Under the Rescore Property Corp. banner, Avila, a veteran housing investor and dealmaker, plans to develop 5,000 to 6,000 units in addition to 6,000 he currently has in development. But to deploy this money, he’s looking for developers with land and experience in urban centers.
“We have a lot of capital to put to work,” Avila says. “We’re looking for off-market opportunities. We’re not looking for deals that are being offered broadly.”
Avila’s goal, like many others in the apartment business, is to go into high-population, low-supply, good–Walk Score areas that are close to entertainment, job centers, and restaurants and build apartments. Encore is already in markets like San Francisco; Los Angeles; Miami; Fort Lauderdale, Fla.; Scottsdale, Ariz.; Austin, Texas; and Tampa, Fla. He aims to build a variety of product types—from four stories up to 26 stories—and would be open to moving into new markets.
“If there are other geographies where there is an opportunity, we would love to hear about it,” he says.
Encore does take re-entitlement risk on its projects. “We are comfortable with re-entitling where there is existing zoning and maybe we have to remap the property or tear down something that’s there,” he says. “We’re also adept at assemblages where multiple pieces of contiguous properties are put together for one project.”
Encore is financing its deals at 65 percent loan to value and plans to recapitalize those deals at 75 percent loan to value after it stabilizes.
“That would allow us to take our capital off the table,” Avila says. “Then, we could potentially sell the property.”
But that isn’t the ultimate goal. “Our objective is to take the entire entity public and have it run a REIT structure,” Avila says. “We’ll have new product in the highest job-growth markets and highest-population urban centers. That resonates well with investors.”
Though Monogram Residential Trust recently announced a New York Stock Exchange listing, it’s been a long time since a multifamily firm did an IPO. With the overhead costs of being public and the high valuations on the private side, privately held firms have shied away from the public markets.
“You have a lot of overhead and public company costs that can eat you alive,” said Rod Petrik, real estate research analyst at Baltimore-based Stifel Nicolaus and Co,. in an interview with Multifamily Executive earlier this year.