all for fools. "

Quite ...

Rental income stands at 19 Million minus expenses and loans leaves about 8 million for shareholders or 16 million for the year delivering ...

5% yield going forwards at a push with the current shareprice ... so 66p sharepice will deliver 6% yield.

[andyj] 22/5/2018 10:30

At best it's a naive claim, at worst it is taking us all for fools. The announcement alone wiped out a year of dividend income.

[shawz007] 22/5/2018 10:18

"The shift to a policy of a fully covered dividend will not change the total return achieved by shareholders, but instead will re-balance how shareholders receive that return between income and capital growth."

How does this work in practice? How will I see my return be the same? The share price itself will rise by the lost cash dividends?

[gsbmba99] 22/5/2018 09:52

I'd be very interested to know what proportion of historical increases in NAV came from issuing shares at a premium to NAV vs revaluations due to reduction in the discount rate vs actual enhancements to the business. I suspect actual enhancements to the business are very thin on the ground.

[spectoacc] 22/5/2018 09:49

So if they can't issue them at a premium, do they:

1. Not make the purchase
2. Make the purchase, but increase (already large, not particularly cheap) debt
3. Issue the shares at par or indeed at a discount

Who knows.

Not got a big position in MXF and can understand their new divi policy, but it says something about their confidence going forwards (ie not very high, whereas previously it seemed that they were confident of "growing into" the high divi). To dress it up as "shareholder returns will be exactly the same, just a change in the mix of capital/dividend" is cobblers. May well be the same on the P&L/balance sheet, but completely different in the real world when the shares tank on the divi cut.

Different sub-sector, but reminds me a lot of ESP, who were also paying out of capital.

[stevie blunder] 22/5/2018 09:41

Subject to market conditions, the Company intends to issue up to 42.88 million new Ordinary Shares at a premium to EPRA NAV

Well with the shares in the market now trading below NAV that looks a bit of a stretch
LOL!

Totally hamfisted statement

[stevie blunder] 22/5/2018 09:41

Subject to market conditions, the Company intends to issue up to 42.88 million new Ordinary Shares at a premium to EPRA NAV

Well with the shares in the market now trading below NAV that looks a bit of a stretch
LOL!

Totally hamfisted statement

[keith95] 22/5/2018 09:17

Correction 66p ... Numpty directors have used last years EPS to illustrate what the dividend would have been this year instead if what they expect next year given the increase in profits ..... idiots like this don't deserve to be directors

[wllmherk] 22/5/2018 09:15

I'm on the worst run since 2008/9, every week one of my holdings collapses. So we are looking at 40-50% cut in the dividend here, just great!

wllm

[keith95] 22/5/2018 08:24

60p target

[nerja] 22/5/2018 08:13

Just when you think its on a recovery phase they go and kick you in the slats, it trades like an effing AIM tech stock not a steady reit that is expected.

[speedsgh] 22/5/2018 07:43

Interim Results accompanied by a significant change to the company's dividend policy. Move to a fully covered dividend as of FY19. Company forecasts no change to the shareholders' total return but a rebalancing of the return between income & capital growth. Based on Interim Results annualised full year dividend would have been 3.5p. Commitment to pay previously announced full year dividend of 6.04p in FY18 i.e. quarterly payments of 1.51p at end of Jun/Sep/Dec. Company says main shareholders are supportive.

Rebasing of the dividend wef FY19 will represent a reduction of c40% on the current annual dividend. Likely to lead to some volatility in the short/medium term as various funds reallocate holdings?

Interim Results -

... Since MedicX was formed in 2006, primary healthcare has become a firmly established asset class for institutional capital, demonstrating consistently attractive returns, with a benchmark ten year track record of 9.4% per annum total return1. Over that same period, UK yields have tightened and are now around 4.25 - 4.75%2, considerably lower than those of approximately 6.0% available when MedicX was formed. Looking ahead, we expect competition for assets to remain strong with yields remaining at these new levels. There are signs of rents beginning to increase on new schemes as a consequence of both rising land costs and higher build costs.

The macro environment is not unique to MedicX and the increased market focus on dividend cover for those companies with real illiquid assets was the backdrop for our recent strategic review by the Board. At this review we considered a wide range of matters to ensure the Company's long term sustainable growth, including risk and the corresponding expected levels of return, capital structure, investment policy, dividend policy and the Company's appeal to a wider range of investors which should be reflected in an improved share rating, enabling the Company to grow sustainably.

Since MedicX was formed 12 years ago, we have maintained and grown a long term visible income stream for our shareholders, and as part of that strategy we have been an active acquirer of high quality assets. Over that period, we have paid dividends totalling over £156 million (62.89 pence per share) to our shareholders. Our Investment Adviser believes that yields are likely to remain stable for high quality, modern, purpose-built primary healthcare properties meeting our investment criteria and, consequently, this necessitated a review of the Company's dividend distribution policy. Since formation, the Company has leveraged at near 50% and paid a high dividend, materially above market sub-sector yields and rental returns, which has delivered significant shareholder returns, while our direct peers are currently paying substantially covered dividends.

Were MedicX to maintain its current dividend policy, it would reduce our ability to evolve and take advantage of acquisition opportunities and also strengthen our capital structure. Following a consultation with a number of our major shareholders, the Board has taken the decision to rebase the dividend going forward and to lower the risk associated with the need for a relatively high leverage to support the existing dividend policy. It will also transition to a fully covered dividend for the 2019 financial year onwards. The new policy will better align the Company's dividend distributions with its current level of cash flows. The Company sees opportunities to grow its portfolio substantially and deliver the benefits of economies of scale; it would not be resetting the dividend if this were not the case and it is appreciative of the level of support received from shareholders consulted.

During this transition period to a fully covered dividend, your Board intends to maintain its previous announced guidance that it will declare and pay dividends totalling 6.04 pence per share for the 2018 financial year. Therefore, subject to unforeseen circumstances, dividends of 1.51 pence per Ordinary Share are expected to be paid in respect of the quarters ending 31 March, 30 June and 30 September 2018, payable quarterly up to 31 December 2018. Following this transition period, the Board expect to pay a rising quarterly dividend from a covered position. As an illustration, if the Company had declared and paid a fully covered dividend on the basis of the results for the six months ended 31 March 2018, less headroom of 5%, the dividend declared on an annualised basis would have been 3.5 pence per share3. Based on the share price at 31 March 2018, this would have given a covered dividend with a dividend yield of 4.45%.

The shift to a policy of a fully covered dividend will not change the total return achieved by shareholders, but instead will re-balance how shareholders receive that return between income and capital growth.

In light of the Company's strong pipeline of opportunities and society's increasing need for modern, purpose-built, integrated healthcare premises, the Board continues to consider that primary healthcare remains a compelling proposition with your Company being well placed to deliver long term value to shareholders.