Eagle Property Capital Investments (EPC), a vertically integrated real estate investment manager focused on the value-add multifamily space, has partnered with Promecap, a leading private equity firm based in Mexico City, on a new investment fund.
EPC Promecap Multifamily Partners V (Fund V) has a goal of raising up to $400 million in equity commitments from domestic and international investors, with an initial closing planned for March. According to the firms, the capital raised in Fund V will allow for approximately $1.2 billion in the acquisition of value-add multifamily assets.
“We’re very excited to be partnering with Promecap, one of Mexico’s leading private equity firms, on this fifth fund,” says Gerardo Mahuad, managing principal at EPC. “I think the multifamily space in general is very competitive. We believe that together we are stronger and in an ideal position to create value for our investors and for the communities in which we invest.”
ECP, which is celebrating its 10th anniversary, has acquired, repositioned, and managed more than 7,600 multifamily units in 31 properties—with a primary focus on Class A-, B, and C+ assets in B+ and A submarkets—in Florida and Texas. The Miami-based firm is a niche player in the multifamily space, catering to the middle-income Hispanic market, the fastest-growing demographic in the U.S., according to Census data.
The launch of Fund V comes about nine months after the closing of EPC’s fourth multifamily fund, which raised $146 million from limited partner investors and co-investment vehicles. Its equity has nearly been deployed for the acquisition of more than 2,400 units in 11 multifamily communities in Florida and Texas.
For Fund V, Mahuad says the joint venture will focus on high-growth markets in the Sun Belt with a concentration on Hispanic presence and strong fundamentals that will continue to benefit from in-migration from other states, limited single-family supply, and favorable regulatory and tax environments. He adds that the joint venture will explore expanding into one or two new markets and will be looking at possibilities like Phoenix and Tucson; Denver; Albuquerque, New Mexico; and Las Vegas.
“It gives us great pleasure to partner with an experienced U.S. multifamily sponsor such as EPC,” says Federico Chavez Peón, managing partner of Promecap. “EPC’s established foothold in Sun Belt markets, 10-year track record of delivering above-target returns in the multifamily space, and operational expertise within predominantly Hispanic communities all resonated deeply with our investors, which includes both global institutional capital and Mexican family offices."
The joint venture has made its first acquisitions through Fund V in two strong submarkets in the Dallas-Fort Worth metro—the 466-unit Enclave at Prestonwood in Far North Dallas and the 492-unit Residences at Mesa Ridge in Garland.
“The strategy for both assets includes a holistic repositioning strategy that consists of improving the exteriors, the amenities, and the interior of the units,” Mahuad says. “The main objective of our value-add strategy is to improve the assets that we acquire along with improving the quality of life of our residents.”
Residences at Mesa Ridge was built in two phases between 1983 and 1984 and includes one-, two-, and three-bedroom units in 39 two- and three-story garden-style buildings. Amenities include a swimming pool, a tennis court, a clubhouse, covered parking, and a laundry facility.
Enclave at Prestonwood, built in 1978, features one- and two-bedroom units in 39 two-story buildings. Amenities include a clubhouse, a swimming pool, a fire pit with outside grilling areas, a fitness center, a dog park, covered parking, and a children’s play area.
Looking ahead, Mahuad says there is a strong pipeline of opportunities.
“It is definitely competitive out there, but with compelling opportunities,” he says. “Given our 10-year history of transacting in the multifamily space, we have unique access to opportunities, with attractive risk-adjusted returns for our investors and that meet the investment criteria of our fund.”
While optimistic about the year ahead, he says some supply chain disruptions have affected business, and he’s also keeping a close eye on inflation.
“We hope inflation stays in check. We have seen the income of our residents grow, and we hope it continues to grow at a faster rate than inflation,” he adds.
