CEO Update – June 2022

The first half of 2022 has been characterised by global economies and equity markets moving from a state of optimism and buoyancy to concerns over wars, continued supply chain shortages, inflation and rising interest rates.

Within the US, many economists are now predicting a possible recession in the coming year.

Against this backdrop, the US Real Estate market has continued its impressive growth curve given that investors and large institutions are transferring enormous volumes of equity and funding from equities into real estate, due to the fact that real estate has always been acknowledged as a ‘safe haven’ and a hedge against inflation. The influx of competitors and equity is sustaining higher prices and underpinning the competitive market.

Over the past 3 months, the US Federal Reserve began aggressively increasing interest rates. The increase in interest rates has led to a surge in the mortgage lending rate, from previous levels of around 3.5% to new levels of around 5%.

This will in turn place downward pressure on the cash-on-cash (COC) dividends produced from new deals going forward. COC will likely move from current levels of 7% - 8% to more moderated levels of 6%-7% annualised. (To clarify, this pertains to new deals acquired, as interest rates are already locked into old historical deals).

OrbVest has continued its acquisition of new deals with the successful launch and closing of Medical 39 in Boynton Beach, Florida followed by the eminent close of Medical 38 in Phoenix, Arizona in the coming month.

We are also proud to announce that we have reached a milestone for OrbVest. We launched a new project, namely Medical 40, located in Albuquerque, NM, which will also be a new state for OrbVest.

OrbVest is excited about the launch of our Short-Term note. This product is specifically designed to allow investors the ability to seamlessly invest dollars over a short period of time and still earn interest on their funds, given that many investors have idle cash available that is not generating a return, especially in their wallets, or they may be unwilling to invest for a period of 5 years.

Lastly, as we enter the second half of 2022, we will continue to work tirelessly to rectify the performance of our value-add conversion deals that we invested into many years ago and which continue to underperform given the poor performance of the partner to date. In addition, we are bullish about our pipeline of ‘off-market’ deals and look forward to bringing these opportunities to our valued investors from around the world.

Martin Freeman
OrbVest CEO