Investment Advisory Agreement Renewal

RNS Number : 2116I

The MedicX Fund Limited

23 July 2012

 



For immediate release

23 July 2012

MedicX Fund Limited

("MedicX Fund", "the Fund" or "the Company")

Proposed Amendment to Investment Advisory Agreement

MedicX Fund, (LSE: MXF), the specialist primary care infrastructure investor in modern, purpose-built, primary healthcare properties in the United Kingdom, is pleased to announce the renewal of the Investment Advisory Agreement and resetting of the performance fee hurdle.

Under MedicX Fund's existing investment advisory agreement with MedicX Adviser Ltd (the "Investment Advisory Agreement" and the "Investment Adviser" respectively), the Investment Advisory Agreement automatically renews for a further 3 year period on 2 November 2013 unless notice is given to terminate by no later than 2 November 2012.  Having undertaken a review of the management arrangements for the MedicX Fund, placing particular emphasis on the pipeline of investment opportunities available to the Fund, the Board is pleased to confirm that it has decided to maintain the current arrangements and, accordingly, the Investment Adviser will continue to manage the Fund for a further 3 year term, commencing 2 November 2013.   

The Board recently introduced a tiered reduction in the base fee payable to the Investment Adviser under the Investment Advisory Agreement as a result of which the Investment Adviser is paid the following in cash quarterly in arrears:

·     0.75 per cent. per annum of the gross assets (excluding cash) where such gross assets are valued at less than £300 million, subject to a minimum fee of £2.25 million;

·     Above this threshold of £300 million and up to £500 million, 0.65 per cent. of gross assets (excluding cash);

·     Above £500 million and up to £750 million, 0.5 per cent. of gross assets (excluding cash); and

·     Above £750 million, 0.4 per cent. of gross assets (excluding cash).

In addition, as part of discussions concerning the renewal of the Investment Advisory Agreement, the Investment Adviser has agreed to increase the hurdle rate for the performance fee with effect from 1 October 2012 for the benefit of the Fund.  As a result of this amendment, from 1 October 2012, the Investment Adviser will only be able to earn a performance fee if the total return to Shareholders in terms of share price growth and cumulative dividends received ("Total Shareholder Return") exceeds 10 per cent. (rather than 8  per cent. previously) per annum. 

The Investment Adviser is entitled to a performance fee equal to 15 per cent. of the amount by which the Total Shareholder Return exceeds an 8 per cent. per annum compound hurdle rate calculated from the issue price of the 2009 Placing and Offer for Subscription (being 69p), subject to a high water mark until 30 September 2012.  Thereafter, the hurdle rate will be 10 per cent. per annum.  The current high watermark is set with reference to the share price at 30 September 2011 at the closing mid-market share price of 75.0 pence per Ordinary Share.  If in any year the Total Shareholder Return falls short of 8 per cent. per annum until 30 September 2012 or 10 per cent. thereafter, then the deficit in Total Shareholder Return has to be made up in subsequent years before any performance fee can be earned.  The compounding of the hurdle rate is adjusted upwards to compound from the high watermark level at which the performance fee was last earned.

David Staples, Chairman of MedicX Fund, said:"We are delighted with the sector leading performance of the management team at MedicX Adviser Ltd and their track record they have built since IPO.  I am therefore very pleased to confirm the Investment Adviser has agreed to the renewal of the Investment Advisory Agreement and has at the same time agreed, effective 1 October 2012, to increase the hurdle for its performance fee from 8% to 10%"

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For further information please contact:

MedicX Group	[phone]
Keith Maddin, Chairman
Mike Adams, Chief Executive Officer
Mark Osmond, Chief Financial Officer
Buchanan	[phone]
Charles Ryland/Suzanne Brocks
MedicX Fund Limited	[phone]
David Staples, Chairman

Information on MedicX Fund Limited

MedicX Fund Limited ("MXF", the "Fund" or the "Company", or together with its subsidiaries, the "Group") is the specialist primary care infrastructure investor in modern, purpose-built primary healthcare properties in the United Kingdom, listed on the London Stock Exchange, with a portfolio comprising 106 properties.

The Investment Adviser to the Company is MedicX Adviser Ltd, which is authorised and regulated by the Financial Services Authority and is a subsidiary of the MedicX Group. The MedicX Group is a specialist investor, developer and manager of healthcare properties with 28 people operating across the UK.

The Company's website address is www.medicxfund.com.  Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

 

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