The commissioning process for new doctors' surgeries is seeing "lots of pressure but no real action", admits Mike Adams, manager of the listed primary care landlord, MedicX Fund (MXF). The development freeze caused by the NHS reforms this spring has yet to thaw, making it much harder to justify rent increases on existing surgeries. The company nonetheless managed to push through rent increases of 1.7 per cent, on average, thanks to the 20 per cent of its leases that are linked to the retail price index.
That led to a modest £2.9m revaluation gain on the £451m portfolio, most of which was offset by purchase costs on acquisitions. Without the benefit of positive revaluations, the company's book value again fell. MedicX continues to defy corporate convention by paying out more in dividends than it receives in rental income, but Mr Adams says he is "very comfortable" with this. "Shareholders will look at our total returns without caring whether they’ve come out of income or capital," he argues.
Dividend cover improved last year - 64 per cent of the payout was funded by rental profits, up from just 42 per cent - as income flowed through from a bumper crop of acquisitions. But it may deteriorate again following a £48.8m placing with institutional shareholders in October.
MEDICX FUND LTD (MXF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 81p | MARKET VALUE: | £275m | |
| TOUCH: | 80.5-81p | 12-MONTH HIGH: | 88p | LOW: 74p |
| DIVIDEND YIELD: | 7.0% | TRADING PROP: | nil | |
| PREMIUM TO NAV: | 30% | |||
| INVESTMENT PROP: | £427m | NET DEBT: | 144% | |
| Year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 63.1 | -1.87 | -1.60 | 5.30 |
| 2010 | 66.0 | 8.16 | 6.40 | 5.40 |
| 2011 | 65.8 | 6.66 | 4.30 | 5.50 |
| 2012 | 63.5 | 2.64 | 1.10 | 5.60 |
| 2013 | 62.2 | 9.67 | 3.60 | 5.70 |
| % change | -2 | +266 | +227 | +2 |
Ex-div: 13 Nov Payment: 31 Dec | ||||
