7th Jun 2005 07:01
Medical Property Investment Fd Ltd07 June 2005 Medical Property Investment Fund Limited 7 June 2005 Medical Property Investment Fund to acquire a portfolio of twelve primary healthcare properties Introduction The Medical Property Investment Fund Limited (the "Company") agreed on 6 June2005 terms to acquire a portfolio of eight investment properties and fourdevelopment properties (the "Apollo Portfolio") from Apollo Medical PartnersLimited for an aggregate consideration of £47,275,000 (the "Acquisition"). The Directors believe the Apollo Portfolio offers the Company: • seven purpose built primary care centres (six of which were newly developed in the last three years); • one multi-let Health Park; • four high quality primary care centre developments due to be completed between June 2005 and June 2006; • geographical spread with properties situated from Eastbourne to Aberdeen; • income weighted average un-expired lease term of 17 years; • approximately 90 per cent. of income secured against NHS Trusts or GP Practices who receive rent reimbursement from their local Primary Care Trust; • reversionary rental potential; • three potential pharmacy opportunities; • development opportunities on at least two sites to create larger prime pitch facilities; and • un-let space in two of the properties providing accommodation for other complementary medical service providers to co-locate alongside the primary care facilities, increasing overall income enhancement potential from those sites. Commenting on the Acquisition, Richard Burrell, Investment Manager to theCompany, said: "We have looked at other portfolios that have come to the market over the last18 months and we believe the Apollo properties represent the best qualityportfolio of primary health care centres that has become available since theCompany was established in November 2003. It is our mutual intention to strengthen links between the Company and theApollo Medical Group, in order to facilitate future development projects andfurther income enhancing opportunities on the properties to be acquired as wellas on certain other properties where appropriate." Enquiries: Richard Burrell Tel: 020 7659 6271 Berrington Fund Management Limited www.berringtonfm.com David Masters Tel: 020 7294 3687 Lansons Communications Principal terms of the Acquisition The aggregate purchase consideration payable, in cash, under the relevantpurchase agreements (the "Property Agreements") is £47,275,000 before associatedcosts. The Acquisition is being effected in two stages, an initial acquisitionof four properties for £6.375 million (the "First Tranche") which is expected tocomplete on 10 June 2005 and a second acquisition of eight properties for £40.9million (the "Second Tranche"). In view of its size, completion of the SecondTranche is conditional upon shareholder approval. The consideration for theAcquisition will be satisfied out of the Company's existing cash resources. The Company has agreed to guarantee the obligations of MPIF Holdings Limited,the Company's wholly-owned subsidiary which will acquire the properties, underthe Property Agreements. Total transaction costs including Stamp Duty Land Taxare estimated to be 5.75 per cent. of the aggregate consideration payable. TheDirectors believe that when all of the properties are completed and fully letthe annual rental income will be of the order of £2.9 million which reflects anet initial yield of 5.8 per cent. The estimated rental value of the propertiesis £3.1 million which reflects an equivalent yield of 6.2 per cent. In agreeing terms with the vendor in relation to the Second Tranche, the Companyhas paid a non-refundable deposit of £1,800,000 in cash. Prior to agreeing topay this deposit, the Investment Manager and Cenkos Securities Limited consultedwith several of the Company's major shareholders. Whilst the Company did notseek binding commitments from these shareholders, the Board is confident that,in the absence of unforeseen circumstances, there will be a majority ofshareholders voting in favour of the Second Tranche. Information on the Apollo Portfolio The First Tranche comprises four freehold investment properties, currentlygenerating £359,500 rental income per annum (£374,500 per annum when fully let).The Second Tranche comprises four investment properties and four developmentproperties, currently generating £2,228,315 rental income per annum (£2,487,085per annum when fully let). Of the investment properties, two are freehold/feuhold and two are held on long leases. Three of the development properties arefreehold/feuhold and the fourth development property is part freehold and partleasehold. All of the leases are on a full repairing and insuring ("FRI") ormodified FRI basis. Benefits to the Company of the Acquisition The Directors believe the Acquisition will add significant critical mass to theCompany's investment portfolio, strengthening its presence in a number ofgeographical locations and providing the Company with further opportunities toexpand its income from those properties being acquired. Aside from the individual properties, it is anticipated that the Acquisitionwill also provide an opportunity for the Company to enter into a long termrelationship with Apollo Medical Partners Limited. It is the mutual intention ofthe Company and Apollo Medical Partners Limited to strengthen links between thetwo organisations, facilitating future development projects and further incomeenhancing opportunities on the properties being acquired as well as on certainother properties. Current Trading and Prospects As at 15 March 2005, the Company announced that it had invested or committed(which includes transactions in legal hands) £175 million towards theacquisition and development of primary health care properties. It is theintention of the Company to invest or commit an aggregate of at least £400million by the end of 2006. The Apollo Portfolio, together with other commitments made since 15 March 2005,brings the total investments or commitments of the Company to approximately £240 million which should, the Directors believe, provide the Company with anoverall net initial yield on completion of approximately 6.8 per cent. The Company is in advanced stages of negotiations regarding the first tranche ofits banking facility. Terms have been agreed in principle with NationalAustralia Bank for a three year Revolving Credit Facility of £100 million. It isthe Company's intention to re-finance this debt once it has acquired a largerportfolio of properties. The Company has entered into a long dated interest rateswap to fix the cost of its debt co-terminous with the average length of itsleases. Extraordinary General Meeting and Circular An Extraordinary General Meeting will be convened at which an ordinaryresolution will be proposed to approve the Second Tranche. A circular containingfull details of the Acquisition and other relevant information together with anotice convening the Extraordinary General Meeting is expected to be despatchedto shareholders shortly. A further announcement will be made in due course. Ends Not for release, distribution or publication in or into the United States ofAmerica, Canada, Australia, Japan, the Republic of Ireland or the Republic ofSouth Africa or their respective territories and possessions, or in any otherjurisdiction in which its distribution or publication is restricted orprohibited. This announcement does not constitute an offer or invitation to subscribe for orpurchase any securities in The Medical Property Investment Fund Limited andneither this announcement nor anything contained herein shall form the basis ofany contract or commitment whatsoever. Neither this announcement nor any copyhereof may be distributed in any jurisdiction outside the UK where itsdistribution may be restricted by law. Persons who receive this announcementshould make themselves aware of and adhere to any such restrictions. Thisannouncement has been issued by The Medical Property Investment Fund Limited andis the sole responsibility of it. 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