After an initial delay caused by the coronavirus pandemic, NRP Group and capital partner PointOne Holdings have closed on a nearly 6-acre site near the Capital Beltway in Tysons, Virginia, where the venture plans to develop a 390-unit apartment project.
The team paid $21 million for the parcel at 1768 Old Meadow Lane that will serve as the future site of Highland District Apartments, a five-story, wood-framed complex to be developed near Tysons Corner Center and Tysons Galleria and within walking distance of more than 20,000 jobs provided by Capital One’s headquarters, Mitre’s office complex in Scotts Run and Northrop Grumman. The venture completed the deal Friday, and NRP expects to break ground on the project in mid-June.
The deal was originally scheduled to close in March, though the onset of the pandemic thwarted the sale and in turn forced the buyers to reevaluate the acquisition and subsequent development in light of the public health crisis.
“We decided to take a step back, take 60 days and just see what’s happening in the market,” Ben Colonomos, managing partner with South Florida-based PointOne Holdings, told CoStar News. “Are there any threats to a development like this one? How do we measure what the threats are?”
Colonomos said the firm took those 60 days to work closely with NRP to understand the supply chain and labor supply, and study how it could offset some of the expected loss in operational income. “We also underwrote the deal all over,” Colonomos added, noting the firm assumed more moderate rent growth and more moderate general assumptions in response to the public health crisis. “And then we worked backward.”
It is not the firm’s practice to acquire land and develop a project in a downturn, Colonomos said. But the firm’s strong debt position coupled with a resilient, high-growth market gave the team confidence to move forward with the project. The timing also could be fortuitious since “there’s not going to be a lot of supply when we come in on the back end of it” in 2022, he said.
“We made very smart and thoughtful decisions about what’s going to happen in this submarket in 24 months,” Colonomos said. “I think we’re going to look great on the other end.”
NRP is not implementing any specific design changes or specialized amenities as a result of the coronavirus, instead sticking with an array of high-end luxuries that include a resident club room with games, an infinity pool, yoga lawns and a warehouse-style fitness center with separate spin and cardio studios, as well as structured parking. The first units are slated to be completed in late 2021 with the project scheduled to deliver in summer 2022.
Highland District would be the latest addition in Tyson’s evolution as it looks to shed its label as a 9-to-5 office market. Spurred on by the Silver Line Metro extension and a younger workforce, more than 3,000 apartments have been completed in Tysons over the last five years with the apartment market projected to grow by another 25% over the next three years.
For NRP and PointOne, the project marks the venture’s second development after teaming up last year on a 308-unit apartment complex in Austin, Texas’ South Congress neighborhood. The venture wrapped up that project earlier this year.
“PointOne is adept at recognizing low-basis, infill projects in strong metros where the inputs to value creation are highly favorable,” George Currall, principal and managing director of capital markets for The NRP Group, said in a statement.
For the Record
NRP and PointOne secured more than $80.5 million in financing through Fifth Third Bank for Highland District, according to public record.