MedicX, the healthcare REIT investing in the UK and Ireland, has signed a £264.5 million (€297.4 million) funding deal with insurer Aviva Investors, its long-term debt provider.
The new facility, which refinances £233.7 million of existing loans and increases the total debt by £30.8 million, is secured against 90 modern purpose-built medical centres, the insurer said.
The new £30.8 million, 10-year interest-only tranche has a fixed interest rate of 3.05 percent per year, while the £233.7 million 15-year partially amortising tranche has a fixed interest rate of 4.69 percent per year. Amortisation of £40 million will be spread over the 15-year term of the £233.7 million tranche, with the remaining £193.7 million repayable at maturity.
The agreement standardises the covenants that will apply to the new facility, MedicX said. Under the new terms, the group will have to operate with a debt service cover ratio of at least 140 percent throughout and with a loan-to-value ratio of no more than 75 percent for the first five years, falling to 70 percent for years six to 10 and then 65 percent for the remaining term.
The facilities will be fully drawn immediately, MedicX said. The net proceeds from the new £30.8 million tranche will be used in the first instance to repay the £20 million drawn by Royal Bank of Scotland through a revolving credit facility. The remaining debt will be deployed into investment properties either under construction or forming part of the company’s acquisition pipeline.
“The new arrangements will improve operational efficiency and free up property collateral, enabling MedicX to undertake identified asset management projects and negotiate new facilities at competitive rates, which should reduce MedicX’s average cost of debt,” said the firm’s chairman Helen Mahy.