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High return profile for development projects that employ multiple sources of capital

By: Analise Roland and Will Beilharz

Due to the shifting nature of our climate and our economy, real estate development is an ever-evolving landscape. Most developers and investors are choosing to either place capital in secondary markets or wait for the market to level, modeling their projects without taking into account key changes in workforce requirements, the environment, and their shifting target market. Let’s not forget one of the most lucrative times to acquire new assets and deploy capital is during a downturn when the supply is higher than demand. We at Anura believe we are about to enter into one of these times.  

By investing in undervalued assets during a market downturn and including impact objectives within the projects, developers and investors can access broader public and private sectors of money. This allows for the strategic development of land, resulting not only in a higher IRR for investors but also in long-standing community and land stewardship.

What is a layered capital structure?

A layered capital structure is a mixture of public, private, grant, and debt capital combined with strategic tax breaks like educational and opportunity credits to achieve a higher IRR than simple, traditional capital structures. 

Why do layered capital stacks matter?

Layered capital stacks allow developers and investors the opportunity to increase IRR (or do projects during a downturn) while doing meaningful work within the community the project is located. Often, this community work directly leads to not only the resilience of key projects but, as real estate is location, location, location, investing in the community your project is a part of can have significant positive long-term effects on your exit value. 

Why is this important in the current real estate investing market?

Quality investments have become harder and harder to find due to the instability of current capital markets, while institutional investors have bought out the majority of traditional class A deals. By diversifying your capital stack and utilizing the above-layered options, you, as a developer, can qualify for strategic funding opportunities your competitors may miss while achieving sustainability and community-supportive goals. 

How do I see if my projects are applicable?

The first question to ask is, do you have any sustainability or impact measures on your project? Does my project fall within an opportunity zone? If the answer is yes, you may be eligible to utilize a layered funding strategy and thus increase your IRR.

In summary:

We founded Anura Capital to work with legacy landowners to create regenerative development projects that steward their land for future generations. By capitalizing on the widening gap in the rural markets, we are able to take advantage of an opportunity within the capital markets which is currently underutilized. Through our decades of experience in impact and sustainable development, our team is uniquely positioned to bring a regenerative real estate portfolio forward. Our projects qualify for layered capital stacks with tax credits in a rapidly growing niche business market. By utilizing this layered funding approach, we are able to not only increase our IRR to investors but we are able to do meaningful work across all of our portfolio projects. Aligning our returns with our values and our vision.

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