New Waterton Fund Takes Balmoral Village for $27M

PEACHTREE CITY, GA-In their newest $1-billion multifamily discretionary investment fund, Chicago-based Waterton Associates LLC and Sacramento-based California State Teachers Retirement System have acquired Balmoral Village. The 16-year-old, 312-unit property is at 450 South Peachtree Parkway in Fayette County, about 20 miles south of Downtown Atlanta.

The joint venture paid Resource Investments Ltd. LLC of Pennsauken, NJ $27 million, or about $86,538 per unit, for the class B property just off Highway 74. The property's formal buyer, Waterton Fund IX, has $330 million of committed equity, says Waterton managing member David R. Schwartz. The property was 95% occupied at closing.

"On a leveraged basis, the fund has investment capacity of close to $1 billion," he says. The fully discretionary fund targets low to mid-teen internal rates of return with an average hold period of three to five years.

"We are very pleased to further our relationship with CalSTERS," Schwartz says. The fund is "a continuation on our strategy to target apartments where can add value through renovation and repositioning." Schwartz adds, "Our all in cost on any asset will be below replacement cost."

Area brokers familiar with the Peachtree City submarket tell GlobeSt.com the estimated hard construction cost today on a comparable class B product would be about $95,000 per unit.

Fund IX is the third joint venture between Waterton and CalSTERS. The venture has invested more than $700 million in 28 apartment properties since 2002, Schwartz says. Balmoral Village apartments average 1,073 sf of living area and are located in one of the highest rated school districts in Georgia, Schwartz says. Waterton plans to invest an undetermined amount in minor renovations at the property.

Targeted markets include Chicago; Baltimore; Washington, DC; Charlotte, Raleigh and Durham, NC; Tampa, Orlando, Miami and Fort Lauderdale, FL; Denver; Phoenix; Seattle; Portland, OR; San Francisco and the Bay Area; Las Vegas; Dallas and Austin, TX.

Schwartz and Peter M. Vilm founded Waterton Associates in 1995 to acquire multifamily properties and other property types "to which they can add value through repositioning and renovation," says Wise. Since its inception, Waterton has acquired more than 31,000 apartments in most major metro areas.