MedicX Fund Ltd. agreed to a 50/50 joint venture with healthcare center developer General Practice Investment Corp. Ltd. to form a healthcare investment company.
The GP Property Ltd. joint venture will invest in primary healthcare properties in the U.K. that will be leased to general practitioners or directly to the National Health Service. The properties may not immediately meet MedicX's investment policy but could in the future. The joint venture will also invest in situations that may lead to asset management opportunities or contracts for new modern purpose-built properties that could meet MedicX's investment criteria through active asset management.
MedicX will fund the joint venture by subscribing in cash for nonvoting preference shares in GP Property in return for a preferred 5% yearly return. That return will be topped up to 8% compounded when properties are disposed of or sold to MedicX if they meet its investment policy. Realized profits above 8% will be shared on a 50/50 basis between MedicX and GPIC.
MedicX has committed up to £15 million to the joint venture on a project-by-project basis. Further funding will require approval by MedicX shareholders and amending the company's investment policy. GPIC will provide asset management and development expertise and services. GP Property will be permitted to borrow up to 50% of its gross asset value.
Octopus Healthcare Adviser Ltd. will provide property management, rent collection and back-office accounting services. It will also source investment opportunities for the joint venture.
GPIC and MedicX have each nominated three board members to sit on the board of GP Property, according to a news release.
Additionally, MedicX said its framework agreement with GPIC will be extended by five years and will no longer be terminable on six months' notice. Since 2012, approximately £77 million of modern purpose-built primary healthcare properties have been delivered to MedicX pursuant to the agreement.