WHAT THE FUTURE HOLDS FOR REAL ESTATE INVESTING.
You may have noticed Investec moving a portion of their Investec Property Fund to Western Europe due to the volatile SA market and that all their acquisitions from 2020 will be offshore. What’s interesting to note is that Rebosis and RDI Reit, two of the more prominent SA companies in Europe, have not excelled in these new geographies. But what this does point to is the fact that people are increasingly in need of an alternative investment option in order to diversify their portfolio and decrease their exposure to the South African market.
SA Commercial Prop News noted that SA-Focused Reits are sitting with significant vacancies with local companies unable to afford the rentals as a result of the current economic climate. The article goes on to paint a bleak outlook on the year ahead for SA property with a forecast of no dividend growth for the first time in 17 years. On the other end of the spectrum, fund managers have forecasted a rise in income of offshore invested property groups by 5%. With investors also being subject to dividend haircuts from some funds, or even skipping dividend payouts altogether, the move towards the offshore property market makes sense.
One of the reasons OrbVest are in USA is because we have the experience and are able to leverage the local knowledge and expertise of our partners on the ground in the USA, all of whom are well established and reputable property companies with exemplary records. OrbVest have been successful, are successful, and will continue to be successful by applying our hyper focused investment model, together with our rigorous and thorough due diligence process.
One unique aspect of our model is that you are investing into the actual property and not a bucket of properties, typical of a REIT. This allows you to personalize your portfolio as a lot of people will have a preference to specific buildings and certain States. We even conduct buyers trips a few times a year to allow you, the investor, to come meet with our team on the ground in USA, and actually get to see and touch the buildings you are investing in.
Like a typical real estate deal that most of you are familiar with, you invest in a building, you know the mix of tenants and the rental income, you take your share of revenue less your expenses. OrbVest distribute this to you as dividends every quarter in US dollars. You have access to all the information relating to the buildings we acquire in the USA and receive quarterly updates by the OrbVest property managers specific to the building in which you have invested. Everything is completely transparent and there are no hidden costs or fees.
Each OrbVest investment is ring fenced in its own listed company, providing you with offshore and asset class diversity, but with all the safeguards attributed to the listed environment. OrbVest has a proven track record of generating returns averaging 8% cash on cash along with a share of the capital growth in the building over the investment term that gives you between 12% and 17% internalized rate of return, in US dollars. If the latest movements of big investment companies offshore have told us anything, it’s that we are ahead of the curve and will continue to pioneer the way in Offshore Medical Real Estate Investments.
Article by Devon Thomson
Investment Consultant at Orbvest Ltd
Devon is an authorized representative and has an Honours Degree in Business Management. He has been involved in finance and property investment for the last 4 years.