Waterton has announced that it is diversifying its investment strategy by investing in ground-up multifamily development in growth markets where demand is predicted to outpace supply. The national real estate investor and operator, based in Chicago, will focus on joint-venture opportunities on new construction with local and regional developers across the Southeast and Southwest while also continuing its 25-year track record of investing in multifamily value-add opportunities.
“With our established track record in the value-add space and our experience with redevelopments across markets, we believe the timing is right to expand into ground-up development,” said CEO and chairman David Schwartz. “Demand is clearly outstripping supply in certain markets, and current conditions are making it more cost effective to build from the ground up—while our experience and relationships with local developers makes Waterton an attractive partner.”
According to Waterton, the joint-venture partnerships will benefit from its ability to underwrite new developments, oversee the construction process, and provide asset and property management services. The firm plans to focus on the construction of affordable garden-style and mid-rise developments for households between 80% and 100% of the area median income in well-located suburban markets and in select urban areas.
“The new supply of multifamily units added in the last five years relative to the existing stock of housing shows supply is still very low in many markets,” said Rick Hurd, Waterton’s chief investment officer. “Development yields are much more pronounced today than in years past, and this produces extremely attractive opportunities in select markets compared to going in cap rates for value-add deals. Our team of investment professionals, combined with our existing relationships with local and regional developers, further supports our belief that a ground-up development strategy will complement our existing value-add portfolio.”
