In November 2016, Encore acquired Encore Tessera, a three- and four-story Class-A multifamily development, comprising 240 residential units on 6.6 acres outside of downtown Phoenix, Arizona, a designated opportunity zone. Total capitalization of the investment was $49.0 million with $11.5 million of invested equity. Encore sold the property ahead of the budgeted five-year hold in May 2021 for $70.0 million, or $27.9 million in equity proceeds.
The property sold to a major institutional real estate investor for approximately $10 million more than initially modeled prior to development. Earning approximately $292,000 per unit, the property netted $50,000 more than the per unit average for comparable sales within the submarket. The property achieved 16.1% deal-level IRR with an equity multiple of 2.0x. Encore’s expertise and industry network created a competitive advantage in managing and exiting the property during an otherwise challenging macroeconomic environment.
Encore’s expertise and industry network created a competitive advantage in managing and exiting the property: