In August 2015, Encore acquired Encore Evans Station a three-story, Class-A garden-style development in Denver, Colorado. The property consisted of 224 residential units and 293 parking spaces on 5.8 acres. At an average unit size of 875 square feet, total rentable square footage was 195,950. Total capitalization of the investment was $49.4 million with $18.4 million of invested equity. Encore sold the property ahead of the budgeted five-year hold in December 2019 for $70.0 million, or $38.0 million in equity proceeds.
Achieving Encore’s initial projections, the property earned 27.5% deal-level IRR with an equity multiple of 2.1x. Encore’s expertise and industry network created a competitive advantage in managing and exiting the property.
- Land acquisition advantage due to strong relationships with local land brokers, allowing Encore “first look” ahead of other developers
- Acquired enough land, typically scarce in an urban area, to provide surface parking, minimizing cost basis
- Ability to navigate the site’s complex environmental history and obtain federal and state approvals necessary to move forward with the development
- Investment strategy to undercut high-end Uptown rents by selecting a location only a few miles away from the Central Business District and Uptown
Past performance is not indicative of future returns. IRR (Internal Rate of Return) and MOIC (Multiple of Invested Capital) represent deal-level returns and do not reflect returns to any individual investor. Total hold represents Encore’s investment hold period and does not necessarily reflect an individual investor’s investment duration. Deal-level IRR represents the total aggregate internal rate of return of realized investment. Deal-level equity multiple represents the total aggregate return of all distributions through the life of the assets over the total equity invested. Deal-level returns do not reflect the deduction of certain fees and expenses. The Gross IRR and Equity Multiple presented do not represent a return to an individual investor and investor returns may be lower due to the General Partner’s promoted interest.
