In this webinar, Robert Hutchins shares an OZ fund with projects in New Jersey and Florida and a focus on impact investing.

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Webinar Highlights

• Overview of the Ellavoz mission and team.
• Projected returns and fee for the Ellvaoz OZ fund.
• The team’s approach to asset and risk management.
• Overview of projects included in the Ellavoz portfolio, including developments in Florida and New Jersey.
• Drivers of economic growth in New Jersey and Florida.
• Live Q&A with OZ Pitch Day attendees.

Industry Spotlight: Ellavoz Impact Capital

Ellavoz is an impact investment advisory and asset management firm that focuses on sustainable community development. Clients invest in quality residential real estate opportunities in two of the strongest markets in the United States – Florida & New Jersey. Within these markets, our strategy is to concentrate our investments into price attainable housing by working together with local nonprofits and government officials. This public/private partnership creates a powerful catalytic change in the community, while offering competitive risk-adjusted returns.

Learn More About Ellavoz Impact Capital

• Visit Ellavoz.com

Webinar Transcript

Jimmy: Robert, you’re up next. Let’s get you up on stage. Robert and I just became reacquainted with each other in Washington, D.C. We just spent some time at the Novogradac Opportunity Zones Summit. Incredible event. I can’t say enough good things about it, and I got a chance to speak with Robert for a few minutes, and I convinced him to sponsor OZ Pitch Day, and come on board and present the Ellavoz Shared Values Opportunity Fund III. Hey, Robert. How you doing?

Robert: I’m doing great. Thank you. All right. And it was good to see you down in Washington D.C. also.

Jimmy: Absolutely.

Robert: I though it was a great conference and chance to talk to the OZ national leadership. So, it was great. Anyway, well, thank you for inviting me. Good afternoon, everybody. I am Bob Hutchins. I am the CEO of Ellavoz Impact Capital. And Impact Capital has as its mission place-based social value creation. As our name indicates, we are an impact investment advisory firm. Our mission is to help private sector impact investors, including our own network of ultra-high-net-worth families that we provide advisory services, and tax, and generation-skipping, generation transfer wealth strategies, as well as alternative investment, due diligence, etc., is helping the private sector impact investor to participate in building sustainable communities that create dignified, affordable homes, and decent work for everybody. We do this with a best-in-class, low-fee, transparent, direct impact investment asset class, that represents shared values of financial returns as well as impact returns. This is the only slide I’m gonna read word for word, because, to me, it’s the most important. What we do is we create an intentionality of making a very strong positive impact in underserved communities. And we’re gonna explain to you a little bit about how we do that. And we do that through a shared values investment strategy.

Shared values is a concept that has been researched and written about for decades by Professor Michael Porter, of Harvard University. Professor Porter, you know, is the godfather of strategic planning, but one of the things in his social entrepreneurship studies is that capital should flow to where society needs it the most, and investors should be rewarded with market returns. And that’s what we believe. And since we represent a lot of high-net-worth individuals, in both advisory and investment, we invest alongside our clients, we created direct investment vehicles for them to take advantage of certain economic development tax incentives, Opportunity Zone tax incentives, etc. So, if you’re like me, and you think the jockey is 50% of the race and the horse is 50% of the race, we do have some biographies here. I’m not gonna go over them, but you’ll see they’re mostly attorneys, CPAs. I was a tax partner with a major accounting firm, specialized in high-net-worth individual strategies, and I won’t go any further than that to say though that we are more of a professional service group, real estate, finance people, etc., Goldman Sachs former partner, than we are real estate developers, although we do ground-up development, and I’ll tell you all about it.

So, we currently have, actually, two OZ Funds that are open. The Ellavoz Shared Values Opportunity Fund III. We have a raise of $25 million. We have a preferred cumulative return to Ellavoz investors of 12%, and our targeted IRR is 16%. That fund is concentrated in Jacksonville, and I’ll tell you a little bit why we picked Jacksonville, and also the asset class that we’re building down there. What’s unique about our funds is that we have a very low cost to them, because we invest next to our clients, similar to a club deal or a family office deal. Our annual management fee is 1.5%. We have an exit fee of 1% to cover close-outs, but we don’t have a carried interest on the fund.

We also have the Ellavoz Newark Opportunity Fund. Oh, by the way, Ellavoz Shared Values Opportunity Fund III is a multi-asset fund, and I’ll go a little bit more into that. Ellavoz Newark Opportunity Fund, which we’re just launching now, is a single-asset fund, in Newark, New Jersey, and we will, I’ll discuss a little bit more about that. That has a cumulative preferred return to Ellavoz investors of 12% annually, and we currently have a projected IRR on that project of about 18%, annually, over the 10-year hold period. So, we are bean counters and attorneys and finance people, so we concur with the rule, “First, don’t lose your money.” So we have a very stringent underwriting and due diligence process on the risk management side. We know we’re a non-correlated asset class, which is very good, I think, in the next couple years. We have some diversified investments in some of our funds. We have preferred returns that go to only our Ellavoz investors first. We are long-term thinkers, and because we invest in Opportunity Zone census tracts, we have that privilege.

We try to have low debt financing, 50:50. We started that last year, before interest rates went up, thinking that too much high leverage is higher risk. Right now, low debt financing is a mandatory requirement if you’re looking for construction loans etc. We understand that, but we were ahead of the game on that. On the investment management side, a little bit… We like to take advantage of tax and economic incentive capital structures, in other words, non-dilutable capital, whether it be new market tax credits, historic tax credits, tax abatements, so on and so forth. Because we’re usually working in urban environments and otherwise underserved communities, we tend to have a higher impact. We leverage that impact by partnering with nonprofit housing, affordable… Excuse me. Housing organizations in the communities we work, so that we can enjoy some acquisition power. In other words, we’re able to work through the government bureau of red tape, with some of our not-for-profit partners, makes it a lot easier. As I talked about before, we’re a low-fee fund. We have very strict underwriting criteria, and professional management.

So, we have a couple of funds. What we’re doing. We currently broke ground on 45 homes in Cedar Creek development in southwest Jacksonville, Florida. It’s 45 homes across 9 acres. They’re about 1700, 1800-square-foot single-family homes. They’re build-to-rent. It’s a $14 million project. These are actually examples of the homes that we’re building, from the builder who will do our building. And we like the build-to-rent single-family residential asset class. We think that the 10-year hold that Opportunity Zone Funds require will create a significant value to our investors. And in Jacksonville in particular, we’ll talk about why we like that. We are doing a 10,000-square-foot medical office building, located near two very large 55-plus communities, about 4 miles, 3 miles from a major medical center. It’s about a $3.7 million project, and we’ll complete that next year, as we will the 45 homes.

We currently are, also have future development plans in northwest Jacksonville, which is a interesting area. Here’s where the county of Duval, and Jacksonville, which are almost the same in size, have targeted northwest Jacksonville for a significant improvement. And so, we see a build-to-rent townhouse community, currently at 74 units. We’re also looking at another one, not too far from there, and in partnership with a faith-based organization, which we like, CDCs, community development corps, that could go up to about 114 units. So, we have a good inventory in our pipeline of the type of units that we wanna build. We have the same builder, the same architect, the same horizontal development team, and we have a full team down there of people that are overseeing these projects. So, Florida, for obvious reasons, is one of our favorite investment states. We’re also doing single-family residential build-to-rent infill lots in and around the communities that we’re building in Jacksonville, and also in and around Newark, where we are, also have a very significant project coming up. These are build-to-rent in OZ census tracts also.

So, we’re very specific. We want build-to-rent, single-family residential, in Jacksonville, Florida, and we’re looking at a, in Newark, under the Ellavoz Newark Opportunity Fund, very unique project. This could be considered opportunistic investment strategy here. This is the hospital, restructuring into student housing for graduate and post-doct researchers. Newark is really the most bustling city in New Jersey. New Jersey Institute of Technology, which has been rated…been rising in their rating for years, and I think it’s the most, one of the most entrepreneurial schools in the country. Currently has to bus their students post-grads, post, excuse me, grad students and postdocs, they have to bus them to another town in Harrison or Kearny, because there isn’t any suitable housing for them near their laboratories. We intend to renovate a old hospital into 94 dormitory beds, kind of co-living kind of situation. The total project’s about 100,000 square feet. It’ll have three floors of residences, one floor of administrative offices, which we already have interest for the residences and the administrative offices from one of the largest universities there.

Rutgers Medical School recently announced a $600 million investment in their medical school, which is less than a half a mile away. And so, we think this is, and I call it opportunistic because we’re able to acquire it at a significant discount to the amount that is already, of capital that’s already been invested in it. It’s somewhat a unique situation. We think this is a great, great opportunity. Our projections are showing that we can do somewhere about $250 to $275 a square foot. If you look at any of the student housing and family offices, a lot of the private equity firms are all getting into student housing. They see it as a very, especially in urban areas, they see it as a very attractive investment long-term. And we are long-term players, because we’re in Opportunity Funds. We think we can do it for between $250 and $275 a square foot, complete, when the, right now, quoting the CBRE, student housing like this, in urban areas, is between $400 and $500 per square foot. So, we’re excited about the opportunities here.

You can read all about the Newark market overview. We are strategic investors. There’s a reason we go into Newark, because that’s where all the money is going. We go into Jacksonville. They’re putting a billion dollars into the downtown. You’ve got the new Jaguar Stadium. They got a brand new soccer, professional soccer stadium going up. This is where all the action’s happening. Jacksonville is creating jobs like crazy. And this just gives you, quickly, our service providers, our partners, and some, a few more fact sheets on the funds. And we like to say, “Don’t just make an investment. Make an impact.” So, if there’s any questions, I’m glad to answer.

Jimmy: Fantastic. Thank you, Robert. We have run out of time during this segment for questions…

Roberrt I’m sorry.

Jimmy: …but… No, that’s okay. That’s why we have email addresses. So, I’m gonna pass along your email address to everyone, [email protected]. I’m posting that in the chat right now as well. So, please do reach out to Robert and Chris if you have any questions. I love that. “Don’t just make an investment. Make an impact.” Ellavoz Impact Capital. Robert, it was great seeing you last week, and…

Robert: Great seeing you.

Jimmy: …appreciate you supporting OZ Pitch Day and OpportunityDb today. Thank you so much for your time.

Robert: Thank you very much. Have a great day.