CIARAN RYAN: We’re talking war in the Ukraine and what impact this will have on inflation and, specifically, one rather unique way of hedging against some of the negative spillover effects of this war. Joining us to discuss this is Justin Clarke, COO at OrbVest. OrbVest is a global real estate company, and it allows investors from around the world to invest directly into US commercial properties, specifically medical real estate.
Let’s face it Ciaran, I think the first thing we need to consider is fuel prices. They’re definitely on the march. I think you mentioned well over $100/barrel at the moment – and there are other impacts. CIARAN RYAN: Your investment offering has traditionally focused on the syndication of single buildings … now, looking at some of your new products, you’ve got [OrbVest] Triple Net, you’ve got OrbVest Diversified Holdings, . Are you moving away from this single-building concept?
Remember, this is an investment in a building. Things can go wrong, and do go wrong. Tenants get taken over by bigger tenants, Covid comes along, medical practices can go bust – and we’ve had one or two of those. Our job is to manage them and get the money in, but it disrupts income. It disrupts dividends.
So to answer your question, this is the first move away from the single-building model. Bear in mind we still have big investors, family offices that want to participate in a particular building. So we will always find buildings for that particular market segment. But we feel much more comfortable creating this little diverse byproduct.
JUSTIN CLARKE: Yes. There are so many moving factors, and what’s so amazing about this free market is that the scale balances itself always. There is a huge amount of money that’s concerned about interest-rate increases that is moving out of the markets and other sources, looking for safe haven – we talked about this last week and I don’t want to go through it again – but looking for bonds and looking for commercial real estate, and looking for gold because it’s seen as an inflation hedge.
We are basing this on our assumptions of future income and future values, so it is an assumption. Just bear that in mind. The same thing applies when it comes to the US. I mentioned that the US is absolutely awash with investment money looking for these types of building. We are saying, no, no, no, sorry, we can’t help you in America because of the specific compliance and the rules of the SEC [Securities and Exchange Commission] – how they control any sort of solicitation of investors in the US.
JUSTIN CLARKE: It actually is possible to invest directly. As I mentioned, that’s how we started off. So you can go in, set up an LLC [limited liability company], get an accountant and make the investments from that LLC in the US. But then you’ve got to worry about the account, paying the account, tax returns and all those things. And of course [there are] the taxes – capital gains, withholding taxes and all that. It does get super-complicated.