Waterton Buys $110M of Debt on 1,337 Units

CHICAGO-Waterton Residential has acquired $109.5 million of debt secured by four apartment complexes in North Carolina and California and, after previously buying $179.2 million in debt secured by multifamily assets earlier this year, plans to buy $150 million more in debt and/or properties by the end of 2010. The most recent debt acquisitions include mortgages secured by the Exchange at Brier Creek, a 274-unit property in Raleigh, NC; and three properties in California: the 139-unit Skyline Terrace Apartments in Burlingame, the 628-unit Waterstone Corona Pointe in Corona and the 296-unit Copper Canyon Apartments in Riverside.

All four properties were acquired as part of Waterton Residential Property Fund X, a $222 million discretionary multifamily investment fund. Max Peek, Waterton Residential's VP of acquisitions, notes that the company's multifamily debt portfolio has grown dramatically over the past 18 months with mortgage interests secured by over 34,382 units with aggregate loan balances exceeding $2.29 billion. "Waterton has been one of the leading buyers of distressed debt secured by multifamily properties in 2010 because of our discretionary capital and ability to close complex transactions in a timely manner," Peek said.

The Exchange at Brier Creek was originally developed by Flaherty and Collins Development. Waterton negotiated a workout with the existing borrower, transferring the title to a new Waterton entity. CW Capital assisted Waterton in placing a new Freddie Mac Capital Markets Execution loan at closing. The property, a class A complex, was completed in 2008 and features a mix of studio, one- and two-bedroom units ranging from 667 square feet to 1,525 square feet.

Waterton acquired the senior mortgage on Skyline Terrace and the junior participating mortgages on Waterstone Corona Pointe and Copper Canyon Apartments from a New York based hedge fund. All three properties are class B complexes, and all three mortgages, which are current and performing, will be held as yield-to-maturity investments.