"We've been wading through treacle for the last year or two, but the next six months should see that change," says Mike Adams, chief executive of MedicX Fund's (MXF) investment adviser, Octopus Healthcare. The group invests in new, purpose built healthcare centres, and the latest government drive to improve NHS infrastructure is expected to see a steady increase in new facilities.
The group has built up a portfolio of 141 centres, and spent £17.2m on four new properties during the first half. That's fairly modest, but Mr Adams stresses competition is growing and, rather than cutting margins by paying higher prices, the group only invests where the return meets internal targets. Even so, there is a £100m pipeline of further acquisition opportunities.
The annualised rent roll rose 3.4 per cent to £3.99m in the six months, and the quality of the revenue stream reflects the fact that 90 per cent of all rents are NHS-sourced. Around a fifth of rents are linked to inflation and these delivered a 2.9 per cent uplift. Rents subject to open-market reviews nudged up 1.4 per cent, but this is expected to accelerate as new sites, where rents are higher, come on stream.
Crucially, MedicX matches its debt and lease maturities, both of which are approximately 15 years. And the 5.57 per cent rental yield comfortably covers the 4.42 per cent average cost of debt.
| MEDICX FUND (MXF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 84p | MARKET VALUE: | £306m | |
| TOUCH: | 83-84.25p | 12-MONTH HIGH: | 86p | LOW: 77p |
| DIVIDEND YIELD: | 7.0% | DEVELOPMENT PROPERTIES: | nil | |
| PREMIUM TO NAV: | 24% | |||
| INVESTMENT PROPERTIES: | £527m | NET DEBT: | 107% | |
| Half-year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 63.9 | 8.6 | 2.4 | 2.9 |
| 2015 | 67.8 | 19.9 | 5.2 | 2.95* |
| % change | +6 | +132 | +117 | +2 |
Ex-div: 14 May Payment: 30 Jun *Dividends (1.475p) paid at the end of each quarter. | ||||
