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EXCLUSIVE: Waterton collects $511m for Fund XII

The Chicago-based private equity real estate firm closed its latest property vehicle above target after more than two years in market.

Waterton Associates has held a final close on Waterton Residential Property Venture XII, its second large commingled real estate fund. The firm raised a total of $511 million, slightly exceeding its original $500 million target.

As reported by PERE at the time, Waterton launched Fund XII in the spring of 2013, around the same time it hired its first dedicated in-house investor relations professional, Michelle Wells, formerly of RREEF (now Deutsche Asset & Wealth Management). The firm went on to hold a first close for the fund in April 2014, raising approximately $200 million. In a note to investors, Waterton said that it held the final close for Fund XII at the beginning of the month.

PERE understands that three of the limited partners in Fund XI made follow-on investments to Fund XII. Additionally, the firm attracted capital from new investors that included public pensions, US and international insurance companies, a US-based foundation and an Asian financial services company, for a total of nine limited partners. According PERE Research & Analytics, the fund’s investors included the California State Teachers’ Retirement System, Orange County Employees Retirement System, Oregon Public Employees Retirement Fund, Employee’s Retirement System of Rhode Island and the Employees Retirement System of Texas.

With Fund XII, Waterton will be continuing its US-focused value-add strategy of acquiring and upgrading multifamily properties in primary markets. According to one person familiar with the fund, the firm is targeting 13 percent net returns and has invested approximately 50 percent of the vehicle’s capital in 30 transactions. Fund XII investments include the firm’s first deal in Houston, the January acquisition of the Villas at Hermann Park, a 320-unit rental community; the purchase of Promenade Crossing, a 212-unit garden-style apartment community in Orlando, in March; and the acquisition of Pensacola Place, a 264-unit mixed-use community in Chicago.

Waterton was founded in 1995 by David Schwartz and Peter Vilim. The firm had raised and invested a number of smaller investment vehicles with institutional investors and family offices prior to raising its first large commingled real estate fund, Waterton Residential Property Venture XI, in a single close in February 2011.