The MedicX Fund Limited Trading Update and Quarterly NAV Announcement (4101V)

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RNS Number : 4101V

The MedicX Fund Limited

23 July 2018

Press Release

For immediate release

23 July 2018

MedicX Fund Limited

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

Trading update incorporating quarterly Net Asset Value ("NAV")

MedicX, the specialist primary care infrastructure UK REIT investor in modern, purpose-built, primary healthcare properties in the United Kingdom and Republic of Ireland, today publishes a trading update incorporating its quarterly NAV as at 30 June 2018.

Highlights for the quarter ended 30 June 2018

-- Portfolio value increased 10.9% to GBP797.9 million (31 March 2018: GBP719.7 million) reflecting UK Net Initial Yield of 4.86% (31 March 2018: 4.99%). GBP14.9 million like for like valuation increase since 31 March 2018, together with net additions of GBP63.3 million;

-- Increase in annualised rent roll of 7.9% to GBP43.9 million (31 March 2018: GBP40.7 million);

   --     EPRA NAV per share increased by 1.5% to 80.8p per share (31 March 2018: 79.6 p per share); 

-- 3.4% total return on EPRA NAV for the quarter ended 30 June 2018 (8.0% for the six months ended 31 March 2018); and

-- Accretive off-market acquisition of portfolio of 12 medical centres for a headline price of GBP63.8 million and net consideration of GBP27.3 million.

Summary of Net Asset Values

 
                                 30 June    31 March 
                                  2018(1)    2018(1) 
------------------------------  ---------  ---------  ------ 
 NAV (GBP'000)                   356,366    340,189    +4.8% 
 NAV per share (pence)           80.5       79.3       +1.5% 
 EPRA NAV (GBP'000)              357,657    341,476    +4.7% 
 EPRA NAV per share (pence)      80.8       79.6       +1.5% 
 EPRA NNNAV (GBP'000)            318,843    297,774    +7.1% 
 EPRA NNNAV per share (pence)    72.0       69.4       +3.8% 
------------------------------  ---------  ---------  ------ 
 

(1) Unaudited

Investment activity

During the quarter ended 30 June 2018, MedicX completed GBP67.0 million of acquisitions, adding 13 properties to its portfolio.

On 19 April 2018, MedicX contracted to acquire, by way of forward funding, a new c.900 m(2) primary healthcare medical centre in Peterborough where all leases will be for a term of 20 years from practical completion.

On 8 June 2018, MedicX completed an off-market corporate acquisition of a portfolio of 12 operational and fully let primary care medical centres for a price of GBP63.8 million and net consideration of GBP27.3 million including GBP3 million settled through the issuance of 3.75 million Ordinary Shares to the vendor.

The acquired portfolio has an annual rent roll of GBP2.95 million with a weighted average unexpired lease term of 14 years, and an average lot size of GBP5.3 million. The portfolio, excluding revaluation, adds annualised earnings of c.GBP1.4 million to MedicX performance.

At 30 June 2018, MedicX had three properties under construction with a combined completed value of c.GBP18.7 million at Vale of Neath and Peterborough (as above) in the UK and in Rialto, a suburb of Dublin in Ireland. Construction on these three schemes is due to complete in early 2019.

Quarterly Valuation

The quarterly valuation of the UK portfolio as at 30 June 2018 was undertaken by Jones Lang LaSalle LLP and the quarterly valuation of the Republic of Ireland portfolio as at 30 June 2018 was undertaken by Cushman & Wakefield. The aggregate total portfolio value at 30 June 2018 was GBP797.9 million (31 March 2018: GBP719.7 million).

Overall the portfolio value increased 10.9% to GBP797.9 million. The movement was made up of a like for like 2% increase of GBP14.9 million since 31 March 2018, together with net additions of GBP63.3 million.

The valuation reflected a Net Initial Yield of 4.86% for the UK portfolio (31 March 2018: 4.99%) and a True Equivalent Yield of 6.6% (31 March 2018: 6.6%) in the Republic of Ireland.

Rent Reviews

For the year to date since 1 October 2017, 60 leases and rents of GBP8.2 million have been reviewed and the equivalent of a blended 1.34% per annum increase was achieved (year to 30 September 2017: 1.02%). Of these reviews, an uplift of 0.69% per annum was achieved through open market reviews and uplifts of 2.12% and 2.75% per annum were agreed for RPI and fixed reviews respectively.

In July 2018, MedicX received the outcome of an independent expert determination of an outstanding rent review for one of its major assets in Clapham, London. The determination was that the contractual rent due from the applicable rent review date of March 2015 should increase by 35% (equating to a compounded 10.54% per annum increase over the applicable 3 year rent review pattern).

Dividends and returns

On 29 June 2018, MedicX paid its quarterly dividend of 1.51p per Ordinary Share in respect of the period 1 January 2018 to 31 March 2018 which comprised 50% (0.755p) Property Income Distribution and 50% ordinary dividend (0.755p).

For the quarter ended 30 June 2018 a total return on EPRA NAV of 3.4% was achieved (8.0% for the six months ended 31 March 2018). This return comprised of the dividend of 1.51p and an increase in EPRA NAV of 1.2p per share compared to the opening EPRA NAV of 79.6p per share.

Funding

During the three months ended 30 June 2018, the Fund drew down a further EUR3.65 million from its EUR34.0 million development facility with Bank of Ireland. As at 30 June 2018, a total of EUR27.0 million of the facility had been utilised, with the remainder available to complete the property under construction at Rialto. On 6 June 2018, the Fund drew down GBP23 million on its Revolving Credit Facility ('RCF') to fund acquisitions.

As at 30 June 2018, adjusted gearing was 52.5% (31 March 2018: 49.5%) and the weighted unexpired term of all drawn debt including the RCF was 11.0 years with an average fixed rate of 4.25% (31 March 2018 12.1 years; 4.27%).

MedicX is currently at an advanced stage of agreeing more flexible sources of borrowings with a number of parties.

During the quarter ended 30 June 2018 the Company issued 13.45 million Ordinary Shares of no par value at an average price of 80.83 pence per share. 3.75 million of these shares were issued out of treasury at a price of 80.0 pence per share to the vendor as part consideration for the acquisition described above. The remaining 9.7 million shares were issued from the Company's block listing.

On 29 June 2018 the Company sold in lieu of cash dividends, 368,440 Ordinary Shares from treasury pursuant to the Scrip Dividend Scheme, based on a scrip calculation price of 80.24 pence per share.

The total number of Ordinary Shares of the Company in issue as at 30 June 2018 was 442,799,016 (excluding treasury shares) with each share holding one voting right. The Company also holds 2,903,383 Ordinary Shares in treasury and has 5,071,668 Ordinary Shares of no par value remaining under its block listing facility.

There have been no share issues since the quarter end.

Outlook

The Fund has continued to execute its strategy of selectively buying high quality, larger, locally strategic and sustainable properties. The Board believes this focus and its discipline of not overpaying for its acquisitions will deliver sustainable long term returns for shareholders.

In light of the strong pipeline of investment opportunities, with a value of c.GBP110 million, the Board remains of the view that the Fund is well positioned for growth.

-End-

For further information please contact:

   Octopus Healthcare Adviser Ltd                                    [phone] 
   Octopus Healthcare                                                     [phone] 

Mike Adams, Chief Executive Officer

   Canaccord Genuity Limited                                           [phone] 

Robbie Robertson/Andrew Zychowski/Helen Goldsmith

   Liberum                                                                     [phone] 

Richard Crawley/Jamie Richards

   Buchanan                                                                   [phone] 

Charles Ryland/Henry Wilson

Information on MedicX Fund Limited

MedicX Fund Limited ("MXF", "MedicX Fund", 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 and Ireland, listed on the London Stock Exchange, with a portfolio comprising 166 properties.

The Investment Adviser to the Company is Octopus Healthcare Adviser Ltd, which is part of the Octopus Healthcare group. Octopus Healthcare invests in and develops properties as well as creating partnerships to deliver innovative healthcare buildings to improve the health, wealth and wellbeing of the UK. It currently manages over GBP1.4 billion of healthcare investments across a number of platforms, with a focus on five core areas: GP surgeries, care homes, special education schools, retirement housing and private hospitals. Octopus Healthcare is part of the Octopus group, a fast-growing UK fund management business with leading positions in several specialist sectors including healthcare property, energy, property finance and smaller company investing. Octopus manages GBP8.0 billion of funds for more than 50,000 retail and institutional investors as well as supplying energy to more than 220,000 customers.

Octopus Healthcare Adviser Ltd is authorised and regulated by the Financial Conduct Authority.

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), nor the contents of any website accessible from hyperlinks within this announcement, are incorporated into, or form part of, this announcement.

The Company's Legal Entity Identifier is 2138008POF35FTNFCB25.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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July 23, 2018 02:12 ET (06:12 GMT)