Medicx (MXF), the healthcare real estate investment trust (Reit), has bought a £63.8 million portfolio of properties less than a month after announcing it would cut its dividend.
The £348 million (Reit) has purchased 12 operational ‘primary care medical centres’ in the North of England, which it said added 8.9% to the portfolio’s value.
The properties, bought from One Medical Property Holdings, lift the total number of properties owned by Medicx to 166 – of which 163 are operational and three are under construction.
The addition of gross rent of £3 million a year takes the fund’s yearly rental income to £43.9 million, a 7.3% increase. The acquisition also sees Medicx acquire the portfolio’s debt of £29.8 million, pushing its total gearing to a high 53.7%.
Medicx chairman Helen Mahy said the acquisition was ‘in line with our strategy of focusing on larger and locally strategic premises, which will deliver primary care services beyond the term of the existing occupational leases’.
‘The company has further pipeline opportunities at various stages of legal due diligence which it expects to complete in the coming months,’ said Mahy.
‘These will bring further scale benefits and complement the acquired portfolio, which provides care for over 150,000 patients.’
The acquisition comes after Medicx freed up cash by cutting its dividend last month. The shares had yielded over 7% but the dividends were only covered 61.5% by earnings in the half-year to March and the board said it wanted to move to a fully covered dividend in 2019. This could see payouts nearly halve this year from an expected 6.04p to 3.5p.
MedicX shares stood at 82p before the announcement on 22 May that the dividend would be 'rebased'. After falling to 76p they have recovered to 81p today, as investors view the prospective covered yield of 4.5% as attractive.