MedicX Fund, the listed specialist primary healthcare property investor, has raised five-year £50m fixed rate debt at an all-in fixed interest rate of 3.80% through UK private placement markets, underscoring the market’s enduring tighter fixed credit spreads over traditional bank financing.
MedicX £50m five-year facility, maturing in August 2019 with no amortisation and the principal value repayable on maturity, is tranched into two facilities: £15m immediately drawn down which will refinance existing assets, and a £35m tranche to fund the listed property investor’s future acquisitions.
The second tranche will be drawn by December 2014.
While MedicX did not disclose the LTV covenant of the new facility, its previous facilities have been between 62.5% and 65% LTV, while the company’s stated leverage threshold is between 55% and 65% LTV.
Including this new facility the average all-in fixed rate of debt for the fund is 4.35% with an average unexpired term of 13.4 years.
Assuming the funds were fully drawn immediately with the proceeds invested in the completion of existing properties under construction or the purchase of new properties, adjusted gearing (the ratio of total debt to total assets in each case net of cash and cash equivalents) would be expected to be approximately 55.2%.
Next up for MedicX is the refinancing of a maturing £31.2m senior facility with GE Capital, which matures in April 2015. Last September, MedicX secured a £25m three-year revolving credit facility (RCF) with RBS.
The RBS’ margin is linked to the LTV, at the time of drawdown, MedicX reported that the all-in was approximately 3%. Based on the running 12-month average for three-month LIBOR, this implies a margin of between 240bps and 250bps.
David Staples, chairman said in a statement: “We are proud of the debt facilities we have put in place for the Fund and are delighted to announce the issue of these loan notes, the terms of which are competitive compared with currently available bank financing.
“This additional debt diversifies our lender base and, together with the existing £25m revolving loan facility we have in place, will enable the fund to commit to additional new investments and to take advantage of its healthy pipeline of acquisition opportunities.”