OrbVest Global Real Estate
Investment Opportunity
OrbVest's latest investment opportunity, Medical 29, 555 N 18th Street, is a multi-tenanted class "A" medical office building located in Phoenix, Arizona.
The expansion into Arizona is driven by the fundamentals that underpin value growth, most notably Phoenix, which is already the 5th largest city in the United States, is a beneficiary of the north-south migration pattern in the USA, and the population has increased by 17.81% since the most recent census in 2010.
The anchor tenant, Maricopa Medical College occupies 57% of the building and has recently entered into a new 10 year lease with two 5 year renewal options that would take them to 2040. Maricopa is a Standard and Poors and Moody’s AAA grade company, the highest possible investment grade, and have also already invested $1.43 million over the last two years on improvements.
The 555 N.18th St. is a class “A” stabilized healthcare asset in the highly regarded Phoenix’s healthcare and biomedical corridor. This healthcare cluster in Phoenix is projected to experience 36% employment growth over the next decade. Several brand name hospitals are located along the corridor, including Phoenix Children's Hospital, Banner University Medical Center, Maricopa Medical Center and Abrazo Arizona Health Hospital.
The property is the only free-standing medical office building on a three hospital campus consisting of St. Luke’s Behavioural Health Hospital, Allegiant Inpatient Rehab Hospital, and St. Luke’s Medical Centre. The St. Luke’s Medical Centre is currently leased by the state of Arizona as a backup facility for overflow of Covid-19 patients.
We have secured this building at a good discount, considering the all-in entry capitalization rate of 8.04%, so there is substantial value-add potential if a new lease can be secured by 2023. In addition to the Steward Healthcare leases, there is also current vacancy of 8.6% that can also be filled. The in-place income secures our first principle of capital preservation, while the lease replacement and buoyant Phoenix market offer a tangible value add opportunity.
We have made an equity portion of $4.0 million available to investors, which will be employed to acquire this Medical Office Building. This investment is available to investors from as little as $5,000.
Location Overview
Phoenix, Arizona is the 5th largest city in the United states within the Healthcare Research and Innovation Corridor.
Medical Office Building
49,751 square feet of Class A property was completed in 2006. 92% Occupied with 2 tenants with 7+ weighed average lease terms The anchor tenant with S&P AAA and Moody’s AAA.
Returns
Forecasted quarterly dividend of 8% annualised with a targeted IRR of 14,5% nett for investors.
Purchase
$8.6million of which $1.4million is provision to tenant installation and transactions cost. Entry capitalisation rate with cost at 8.04% and $176/SF.
Funding
The $4,2 million equity raise includes 3% equity contribution from the sponsor. There will be a debt portion of approximately $5,7 million.
Holding Period
The investment period is planned for 5 years.
