Earlier this month we reported on HGI's acquisition of Mezzo, a 378-unit Class A multifamily asset in Aubrey, Texas. On May 11, the transaction was completed and new details were revealed about the deal.
Civitas Capital Group (Civitas), who developed the building in partnership with ZOM Living, reaped the rewards of their 15 acre, 13 building, 378 unit asset. Roovik Patel, MD of Investments for Civitas, spoke to the strategy behind the development:
Mezzo Dallas is one more proof point of our firm's multifamily strategy. It perfectly illustrates our firm's efforts to invest in development of high-quality properties in high-growth markets where demand for new residential units continues to expand.
Having commenced construction in 2020, the project came to be amidst the choppy covid market. Civitas, who pride themselves upon leveraging their nimble nature to find value where others do not, surely chose a good opportunity to pursue. Located near the 2544 acre Fields master plan, including the 600 acre PGA HQ, the property is positioned in a prime area to benefit from the existing market as well as future growth.
Chandler Kyser, VP of Investments at Civitas, elaborated upon the opportunity they saw:
We're proud that we were able to navigate the choppy waters of the real estate market during COVID-19. We bet on the market and the demand we saw in North Texas, and we got an outcome that outperformed our projections. It was a win-win for everyone involved.
As mentioned in the initial article, the explosive growth of the northern suburbs has provided great opportunity for investors. The convenience to the Metroplex combined with abundant jobs located in the suburbs themselves has created a prime environment for people who would prefer to live away from the traffic (and cost) of the heart of the city.
Despite rising cost of capital, the growth prospects for the area will likely keep cap rates from expanding to the extent seen elsewhere. Developers will be happy to redeploy their capital after a hefty payoff while asset managers will be happy to control a high quality asset in a thriving market.