CHICAGO-Almost quadrupling its most recent $400 million fund, locally based Waterton Associates has now closed Residential Property Venture XI, which will invest $1.5 billion over three years in acquisition of multifamily assets and loans. The fund will seek opportunities in 14 primary markets, mostly outside the Midwest.

The company previously ran Residential Property Venture X, closing more than $400 million in multifamily transactions that were mostly purchases of troubled multifamily construction loans. This fund began in 2008 but was mostly halted in 2009 due to the economic downturn, says CEO David Schwartz, and most of the buying took place in 2010.

“We look to do much of the same with this new fund, but we think that we will see less distress, there seems to be fewer fire sales on notes than there was last year,” Schwartz tells GlobeSt.com. He says the fund is restricted to multifamily but will have a broad mandate to buy loans, B notes, CMBS and properties in cities such as Boston, New York City, Washington, DC, Miami, Dallas, Houston and Chicago, the latter being the only market pursued in the Midwest.

There’s a growing US renter market that will last for a good while, Schwartz says, as the attitude of home ownership declines and people are more mobile because of a difficult job market. “The possibility that the rental trend will continue and increase seems high,” he says.

Schwartz says there’s a lot of competition for orderly sales for good quality apartments, whether it’s a bank selling REO or a developer selling property. “These command pretty frothy bidding. We’ll lose these, we can’t compete,” he says. “Where we have had success is on somewhat distressed loans, where a bank has a construction loan in default and they need to lease up, or some completion needs to be done with a property that isn’t financeable, where we can come in with a cash purchase.”

He says the firm is already working on a handful of deals that should be complete by the end of the quarter. Waterton has acquired more than 42,000 apartment units, including the 2,346-unit Presidential Towers in Chicago, and has a 10-year relationship with CalSTRS that has resulted in more than $3 billion in multifamily equity investment.