Kevin O'Grady, left, and Eric McGlynn, Walker & Dunlop capital markets group managing directors in Miami (Courtesy photos) Kevin O'Grady, left, and Eric McGlynn, Walker & Dunlop capital markets group managing directors in Miami (Courtesy photos)
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High-profile South Florida-based developer Art Falcone has been expanding his work beyond the Sunshine State to other places with booming real estate markets: California and Oregon.

Falcone's Rescore Property Corp., which he founded and leads with Tony Avila and Bill Powers, is a real estate investment trust that is developing eight multifamily projects in California, Florida and Oregon — all with help from a Walker & Dunlop Miami duo.

Managing directors Eric McGlynn and Kevin O'Grady so far have closed $500 million in financing for seven of the projects, including the latest $153.8 million loan for Rise Koreatown in Los Angeles.

“The Rescore vehicle took a more streamlined approach to exclusively multifamily development and more urban, what we call core markets, where you can get an institutional exit with a portfolio so you can maximize your valuation,” McGlynn said.

Rescore has partnered with Los Angeles-based Cal-Coast to develop the seven-story, 364-unit Rise Koreatown. Its name stems from its location at 3525 W. Eighth St. in the Koreatown neighborhood. The project will include 52,000 square feet of ground-floor retail anchored by Korean supermarket chain Zion Market.

The Rise Koreatown loan, which closed Sept. 21, was secured by Barings LLC, a Charlotte, North Carolina-based investment manager owned by MassMutual.

This is a nonrecourse, floating-rate, three-year loan with two one-year extension options and covers 80 percent of project cost.

Rise Koreatown, which will be finished in late 2020, is being built in a walkable area following Rescore's business model focusing on developing urban infill multifamily.

“There are a lot of restaurants and bars and retail all around this. You are also very proximate to employment, so you are a six-minute metro ride from downtown L.A., 11-minute metro ride from Hollywood,” said McGlynn, who visited the site. “It's close to a lot of employment, and you don't really need a car. It's really convenient.”

A quirk McGlynn and O'Grady worked through in this deal is the limited unit mix — it will have only studios and one-bedroom units — that turned away some lenders.

The small unit size averaging 649 square feet is an acknowledgment of high rents and a way to make the building more affordable to those seeking the live-work-play lifestyle.

“Some lenders got it. It's expensive to live in L.A., and there's just generally a lack of affordable housing, so studios and one bedrooms really provide a more affordable apartment for a lot of people who need it,” McGlynn said. “There were some lenders who didn't necessarily understand or it wasn't for them because the unit mix was so focused.”

The average rent will be $2,500 a month plus 36 workforce units offering below-market-rate rent. The workforce studios will rent for $1,325 to $2,300 and one bedrooms for $1,500 to $2,640.

This is the second L.A. project Rescore is developing along with Cal-Coast after the 368-unit Rise Hollywood at 1311 N. Cahuenga Blvd.

Rescore also is targeting other areas of California with the 160-unit Rise Market in San Francisco and the 116-unit Rise Walnut Creek in the East Bay, according to Rescore's website.

In Portland, Oregon, Rescore's projects are the 230-unit Rise Central and The Rise Old Town, which has 87 apartments and nine live-work units. Rescore's South Florida projects are the 348-unit Rise Flagler Village in Fort Lauderdale and the 700-unit Rise Plantation Walk in Plantation.

All are either under construction or soon to start construction except for The Rise Old Town, which has been completed. Financing has been secured for all but Rise Plantation Walk.

“The areas they identified have strong demand generators and employment growth. Multifamily is the property type that they have expertise in, and Falcone's background is in housing,” McGlynn said.

Rescore is an investment vehicle segment of Falcone's Encore Capital Management, the Boca Raton-based real estate and investment company he founded with Avila. Falcone, Avila and Powers are Encore's managing principals and investment committee members, according to the firm's website.

Rescore has about $300 million of committed capital, according to McGlynn.

Encore Capital has two other investment vehicles: Encore Housing Opportunity Fund I, which was formed in 2009, raised $160 million in equity commitments and invested in 19 assets; and Encore Housing Opportunity Fund II, which was formed in 2012, raised $462 million and acquired 24 assets, according to Encore's website.

The funds focused primarily on distressed assets, such as land purchases after the downturn, McGlynn said.

With Rescore, Encore switched to developing an in-demand product in in-demand markets.

“The goal is to build and stabilize the portfolio and then have some sort of liquidity from there, whether they make it public or they sell it to another REIT,” McGlynn said, adding he is unsure what Rescore's exit strategy would be in these projects.

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