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Tuesday, 08 March 2011

Waterton Raises $500Mln for Latest Fund

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Waterton Residential has raised $500 million for its latest investment vehicle, Waterton Residential Property Venture XI, which pursues opportunities in the apartment market.

The Chicago investment manager expects that with leverage, the fund will have $1.5 billion of investment capacity.

The fund's predecessor, Waterton Residential X, had raised $222 million, 90 percent of which was committed by the California State Teachers' Retirement System. It was the fourth Waterton vehicle to be largely capitalized by the pension and made $400 million of investments.

The latest is a more traditional commingled fund, with CalSTRS playing a smaller role.

The value-add fund will target investments that need repositioning. It will also pursue properties in need of capital and will invest in debt backed by apartment properties.

"We want the investment community, including investment bankers, brokers, banks and sellers, to be aware that we have funds available," said David Schwartz, co-founder and co-manager of Waterton.

The firm is one of only four companies that Freddie Mac picked to write mezzanine loans behind its senior mortgages. In doing so, it would have first dibs on taking over properties that default on their senior loans. It also has been active in acquiring the B-pieces of Freddie's multifamily loan securitizations, buying bonds from two transactions.

Among Waterton's recent investments: it bought a $150 million construction loan on the Addison, a newly-built apartment complex with 271 units in Brooklyn, N.Y. The loan was sold by an affiliate of iStar Financial. It also bought a $40 million construction loan against Uptown Square, a 363-unit property in Atlanta. In each case, Waterton's investment allowed the collateral properties to be recapitalized, with their developers retaining a participating interest.

Waterton was founded in 1995 and owns 36 properties with 15,000 units in 12 states.

Comments? E-mail Orest Mandzy, or call him at (267) 247-0112, Ext. 211.


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  • Subject: Institutional Investment (INS), Opportunity Funds (OPPY)
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