Medical real estate in the US

A hit among South Africans wanting a different diversification strategy.

RYK VAN NIEKERK: OrbVest is a global real estate company and it allows investors from around the world to invest directly into US commercial properties. I’m speaking to Martin Freeman, CEO of OrbVest – he is based in New York. Martin, thank you so much for joining me.

Many investors in South Africa are very concerned about internal risks, especially after the downgrade, that the exchange rate of the rand may weaken significantly and of course that makes international and offshore investments very attractive.

How does OrbVest protect a South African investor from that exchange rate risk?

MARTIN FREEMAN: Ryk, firstly thanks for having me on your show again. I just want to start off and say that it’s absolutely heartbreaking for me to see so many of my friends and family have their wealth decimated in South Africa through the depreciation of the rand. I know that it’s very stressful and now that the downgrade has been confirmed by Moody’s, it certainly doesn’t look like it’s going to get better for a long time to come.

So how we mitigate risk for people is we take their money and we invest it into a very stable asset class in the United States, which is the healthcare niche. It’s real estate, it’s stable buildings, it’s multi-tenanted buildings. They’ve been producing profits, these buildings, for a long time and will continue to do that. So when someone takes their money in rands and they invest into one of these buildings, they will receive dollar dividends. And those dividends, as the rand depreciates, in fact, when they bring it back to South Africa, mean they’ve got more rands back. So they’ve protected their wealth in dollars.

RYK VAN NIEKERK: Are you able to reinvest the dividend?

MARTIN FREEMAN: Absolutely – it’s as easy as a click of a button on our system. People go on and they consistently reinvest and that’s actually what we encourage people to do. It’s the power of compound growth. So remember, because we’re not a fund, each time you start off with one building and you reinvest, you’re reinvesting into the second building, and then the third and the fourth. So before you blink in a year’s time, you may have six, seven, eight buildings in the United States where you are now an owner of real estate.

I just want to say to everyone that, like your listeners, I remember when I was emigrating to the US and the rand plummeted to R16.75 when [former finance minister] Nhlanhla Nene was fired. And what I’ve always said to people from then until now, being in the real estate industry, is you are never going to guess the rand correctly.

The one thing we do say to all our investors is just get into the game as soon as you can. Even if it’s $3 000 – start investing.

Over time it will average out and it will be at a lower amount or a higher amount, but at least you can sleep well at night knowing you’ve got a portfolio in the United States in dollars, earning dividends on a consistent quarterly basis.

RYK VAN NIEKERK: South Africans really like property and … want to invest in property. I think many people understand the models, the business model behind such investments, but there are many ways and options available to South African investors to invest in offshore property. What makes OrbVest different to other real estate investment options?

MARTIN FREEMAN: Great question, and I think that for South Africans we really are a viable solution. I’ll tell you the reason why – it’s because, like your listeners, I was in their shoes. You don’t know where to put your money. You don’t know who to invest it with. We’re a team of well-known businessmen in South Africa.

We specifically wanted exactly what your listeners want, which is just to find a place to put our money and notes safely. Hence the reason why we’ve been doing this for six years. We help people with a couple of clicks of a button. Literally you go to … and you register. Our team, based in Cape Town and Centurion, will help you finalise the process.

OrbVest’s directors (from left) – seated: Hennie Bezuidenhoudt, Justin Clarke and Martin Freeman; standing: Louw Viljoen and Machiel Lucas.

You invest your money; you’ve then become an owner in a building. It’s transparent. It’s easy. It doesn’t mean there’s any hidden fees. It’s not like investing into a Reit [real estate investment trust] where you don’t know what’s actually going on or if your investment is going to go up or down. And it is so consistent, over five years. I think that’s the reason why we have shown such significant growth, not only in South Africa but in 10 countries.

RYK VAN NIEKERK: Why are the investments listed in the Seychelles and not in the US?

MARTIN FREEMAN: Because the only way to invest via the US directly is you have to have some kind of structure, which is a company or an LLC [limited liability company]. And what that does is it creates a complicated scenario and it’s also costly for someone that doesn’t have a lot of money.

And so over the six years we’ve made the process so simple; we’ve done away with the complicated structures. We’ve made it easy for South Africans to just invest and become owners in real estate. Hence the reason we’ve created these structures, which people are absolutely enjoying investing [in] again and again and building their portfolios. And that’s what we’ve done.

We’ve simplified the process of investing in the United States and becoming a real estate owner.

RYK VAN NIEKERK: Are you seeing that individual investors hold multiple investments? Is that a trend?

MARTIN FREEMAN: Absolutely. People come and they’ll test us the first time and they’ll invest a small amount. It goes well. A couple of quarters later they’re getting their dollar dividends.

Remember they are investors directly in that building. And the next question is ‘Well, when is your next building coming out?’

And then your next, and what we do is we encourage people to invest over time – whatever your amount of money is – invest it over five or six and then eight and then 10 buildings and then you’ve got a portfolio in the US, across different geographical locations, different buildings, different states, and you really are very resilient.

And we believe that’s the ideal diversification strategy, specifically in this world of chaos and in the world where you don’t know where equity markets are going or where the rand is going in the next six months to a year.

So this, I believe, is a solution that a lot of people should be considering. The challenge is people just don’t know when to start. My view is if you don’t get into the game, you’re never going to be in the game.

RYK VAN NIEKERK: Martin, thanks for your time. That was Martin Freeman. He’s the CEO of OrbVest.

Brought to you by OrbVest.



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