Addison-based Guaranty Bank & Trust is on a mission to drive investments that will revitalize communities across Texas.
Through a new partnership with Caliber, a middle-market alternative asset manager and fund sponsor based in Arizona, Guaranty wants to strengthen low- and moderate-income (LMI) neighborhoods in Dallas, Austin, and Bryan/College Station—through real estate developments.
The companies plan to offer more affordable housing opportunities in these LMI communities through strategic investments. Guaranty Bank & Trust, a subsidiary of bank holding company Guaranty Bancshares, will supply Caliber with capital to be used as a sidecar to its existing Caliber Tax-Advantaged Opportunity Zone Fund.
$50 million in total funds to deploy
The capital structure includes $50 million in total funds to deploy into what the companies deem “qualified real estate developments.” That specifically means focusing on creating opportunities in low income areas that often receive an under allocation of capital, Guaranty CEO Ty Abston told Dallas Innovates.
The Caliber team will source potential prospects, acquiring and managing them, then reporting their progress to Guaranty. Essentially, Abston says, his team provides the money while Caliber offers the expertise in this area.
According to Caliber, its Tax-Advantaged Opportunity Zone Fund is designed to invest in commercial real estate projects that sit within Qualified Opportunity Zones, which the IRS defines as economically distressed communities where new investments, under certain conditions, may be eligible for preferential tax treatment.
Caliber says the partnership with Guaranty combines the Opportunity Zone tax incentive with community reinvestment.
“This is a transformative time in Caliber’s history,” John Hartman, Caliber’s chief investment officer, said in a statement. “As we expand our investment platform across private and public markets, we anticipate that our partnership with Guaranty will continue to evolve and grow in tandem with our initiatives to develop wealth for our investors and the communities we invest in.”
Pursuing goals of the Community Reinvestment Act
The deal is consistent with the goals of the Community Reinvestment Act (CRA), a law that requires the Federal Reserve and other federal banking regulators to encourage financial institutions to assist in meeting the credit needs of communities where they do business, according to the Board of Governors of the Federal Reserve System.
That includes LMI neighborhoods.
“Currently we’re focused on marginalized neighborhoods that need the most attention,” Hartman told Dallas Innovates. “[This partnership] could stimulate population growth within those submarkets and create amenities that were not there before, as well as higher quality housing. We like to focus on communities where we see demand and try to bolster the supply.”
Since its inception, the wealth development company has been focused on “investing with purpose.” Today, Caliber has around $500 million in assets under management.
From schools to hospitals to hotels and housing
Caliber takes a multi-pronged approach to investments, according to Hartman: creating value, which could be through a school, rehabilitation hospital, offices, hotels, or housing; rehabilitation, which will attract business growth that could increase the quality of life within a neighborhood; and solid returns for investors.
The deal with Guaranty is Caliber’s first investment in Texas, but Hartman says the team hopes to increase its development and investment presence in the state with further private accounts.
“Caliber is constantly looking for investments and sometimes that could include a distressed asset within a highly desirable neighborhood,” he says. “Through our underwriting process, we consider how our investments best benefit the communities and our investors.”
Hartman remains positive about the social aspect of Caliber’s partnership with Guaranty. “A lot of people are doing real estate deals now. Although we look at the bottom line of investing, we like to see evolving communities thriving. If we can be part of that equation, we have fulfilled our goals.”
Guaranty’s history in NTX
Guaranty Bank & Trust is one of the oldest regional community banks in Texas. Its relationship-driven commercial and consumer banking products and services include mortgage, trust, and wealth management services from 31 banking locations across 24 Texas communities.
As of June 2021, Guaranty Bancshares had $2.93 billion in total assets.
The scope of the deal with Caliber is still being defined, Abston says, but the Guaranty team mainly wants to focus on the new construction of affordable housing or other projects benefiting residents in LMI areas.
“By partnering with Caliber, we have a well-respected partner to lead our efforts in sourcing, development and the management of selected projects,” Abston says. “The combination of our efforts creates an opportunity to make concentrated investments within low to moderate income areas that individually is much more difficult to accomplish.”
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