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Waterton co-founder heads to semi-retirement – Exclusive

Pete Vilim will stay on the firm’s investment committee, among other responsibilities, as he focuses more on philanthropic work.

One of Waterton's founders has started semi-retirement, part of a long-term succession plan, PERE has learned.

Pete Vilim, who founded the Chicago-based private equity real estate firm with David Schwartz in 1995, began his new role as vice chairman on January 1. Vilim and Schwartz previously served as co-chairmen of the hotel and multifamily-focused firm, which has long worked in the affordable housing space both for profit and philanthropically.

In addition to his change in position, Vilim transferred an undisclosed part of his ownership interest in the firm to Schwartz, retaining a minority ownership stake that makes him the firm’s second-largest shareholder.

“I’m turning the ripe old age of 62 in a month or two,” Vilim told PERE. “This has been something on my mind for a while. When David and I formed this company, we always had the intent that it would outlive us. We always had our eye on a succession plan and how we would cultivate leadership over the years… given that real estate is a long-term business, it’s a long-term retirement.”

The co-founders began thinking about the succession plan about five years ago, hiring and promoting internally for executive positions including chief investment officer, chief operating officer and chief human resources officer. Schwartz said he may consider expanding the senior leadership team further over time.

During the multi-year process, the co-founders said they talked with their investors, most of which are large state pension plans, before formalizing their plans.

“One of the reasons we’ve had such good investor relationships with these plans over the years is we think the same way,” Vilim said. “They’re intrigued by my new role because it plays to their clientele. If a state plan that probably doesn’t get a lot of good press helps support the preservation and development of housing that’s suitable for its own beneficiaries, that’s a good thing.”

In semi-retirement, Vilim continues to serve on the firm’s investment committee, advisory board and valuation committee, though he will no longer be involved in fundraising or deal-scouting. Instead, he said he is working to translate Waterton’s best practices to the affordable housing sector.

At the local level, he became the president of the board of directors last year for All Chicago – Making Homelessness History. Vilim is also on the board of the Housing Partnership Equity Trust, a social-impact focused, non-traded real estate investment trust.

“Selfishly, the promise of giving back to community through a lot of these activities will engage our associates,” Schwartz said. “It’s great for retaining talent and attracting talent. We find today people who work in our industry, particularly millennials, are very engaged in doing not-for-profit work.”

Waterton, which manages $4.5 billion, is currently in the market with its latest value-add fund, PERE reported last month. The firm is seeking $750 million for Waterton Residential Property Venture XIII, with a strategy of acquiring and upgrading multifamily properties in primary markets.