OrbVest secures prime acquisitions in competitive US medical office market

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OrbVest, the specialists in US medical real estate, came back strongly in 2021 from the Covid-19 lockdowns, which hit many sectors of the economy. It closed 10 acquisitions, mostly in highly desirable locations in the US, making 2021 its strongest-ever year for dealmaking.

OrbVest is aggressively searching for attractive investments in medical office buildings in specific locations across the US in 2022, to provide enhanced diversification for its investors and reduce concentration risk.

This is no easy task in an environment of rising interest rates. Also, investors, especially in the US, have recognised the resilience of medical real estate that is driving demand for good-quality properties.

The culmination of a busy 2021 was the closure of Cincinnati Medical Offices, a combined 5,257 m2 facility with two well-maintained Class A Medical Office properties in Cincinnati, Ohio.

This latest deal brings OrbVest’s portfolio of medical real estate under management to over 130,000 m2, representing approximately $400m in value.

“The purchase of the Cincinnati Medical Office is part of our continued expansion across the country. The decision is influenced by the underlying fundamentals that guide every acquisition by OrbVest. With an estimated population of 2,190,209, Cincinnati currently ranks as Ohio’s largest metropolitan area and has strong growth potential. Consequently, we expect the acquisition will deliver strong returns for investors into the future,” said Martin Freeman, OrbVest CEO.

OrbVest’s energy derives from the surge in investor demand for well-managed healthcare real estate portfolios, based on their expected profitability and predicted future investment returns. For South Africans, OrbVest is also helping to meet a huge appetite for global diversification into politically and economically stable environments.

Healthcare real estate is generally a stable niche of the property market because tenants in medical office buildings offer high credit quality and long-term leases where their specific location requirements are met.

As the spread of Covid-19 slows down, patients are resuming elective procedures and non-essential visits that had previously been postponed. Employment rates in the healthcare industry have rebounded a lot faster than the job market as a whole. Additionally, medical office facilities did not see the same steep declines in demand that most other commercial property types did during the height of the pandemic.

Some of OrbVest’s other deal highlights of 2021 were: West Orange Professional Centre in Orlando, Florida, a 3,580 m2 campus with two medical office buildings located directly across the street from Orlando Health, Health Central Hospital; the purchase of a third property in Princeton, New Jersey, which is a medical and office building comprising 3,719 m2 of rentable space; Talavi Spectrum, a 6,936 m2, multi-tenant office building in Phoenix, Arizona, which became OrbVest’s second property in the greater Phoenix metro area; two dental buildings in Atlanta, a 1,100 m2 Great Expressions Dental Centre office situated on 1.15 acres in Fayetteville, Georgia, and Eagles Pointe Dental Centre in Stockbridge, GA totalling 1,466m2; and Fleming Island, a 7,132 m2 office property located in Jacksonville, Florida.

OrbVest’s goal is to make investing in global real estate simple for small and large investors who are able to invest from as little as $5,000. These investments generate regular dividends in US dollars (between 7% and 8% per annum) that are distributed on a quarterly basis, creating annuity income and long-term wealth over the investment period. The targeted IRR over the full period of the investment is predicted to range between 11% and 17%. Investors also enjoy a share of the capital growth of the building, which is currently being driven by cap rate compression (demand pushing prices up) and the simultaneous increase in rental income on renewal of leases pushed by inflation.*

On top of that, South African investors enjoyed enhanced returns from rand depreciation over time. The rand is notoriously volatile, so it is best to take a long-term view (which is also appropriate for offshore property). Between January 2017 and January 2022, the rand went from R13.44/$ to R15.27/$ – a 13.6% depreciation – but in April 2020, the rand hit nearly R19/$! Over the long term, the rand is expected to depreciate by at least the inflation differential between the US and South Africa.

*Past performance is no guarantee of future returns

OrbVest SA (Pty) Ltd is a registered FSP with registration number 50483

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