Offshore success for OrbVest investors

Combining the security of an ownership stake in a building with steady rental income from multiple tenants is proving popular.

RYK VAN NIEKERK: OrbVest is a global real estate company – it is based in New York and offers investors from around the world the opportunity to invest directly into US commercial properties and especially properties in the medical sector. I’m now speaking to Martin Freeman, he is the CEO of OrbVest. Martin, thank you so much for joining me. I would like to talk about your existing property portfolio. How many properties have you actually syndicated as part of this portfolio to investors?

MARTIN FREEMAN: Ryk, firstly, thanks for having me on your show again. And regarding the question of our portfolio – our portfolio now is over $350 million in the United States in the healthcare niche only. We have 26 buildings, we’re about to launch in the coming week or so Medical 27 [an inpatient rehabilitation facility in Texas], and we have over a million square feet [around 93 000 square metres] under management.

RYK VAN NIEKERK: How many investors do you have?

MARTIN FREEMAN: It’s not a disclosed number. I can say to you that it’s in the thousands and it’s from over 10 countries in the world. We are seeing exponential growth. I think the reality is that every single country we go into has investors who would like to acquire real estate in the United States. The challenge for them is that whilst they want to do that they don’t know any person that can assist them and they’re certainly not familiar with how simple it is, and so that’s what we do. We go into a country, we then set it up, we show people how simple it is to invest in the United States and it grows from there. Regarding our investors in South Africa, we’ve seen tremendous growth in our numbers in South Africa because I think specifically with the current economic environment, the depreciation in the currency, people are looking to just get their money offshore and earn stable income-producing dividends in dollars and then repatriate them back to South Africa if they so wish.

RYK VAN NIEKERK: All the properties are in the medical sector – can you describe a typical property you would buy and then syndicate to investors?

MARTIN FREEMAN: Absolutely. So people should expect, if they go onto our website, they’ll see our kind of buildings. A lot of them at the moment are trophy assets. What [do] we call a trophy asset? It’s a beautiful medical office building like you would expect to see in South Africa next to a or nearby a hospital. It’s not the hospital; it’s an outpatient facility. It’s where people would go typically to see their GP, the radiologist, orthopaedic surgeon, anyone else like that and those kinds of ancillary services are housed in a building known as a ‘MOB’ (medical office building).

RYK VAN NIEKERK: The properties are in the vicinity of hospitals. Are those public or private hospitals?

MARTIN FREEMAN: In the United States there are a plethora of various medical facilities [and] most of them are owned by listed entities on the Nasdaq, and so these large hospitals require the ancillary services around [them] and so that’s where we’ll often find these medical office buildings. Also, there are a number of campuses, so there might be campuses with eight or 10 buildings on that campus, and we would acquire one of the 10 buildings. So it really is a mix, but the bottom line is that its part of the trillion-dollar industry in the United States known as health care.

RYK VAN NIEKERK: But you are very specific in the geographical areas into which you invest and where the properties you buy are located – what are these geographic areas, and why are you only looking at those areas?

MARTIN FREEMAN: So we as OrbVest have an independent investment committee consisting of very well-known individuals in South Africa and these individuals have very strict criteria in terms of where we can invest. One of the most important criteria [relates] to maintaining the property’s value and in fact increasing it over time. We believe [in] population growth areas where it’s landlord-friendly; areas where there is a diverse economy and a lot of stability. So if you take the kind of areas – we’re in Atlanta, Georgia, the enormous growth in the last 10 to 15 years, together with places like Texas, where you’re talking about Dallas, Houston, San Antonio and Austin. These kinds of places really do present the perfect platform where, if you go into a great location and you’ve got a good building with solid tenants, there is every likelihood, with a growing population, that that building will probably be more valuable in five years’ time notwithstanding the increases in the rental income itself.

RYK VAN NIEKERK: The medical sector is quite niche, would you consider maybe, later on, to invest in other sectors or other segments?

MARTIN FREEMAN: You’re absolutely right. The medical sector in the United States is, as I mentioned, a trillion-dollar industry. It covers hospitals, senior living, assisted living, medical offices, rehabilitation sector, and we have been looking at all of these various sectors. I’m certainly delighted that we never went into senior living at this stage given the coronavirus because it really has been heavily impacted. But when you look at other sectors, the one I do want to talk about is possibly the rehabilitation sector. When I talk about rehabilitation, in America when you go in and you have an operation, the first thing that the insurance companies want to do is get you out of the hospital as quick as possible because it’s just so expensive to stay hospital. And then what they would do for a period of anywhere from four weeks to 12 weeks, they would send you on a weekly basis or [for] post-acute care to a rehabilitation centre where you’ll be looked after. You may have physio on a daily basis, etc … and these are buildings that are generally managed and are tenanted by very powerful players in the US who are very profitable. And so that is a sector that we are looking at at this stage.

RYK VAN NIEKERK: Martin, thank you so much for your time today. That was Martin Freeman, he is the CEO of OrbVest.

Brought to you by OrbVest.



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