Blueprint: Rockpoint’s record first close, Apollo’s retail capital plans, Blackstone’s Canada expansion

Rockpoint's record first close populated with re-ups, Apollo's ambitious retail capital target, Blackstone's growing Canadian presence and more in today's briefing, exclusively for our valued subscribers.

They said it

Hotels and resorts of this scale and quality are difficult to replicate”

Lowell Baron, managing partner and chief investment officer in Brookfield’s real estate group, about its purchase of hospitality REIT Watermark

What’s new?

Fundraising momentum: Boylston Street-headquartered Rockpoint has enjoyed a strong re-up for its seventh opportunity fund (Source: Getty)

Re-ups behind Rockpoint’s record close
Backers of Rockpoint Group are pushing the Boston-based manager’s vehicles to new heights. Fresh from securing a much coveted separate managed account from United Arab Emirates sovereign wealth fund, Abu Dhabi Investment Authority, the firm has managed a record first close for the seventh in its flagship opportunity fund series, Rockpoint Real Estate Fund VII. As PERE revealed today, the firm has collected $1.65 billion for the closing, thanks in large part to re-upping investors. Among them is the Teachers’ Retirement System of the State of Illinois, which committed $150 million to Fund VII. The US pension previously committed $200 million to Fund VI. Ultimately, Rockpoint wants $4 billion for Fund VII – $1 billion more than its predecessor.

Chill in
The industrial market continues to heat up and one chilly sub-asset class is getting caught up in the action. Underpinned by the continual acceleration of online grocery shopping and need for storing more pharmaceuticals, managers are including cold storage in their industrial strategies. Among them is Boston-based manager Bain Capital, which has formed a $500 million joint venture with Dallas-based developer Barber Partners to develop 15 cold storage facilities nationally under a new brand: Chill Storage. The venture has already commissioned one project in the Dallas-Fort Worth area, with several more in the pipeline for the coming months.

Double the wealth
Apollo Global Management has thrown its hat into the retail capital management ring. During the New York-based manager’s Q1 2022 earnings call on Thursday, co-president Scott Kleinman told investors how inflows from its global wealth platform accounted for 10 percent, or double the firm’s historic average, across asset classes. Apollo is not done either, he said. The firm is expecting to launch between one and two retail products every quarter over the next two years, beginning with its non-traded real estate income vehicle: Apollo Realty Income Solutions, which was registered with the SEC in April. Already slugging it out for this type of capital are Blackstone and Starwood.

Trending topics

Repositioning to the FORE
The concept of repositioning assets since the start of covid, particularly offices, has been on the minds of many managers. But tangible conversions of obsolete stock have been rare, despite the chatter. New York-based KKR, however, is committing to such a project via its second European Fund, KKR Real Estate Partners Europe II. The private equity firm has made a majority investment in the TBC.London scheme, according to an announcement. The redevelopment is next to London’s Tower Bridge, being overseen by local development company FORE Partnership, and is a modernization of a 1990s office building. The partners are targeting net-zero carbon emissions from the work too, using no fossil fuels in the process.

Flight to niche
Another manager targeting niche industrial strategies to take advantage of the secular tailwinds lifting the entire sector is Annapolis, Maryland-based Realterm, which has attracted a further $150 million for the open-end vehicle Airport Logistics Property Fund. The commitments bring total capital for the fund to $900 million. The firm has been in the market with the vehicle since 2015, targeting cargo buildings, hangars and flight kitchens as part of its niche strategy. The latest capital raise will primarily be used for development opportunities, as opposed to standing assets.

Data snapshot

Centers of attention
CBRE’s EMEA Retail Occupier Survey 2022 shows 57 percent of retailer respondents plan to open new stores. Regional shopping centers and city center high streets are their preferred option.

People move

Old Canada
After two years in a chief investment officer role, Janice Lin has attracted the attention of the world’s biggest landlord. On Monday, New York-headquartered Blackstone announced Lin will oversee its Toronto office as the firm expands its Canadian presence. Lin arrives from Revera, a Canadian senior living specialist. Currently, Blackstone oversees a property portfolio valued at approximately C$14 billion ($10.8 billion; €10.2 billion), predominantly comprising logistics, but in a statement on the hire, Lin said the firm will look to grow its presence in Canada’s residential and office sectors too. Given her background, expect senior living to be a part of the mix.

Investor watch

CalSTRS consultant
California State Teachers’ Retirement System is looking for a new consultant again. Incumbent RCLCO Fund Advisors’ contract expires on January 14, 2023, having been the West Sacramento-based pension’s consultant since 2017. Since taking over, the Bethesda, Maryland-based consultancy has overseen the portfolio almost doubling in value, from just below $26 billion to more than $42 billion now. The five-year return in CalSTRS’ real estate holdings was 9.3 percent at the end of Q3 2021 when it was last measured by RCLCO, performance that was 2.7 percent better than its benchmark, the ODCE index. The next consultant appointed will have these numbers in mind when it gets started with the next period of stewardship.

This week’s investor meetings

Tuesday, May 10

Wednesday, May 11

Thursday, May 12

Friday, May 13

Today’s letter was prepared by Peter Benson, with Jonathan BrasseEvelyn Lee, Christie Ou contributing