Apartment landlord Waterton jumps into single-family rentals with $500M JV

Chicago-based investment firm, which owns 26K apartments nationwide, plans to target Sun Belt markets

Chicago /
Mar.March 11, 2022 12:52 PM

Waterton’s David Schwartz (Waterton, iStock)

A Chicago-based multifamily landlord has a new business sector: single-family rental homes.

Waterton, a real estate investment firm whose portfolio spans nearly 26,000 apartments across the country, plans to join the rush of investors to the single-family rental market, Crain’s reported.

The firm — which owns more than 6,000 apartments across 10 properties in and around Chicago, including the Presidential Towers complex in the West Loop — has formed a $500 million joint venture with Florida-based single-family rental firm Second Avenue to buy or build rental homes in the Sun Belt.

The venture, which will focus on markets including Arizona and Florida, will invest in individual homes or aim to develop entire communities, Waterton CEO David Schwartz told the publication, adding that the partnership plans to spend between $250,000 to $300,000 on each house. Waterton’s new development plans do not include the Chicago market.

The single-family rental market, which has grown since the recession, gained considerable momentum as housing prices climbed over the past year. Priced out of the market, many younger buyers have been drawn to renting individual homes as an alternative.

One research firm estimated the U.S. single-family rental market at $3.4 billion, according to Crain’s. Sustained demand and limited supply have yielded strong returns during the pandemic, leading the formerly niche sector to attract unprecedented interest from institutional investors. The build-to-rent sector, in which developers build single-family homes with no plan to sell them, is also growing increasingly crowded.

Waterton’s main business is in the value-add area of multifamily — purchasing Class B or lesser buildings and renovating them to bring in higher-paying tenants.
The firm purchases its buildings through investment funds, and has the capacity to invest more than $4 billion in multifamily properties.

Waterton has been busy this year. In February, it pledged $150 million toward new multifamily housing, further illustrating interest in the asset class is booming. The firm said it plans to focus on ground-up construction of affordable, garden-style units and mid-rise structures in suburbs and urban areas across the nation

[Crain’s Chicago] — Miranda Davis






    Related Articles

    arrow_forward_ios
    Compass' Robert Reffkin, @Proerties' Mike Golden and Berkshire Hathaway's Diane Glass (iStock, Getty Images, @Properties. Berkshire Hathaway)
    @properties, Berkshire brace for cooling market
    @properties, Berkshire brace for cooling market
    801 South Financial Place (Alta Rosevelt. iStock)
    South Loop apartment tower trades in largest downtown apartment sale of 2022
    South Loop apartment tower trades in largest downtown apartment sale of 2022
    Fritz Kaegi (iStock)
    Chicago Assessor Kaegi wins primary, fending off trade union challenge
    Chicago Assessor Kaegi wins primary, fending off trade union challenge
    977 Forest Avenue, Glencoe, IL (AtProperties)
    Six-bedroom mansion may become Glencoe’s second-priciest listing
    Six-bedroom mansion may become Glencoe’s second-priciest listing
    1134 Taylorsport Lane (Redfin, JS Eckert)
    Life’s a beach at these five Chicago-area lakeside homes
    Life’s a beach at these five Chicago-area lakeside homes
    1919 N Dayton St, Chicago (Zillow)
    Lincoln Park mansion sale underscores strength of Chicago luxury market
    Lincoln Park mansion sale underscores strength of Chicago luxury market
    Ken Griffin and No. 9 Walton (Getty Images, Gold Coast Realty Chicago, iStock/Photo Illustration by Steven Dilakian for The Real Deal)
    What’s next for Ken Griffin’s unfinished $58M Gold Coast penthouse?
    What’s next for Ken Griffin’s unfinished $58M Gold Coast penthouse?
    The late Jack Sandner with 1 Moffett Road (Getty, Compass)
    Home of late Chicago Mercantile Exchange leader hits the market
    Home of late Chicago Mercantile Exchange leader hits the market
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...