Waterton Raises $1.5B in Latest Value-Add Multifamily Fund

Chicago-based Waterton has closed its Waterton Residential Property Venture XIV with $1.5 billion in equity commitments, making it one of the largest dedicated multifamily funds in the US. Waterton raised capital from a diverse group of global institutional investors, according to the company. Including debt, the fund has the capacity to purchase $4 billion in more than 50 multifamily properties.

Despite the market dislocation in the last year, Waterton remains bullish on the multifamily sector and plans to invest this capital through the disruption. “This fund represents a unique opportunity to invest in a strategy we’ve been executing for 25 years that evolves to capitalize on cycle-specific opportunities, which should be plentiful in the current market environment,” says David Schwartz, chairman and CEO of Waterton, in a statement about the fund’s closing.

Waterton launched the fund in May 2020—in the midst of the pandemic—and has already begun deploying capital. In its first purchase, the fund acquired a four-property, 1,824-unit portfolio in Atlanta. The transaction closed on November 5, 2020. In later transactions, the firm also acquired a two-property portfolio in Hawaii and three assets in California. In keeping with its recent strategy, Waterton will focus on workforce housing properties in major urban and suburban US markets with strong job growth, employment metrics and transportation logistics.

While the multifamily market has certainly struggled during the pandemic, investment capital remains bullish on the asset class. Lionstone Investments closed its most recent fund with $745 million in capital commitments, exceeding its initial target by $100 million. While the fund is diversified, it will target value-add multifamily opportunities in locations with economic growth and innovation, according to the firm. The fund has completed two purchases and is under contract to purchase a new construction multifamily project in Raleigh, NC.

Other investors have made significant purchases in multifamily already this year, further illustrating the strong demand. Investcorp, for example, has acquired a portfolio of five multifamily properties totaling 1,854 units for $330 million. The class-B, garden style properties are located in Atlanta, GA, Baltimore, MD and Jacksonville, FL, and are currently 96% occupied. The transaction came on the heels of Investcorp’s divestment from more than $1 billion in US multifamily real estate assets. With the most recent purchase, the firm has a portfolio of more than 14,000 units across 40 properties.