Commercial Real Estate Investing California, New York, Texas

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Investment Strategy

Encore Commercial focuses on the acquisition, ownership, development, redevelopment, and asset management of retail and Class A commercial office buildings across the United States. Acquisition and development properties with value added potential, credit anchored tenants, and good locations in primary, secondary, and tertiary markets that yield higher market cap rates is the focus for retail locations while office building acquisition is further complemented by plans for new development projects in an effort to build a diversified portfolio of assets.

Encore Commercial seeks only high-quality, well-located office projects with in-place positive cash flow plus value-add potential that can be acquired at a discount to replacement cost in order to achieve our investment objectives.

Encore Commercial offers coast-to-coast program management, site selection, and analytics to provide quality locations, property contract negotiations, cost and “build-ability” due diligence, legal and entitlements, design, permitting, and construction management for the following sectors:

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  • Neighborhood and Community Retail Shopping Centers: Nationally anchored neighborhood, community, regional and power shopping centers
  • Single-tenant retail developments: Nationally recognized tenants occupying single tenant properties
  • Locations in the United States
  • Minimum transaction size is $10 million, no maximum
  • Open to various transaction structures
  • Equity investment range of $5 million to $30 million per asset.
  • Maximum loan-to-value ratio of 65%.
  • Investment period ranging from 2 to 5 years.
  • Leveraged internal rate of return of greater than 18.0%.
  • Unleveraged internal rate of return of greater than 12.0%.
  • Equity multiple of greater than 2.0x over 5-years.

Acquisition Criteria

Retail

The retail market is returning to pre-recession levels. Retail sales in the U.S. totaled an estimated $5.321 trillion during 2014, compared to $4.0 trillion during 2009. Retailer concentration and sales per square foot have trended upward, especially in larger markets, as a result of increased consumer confidence and spending.

Encore Commercial considers multiple factors in its acquisition criteria, including:

  • Proximity to a top 75 market in the nation by population.
  • Positive market occupancy variance with low future supply where there is a void for additional expansion.
  • Trade Areas with Average Household Income of $70,000 or greater.
  • Void for top market anchors based on need in the market.
  • Strategic location within an established retail corridor in the market.

Office

The office market is experiencing significant positive growth. Vacancy dropped to 10.9% over the first quarter of 2015, close to pre-recession 10-year lows, and net absorption was positive. Rental rates have picked up in recent months, currently pegged at an average of $22.74, an increase over Q4 of 2014. Development and completion of new buildings increased to 244 locations constructed, compared with 237 in the previous quarter.

Encore Commercial considers multiple factors in its acquisition criteria, including:

  • Targeted markets with high concentrations of well educated, office-using employment.
  • Submarkets where office using demand growth is forecasted to outpace supply growth over the foreseeable future.
  • Class “A” quality, multi-tenant designed properties that are less than 30 years old.
  • Close proximity to desirable tenant amenities.
  • Favorable ingress and egress to primary transportation routes.
  • No individual tenant should comprise more than 25% of the total revenue generated on any particular property if their remaining lease term is less than 10-years.