Weekly Real Estate News
Avila Real Estate Capital has closed $390 million in new institutional commitments and co-investments, adding fresh private capital for land, lot and construction financing across the U.S. homebuilding sector.
The new commitments came from two unnamed institutions — a large insurance company and a major university endowment — and bring the private real estate credit platform’s total commitments and co-investments to more than $750 million, according to reports published Sept. 21.
AREC focuses on acquisition, development and construction financing for homebuilders and residential developers. The firm said the new capital will support land acquisition, horizontal development, construction and finished-lot delivery in major U.S. growth markets.
Major homebuilders are already investors
The new institutional investors join a group that includes several of the nation’s largest homebuilders. D.R. Horton, LGI Homes, Century Communities, Toll Brothers, Dream Finders Homes and DRB Group, a subsidiary of Sumitomo Forestry, have invested in the platform. Developer Hillwood is also among AREC’s investors.
“Institutional investors and the country’s leading homebuilders are underwriting the same opportunity from different sides of the table,” AREC founder and CEO Tony Avila said in the announcement, according to Builder.
AREC is targeting financing for 100,000 residential lots over the next five years. The company says it has already financed more than 18,000 lots.
Private capital moves deeper into housing development
The capital raise comes as builders and developers continue to navigate constraints in the land and finished-lot pipeline and a lending environment in which traditional bank construction credit can be selective.
AREC has been expanding its position in that market. Earlier this month, the company announced a $305 million credit facility supporting construction and development for more than 3,000 lots in California.
The latest commitments also build on AREC’s second debt-fund strategy. In March, the company announced a second close that brought commitments at the time to approximately $200 million, with D.R. Horton, Toll Brothers and Century Communities joining as strategic homebuilder investors.
The scale of the new capital is significant for the housing industry because land development financing sits upstream from new-home delivery. Access to acquisition and development capital can influence how quickly developers can turn entitled land into finished lots that builders can ultimately convert into new housing.
AREC’s stated five-year goal of financing 100,000 lots would substantially expand the platform’s current footprint as it competes to provide non-bank capital to builders and developers.
Sources: Avila Real Estate Capital and Builder Advisor Group company materials; Builder; HousingWire.
Photo: Iain/Unsplash.
