Why the president of Pluris Real Estate says now's the time to invest in local real estate
This article was written by Eleanor Tolbert and originally appeared in Louisville Business First on May 23, 2023.
With banks failing, the Federal Reserve increasing interest rates and the possibility of a recession on the horizon, the leader of a local real estate firm is optimistic about continued growth in Louisville.
The Federal Open Market Committee approved a rate hike of 0.25% at its May meeting, taking the federal funds rate to its highest point in almost 16 years, ranging from 5% to 5.25%. Federal Reserve chairman Jerome Powell said at the meeting while avoiding a recession is the goal, it’s still possible.
But despite the economic uncertainty, Colin Underhill, president of Louisville-based Pluris Real Estate, is unyielding in his belief that now is the time for local investors to capitalize on real estate opportunities.
Underhill recently spoke with me about his experiences in the real estate industry during the Great Recession that began in 2008. At the time, he was working on Westport Village with Underhill Associates — run by his father and uncle Todd and Jeff Underhill. With just a few years on the job, it was his introduction into the business when the economy was on the decline.
The group had just taken out a sizable loan for the completion of Westport Village. Despite economic woes, Underhill Associates was able to get the job done.
With one success under their belt, Underhill and now business partner Matt Willinger wanted to find a way to continue developing distressed properties in Louisville. They had to come up with a plan to find money in a world where financing was scarce.
“I said, ‘Fortunately for us, we don’t have anything to lose,’— and this was us talking as 25- and 26-year-olds,” Underhill said. “The challenge for us was that we were working in a business that appeared like it wasn’t going anywhere anytime soon because there’s not going to be any capital to grow, there’s not going to be any funds to borrow and there’s not going to be any new development because there’s no financing for it.”
The partners created Pluris Property Fund in December 2008, which would eventually turn into Pluris Real Estate. With the mentality of moving real estate growth along, they looked to raise funds through local investors who had a stake in making sure their community didn’t become stagnant.
The business plan was to raise 35% of the firm’s equity and borrow 65% from local banks that could see the value new development brought to the community. Using the success at Westport Village as an example, the team looked to convince local lenders that development was still possible.
If they could secure the financing, the rest was simple, Underhill said. Land and property were available for cheaper than it had been in years prior, and large developers were stalling projects, creating less competition during the recession.
“We just think that well located real estate is going to have intrinsic value long term no matter what,” Underhill said. “So we started the Pluris Property Fund and sure enough, we were able to find success.”
The firm’s first success with the Pluris Property Fund was a joint venture with NTS Development on a project in Orlando, Florida. In 2009, it acquired 719 apartment units across three different complexes in Orlando, bringing in professional management and quality upgrades to rehab the facilities.
Just like back then, Pluris Real Estate is entering a phase where it plans to ramp up activity, even if that’s opposite of what other developers are doing. The firm undertakes projects that have a “live, work, play” mentality, specifically multifamily and retail developments.
A recent project from the firm is Lyndon Yard, an over 50,000-square-foot retail center with tenants such as Liquor World and the Music & Arts Center. The firm is continuously looking for more lease opportunities for that property as well.
In a period of economic insecurity, Underhill said multifamily tends to be a safe investment. There continues to be demand for more housing in Louisville as the population grows, he said.
As a tenure investment holding company, Underhill said Pluris will continue to operate and maximize the value of a property years after acquiring it. That’s why the company is looking for opportunities now that will grow and bring value to Louisville for years to come.
“With some of the volatility that’s starting to kick in and some of the uncertainty, ultimately our passion is to really double down and really dig in, in our home community, and look at making a big splash in continuing on more than ever, from a development perspective,” Underhill said.