Growth Group Gains Ground; Partnerships Pump Up Portfolio

A Northwest Arkansas development group was mentioned in the Oct. 25 edition of The Wall Street Journal, but local readers may not have recognized the limited liability company by its name.

The front-page article stated that Eastpoint Redevelopment LLC of Fayetteville had purchased land in Florida from Bruce Millender.

Eastpoint is managed by Growth Group LLC, which is owned by Mitchell Massey, Morgan Hooker and Ward Davis.

Millender will remain a partner in the project, which includes 135 condominiums in Eastpoint, Fla., a city near Apalachicola in the state’s panhandle. The project also has more than 20 different private investors funding it.

But that’s just one project.

Growth Group has more than 2,200-acres that it owns or is a partner in owning and has more than 3,000 residential lots in various stages of development. It also owns and manages about 200 apartment units. Growth Group has about 45 different projects in various stages of development, including about 10 residential subdivisions and more than 300 multifamily units, mostly in Washington County.

Some of its commercial ventures include various lots on College Avenue in Fayetteville that are being inventoried for future development, in addition to pockets of land around Interstate 540 interchanges from the city of Greenland to Walnut Street in Rogers.

Growth Group maintains a one-third partnership in the Spring Street Lofts and Renaissance Tower projects in Fayetteville.

Massey said the firm concentrates on timing.

“I think that some projects are more apparent than others that the timing is right to do it,” Massey said.

For example, Growth Group owns about six acres of industrial land off I-540 in Greenland that it could develop right now into cheap warehouse space, but Massey said it could wait.

Morgan Hooker, principal with Growth Group, said the firm has a mixture of affordable housing and higher-end homes in the works, but for some of the affordable homes planned, it took two or three years to acquire the land to make it happen.

“It all starts with the land acquisition,” Massey said.

Hooker said studying a piece of land to conceive the right product is key.

“Even on the affordable housing, we spent a lot of time on layouts,” Hooker said.

Vision

Mike Watkins, director of town planning for Duany Plater-Zyberk & Co., a Miami-based land planning and architectural firm, is designing the Eastpoint project for Growth Group.

One of DPZ’s best known projects is Seaside, a Florida coastal beach town developed in the “neotraditional” style in the early 1980s.

Watkins said Growth Group’s vision for Eastpoint meshed well with DPZ’s design style. This is DPZ’s first project with Growth Group, and it has been working on the land-planning portion of the Eastpoint project for about six months.

“We have a lot more work coming at us than we can do, but what impressed me about these guys was from the first meeting, they were determined to build a quality project and were willing to do whatever it took to make it happen,” Watkins said. “They understood the design principals that we do.”

Watkins said DPZ does only neotraditional neighborhoods, meaning they are designed to promote community and avoid urban sprawl.

Ward Davis, principal with Growth Group, said the type of pedestrian-friendly developments DPZ designs reduce the number of household car trips by 25 percent to 50 percent. He said the average family makes 13 trips in the car per day. Davis said Growth Group hopes to build similar projects in Fayetteville one day.

Partnered Growth

Growth Group isn’t afraid to partner.

“We’ve all been comfortable with bringing other developers into partnerships,” Hooker said. “I think it continues to work.”

But, as Mitchell Massey pointed out, the group has more individual than partnered work in its portfolio.

“It’s always nice to spread your risk with groups that can carry their own weight,” Massey said.

Massey said liquid equity is a key component.

“We structure the deals to where we have plenty of liquid equity in the project to carry it forward,” Massey said. “It gets back to why we do as many partnerships as we do.”

Growth Group also tries to keep its overhead low, Hooker said.

The company has about 35 employees.

Massey, Davis and Hooker are all equal partners in Growth Group.

Hooker and Massey began developing projects together about eight years ago. Hooker was a partner in a commercial and residential construction company, J.M. Hooker Construction.

At the time, Massey owned Hydraulic Solutions Inc., a company that specialized in hydraulic motors, pumps and flow repair. Massey sold the company in 2005.

Davis is the newest partner in Growth Group. He worked as an investment banker for Stephens Inc. in Little Rock for four years before becoming head of acquisitions for Medical Properties Inc., a real estate investment trust based in Birmingham, Ala.

He met Massey and Hooker through mutual friends.

“I was interested in the development side of the business,” Davis said.

Davis said Growth Group gets paid a fee for developing its projects. The projects are actually owned by entities that always include Massey, Hooker and Davis.

Group Group usually gets a fee of 4 percent of the construction costs of the development.

A development fee covers all the things that are required to execute the project.

Some of Growth Group’s partners include Richard Alexander, Rob Merry-Ship, John Nock, Gerald Johnston, Tom Terminella and The Barber Group.

Nock and Richard Alexander are developing a 200,000-SF mixed-use Renaissance Tower, which was the site of the Mountain Inn. Massey is also a partner in that project.

Growth Group is also partnering with Nock and Alexander on South Pass, an 800-acre residential development planned for southwest Fayetteville.

Nock said Massey brings a lot to the table as a partner.

“He can quickly grasp what is needed for a given market for a specific project and be able to bring those ideas to the table in a sound way as a partner,” Nock said.

A project needs three components to be successful, Nock said.

“It needs to be the right project at the right place at the right time,” he said. “The second thing it needs is to be economically viable. Three, the project team — the owners, the investors, developers, marketing people, the team — has to be people you genuinely enjoy working with.”

He said different developers coming together brings more to the project.

“You spread the risk around, but what you are really doing is adding value,” Nock said. “You aren’t ruling by committee, but you are getting a consensus of life experience and specialties from people to make your project better.”

Massey said the market has been forgiving.

“We have certainly made mistakes, but with 10 years of development experience under our belt, we’ve learned lessons early on in our careers,” Massey said. “The reality is, some of the mistakes we made would have cost us a lot of money if it wasn’t for this market.”