StepStone Commits $200M in Deal With Western Wealth Capital

Western Wealth Capital, a Canadian-based real estate investment company, has recapitalized an 11-property, 2,750-unit U.S. multifamily portfolio with $200 million from StepStone Group Real Estate. The recapitalization and strategic partnership with StepStone enabled WWC to refinance the assets and will fund value-add improvements throughout the portfolio.

Ten of the communities in the portfolio, described as large and geographically diverse, have been refinanced. Nine of the properties consisted of a five-year, fixed-rate financing with Freddie Mac. One deal is still pending. The recapitalization allowed WWC to consolidate lenders and place moderately leveraged debt sized for the current market cycle on its balance sheet.

One of the properties in the portfolio is Valley Oaks Apartments, a 332-unit, garden-style apartment community in Hurst, Texas. Built in 1979, the 31-building property has one-, two- and three-bedroom apartments ranging from 581 to 1,396 square feet. Community amenities include two swimming pools, a fitness center, picnic areas, a playground, a pet park and package lockers.

In prepared remarks, WWC called the recapitalization a big milestone that will appropriately fund the communities and put the portfolio in a stable position moving forward. It will also preserve the firm’s flexibility to sell properties at an optimal time and allow WWC to pursue opportunities in top growth markets like Phoenix, Dallas, Atlanta and Las Vegas, Nev.

Janet LePage, WWC’s co-founder and CEO, identified those locations as key markets where fundamentals drive rental demand and support sustained opportunity. LePage noted in prepared remarks that those markets are business-friendly locations with employment and population growth where there is a clear and increased demand for housing. 

A portion of the $200 million commitment from StepStone will also be applied to making near-term and future equity investments. LePage stated the partnership provides WWC with an opportunity to invest alongside a firm with significant experience sponsoring recapitalization investments in private real estate.

Jones Lang LaSalle Securities LLC, an affiliate of Jones Lang LaSalle Americas, Inc., served as exclusive financial advisor to Western Wealth Capital. Latham & Watkins LLP served as counsel to StepStone and Goodwin Proctor LLP was counsel to WWC.

JLL also worked on behalf of WWC to secure the five-year, fixed-rate loan through Freddie Mac. The loans will be serviced by JLL Real Estate Capital, LLC, a Freddie Mac Optigo Lender.

Earlier deals

In July 2022, StepStone Group, a global private markets investment solutions and advisory firm, invested $300 million as part of a multi-pronged capital commitment to ACRE. That strategic partnership included a portfolio recapitalization and plans to invest in multifamily properties across the nation. StepStone’s commitment was broad-based and underpinned by recapitalization of a 1,500-unit multifamily portfolio from an earlier ACRE fund. It also included a joint venture focused on various opportunities such as value-add acquisitions, lease-up and ground-up multifamily developments.

Since its inception, WWC has completed more than $6 billion in real estate transactions, acquiring 129 multifamily assets with more than 29,000 units. In July 2022, the firm acquired Embry Apartment Homes, a 151-unit community in Carrollton, Texas, with one- and two-bedroom apartments. The 23-building asset was constructed in 1985 with more units added in 1995.

Several months earlier in April 2022, WWC acquired another North Dallas-area property. Villas at Chase Oaks in Plano, Texas, is a 250-unit multifamily asset built in 1986. The property spans 14 acres and has 20 buildings with one-, two- and three-bedroom apartments.