Waterton’s latest US value-add apartment fund has partnered with a mezzanine fund managed by Pearlmark to make a $53.2m (€49.3m) debt investment in an apartment project.

The unknown Waterton fund is making the debt investment by contributing 90% of the five-year loan for the development of the first phase of South Pier at Tempe Town Lake apartment complex in Tempe, Arizona, alongside the Pearlmark Mezzanine Realty Partners V (Pearlmark Mezz V)  fund.

David Schwartz, Waterton’s CEO, said: “This is our first mezzanine loan that we have written since the great financial crisis. It is my view that there is a short-term investment opportunity for us with this type of investment due to the illiquidity that currently exists in the debt markets in the US.”

Waterton will be looking to continue providing either mezzanine loans or preferred equity on both new developments and for acquisition loans.

As previously reported, Waterton is seeking to raise $2bn for Waterton Residential Property Venture XV, a fund expected to buy undercapitalised, underperforming assets from stalled developments, foreclosures or owners in need of liquidity.

In December last year, Pearlmark Mezz V, subordinated debt investment vehicle, closed with over $210m in commitments. In addition, Pearlmark said it expected to have another $200m in co-investment capital that will invest alongside Pearlmark Mezz V in select transactions.

The fund is targeting loan sizes of $5m and above.

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