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AUSTIN-Chicago-based Waterton Associates LLC, fueled by a $330-million equity pool from CalSTRS, has paid $43 million for two JPI-developed multifamily properties in Northwest Austin and $30 million for an inroad into Charlotte, NC. The closing pipeline has $340 million more deals slated to close before the year ends.

The joint venture has scooped up its first Austin deed, and Waterton’s second in the city, with the 551-unit takeover of Jefferson-branded sister properties at 7655 N. FM 620. The 92%-leased pair has been renamed to Tintara at Canyon Creek.

The Tintara isn’t Waterton’s historical value add-type of play. “This is a market recovery strategy,” Rick Wise, Waterton’s acquisitions director, explains to GlobeSt.com. “We bought it at a very attractive price per pound. We believe there’s a lot of upside in the Austin market.”

The class A, 26-building complex sits in the Four Points neighborhood on 30.8 acres with open views of the Texas Hill Country and beside a 100-acre nature preserve. The net rent for the trailing 12 months is $730 per unit monthly, factoring out at 76 cents per sf, according to Wise. “To us, that is what the market opportunity is,” he says, citing the location and quality is poised to command far more. The one-, two- and three-bedroom units average 954 sf.

The Irving-based JPI completed the Canyons’ sisters in 2001 and 2002. They were marketed by Charles Cirar at CB Richard Ellis.

In January 2004, Waterton bought the Retreat at Wells Branch at 2801 Wells Branch Parkway in the northern tier. “We’re definitely still looking for more assets there,” Wise says. And, he’s also on a scouting expedition in Dallas/Fort Worth, Raleigh-Durham and Charlotte, where Waterton just broke into the market with a 460-unit purchase from Highlands Ranch, CO-based United Dominion Realty Trust Inc. The deal was won in a select marketing by Apartment Realty Advisors.

Wise says the 92%-leased Matthews Crossing Apartments, formerly Dominion at Crown Point, is a traditional value-add play. The plan calls for completing complete a UDR-started renovation for the 18-year-old first phase of the 26-building complex. The 50-acre complex at 7815 Calibre Crossing was completed in 2000. Wise says the upgrades will take a year to 18 months to complete.

Wise says UDR realized more than $100 per unit in rent gains from renovated apartments. He says Waterton is eyeing a $75 to $100 per unit gain in post-renovation revenue. The net effective rent is 74 cents per sf, but the dynamics are such that it should be 95 cents per sf, based on Wise’s calculations. This year’s rent growth is 7% for a mix of one-, two- and three-bedroom apartments, ranging from 621 sf to 1,431 sf and bringing in an average of $820 per month.

“I believe the market as a whole has been recovering nicely,” Wise adds. “What’s happening at our property is symptomatic of what’s happening elsewhere in the market.”

Matthews Crossing is the Waterton Residential Property Fund IX’s second purchase this year in North Carolina and far from its last. “We’re specifically looking for class B assets that we can upgrade. The Charlotte market was hit pretty hard in the recession,” Wise says. “It now has good job growth, good population growth and rents are starting to rise. Our intent is to buy more in Charlotte and Raleigh-Durham.” In May, the fund picked up the 350-unit Pinnacle Ridge at 3611 University Dr. in Durham.

The latest deals, anticipated three- to five-year holds, take the fund to six properties, totaling $220.4 million. The $340-million pipeline has closings scheduled from Nov. 1 through year’s end. Waterton’s sweet spot is location, construction quality, no less than 200 units and “the price per pound and value-add opportunity,” Wise says.

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