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OrbVest has announced the launch of AccretivPLUS Healthcare Portfolio Limited with a new acquisition of 4700 West Palm Beach Medical Plaza in Florida USA.
“The acquisition of the Medical Plaza building concluded in December 2023 and has been under negotiation for over 8 months. The acquisition fits the core/core plus investment mandate perfectly with 100% occupancy which includes 13 healthcare tenants, said CEO Martin Freeman out of New York.
“We acquired the 42,000 square foot building at an excellent price, taking advantage of the current market conditions and managed to negotiate a lock in interest rate of 6.6% over 5 years, from one of our most supportive lenders”.
OrbVest has strategically shifted from individually owned syndicated buildings to the consolidation of 29 of its best healthcare investments into a single entity. With the overwhelming support of its investors, the total value of the portfolio identified to consolidate into the new AccretivPLUS Healthcare Portfolio is some $250 million. Occupancy is just under 91% and weighted average lease term comfortably above 5 years. The mandated return in cash is 5% to 8% per annum in USD (7% hurdle) with an exit within 5 years and an expected double-digit IRR.
The healthcare real estate sector has continued to perform well during and in the aftermath of Covid-19, although the macro-economic environment that has prevailed over the past 3 years has negatively impacted all categories of commercial real estate. Interest rates increased consistently with borrowing rates moving from 3% to 8% and above, and the cost of private debt has moved into double digits. Increasing defaults have caused regional and smaller banks to reduce new debt allocation to commercial real estate borrowers, placing increased liquidity pressure on the sector.
“The cycle is reversing as it often does, and we want to be ready to grow this portfolio aggressively, as we take advantage of the price dislocation and as interest rates start to decline.”Â
“We also learned that investing into individual buildings is a concentration risk and does not fit our investor community needs. Our disastrous Honan Group partnership also taught us that we cannot rely on third-party sponsors and will undertake our own general partner mandates, with more of our team moving to the US to be close to our assets”. Says Freeman.
The changes will give us full control of the performance of the building. The operating team will be expanded extensively in the US as property management will also be insourced. “We intend to create closer relationships with our tenants and relevant stakeholders, continuously improve occupancy and so doing increase net operating income”, concludes Freeman.
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