EXCLUSIVE: Rockpoint raises $950m for core-plus RE

The Boston-based private equity real estate firm has completed its first non-opportunistic capital raise just as it brings a new fund to market.

Rockpoint Group has wrapped up fundraising for Rockpoint Core Plus Real Estate Fund (CPF), its first lower-risk, lower-return investment vehicle. The firm, which is best known for its series of opportunistic property funds, collected a total of $950 million for the fund, just shy of its original $1 billion target, according to sources familiar with the matter.

The capital came from a group of five to six US and international investors, primarily limited partners that previously committed to Rockpoint’s other funds. Among them was the Oregon Public Employees Retirement Fund (OPERF), which actually was the fund’s first investor, earmarking $100 million to the vehicle in December. OPERF has invested in all six of Rockpoint’s previous fund offerings.

PERE understands that the firm began talking to investors about the fund in October of last year, and held a final close on Monday. Rockpoint completed the first close of the vehicle just a month ago, with an initial equity haul of approximately $600 million.

As with the opportunistic Rockpoint Real Estate Fund series, the firm will pursue transactions in multiple commercial real estate property types in major US markets on behalf of CPF. The fund will be focused on stabilized assets with strong existing cash flows and less capital-intensive business plans than Rockpoint’s opportunistic fund investments. With the core-plus strategy, the firm will target 11 to 12 percent gross returns, with leverage of no higher than 50 percent. It has not yet begun to deploy capital from the fund.

Rockpoint is said to have entered the core-plus market at the request of several of its existing limited partners, which viewed the firm’s sourcing and asset management expertise in opportunistic real estate as easily transferrable to lower-risk, lower-return investments. Meanwhile, the Rockpoint team had passed on a significant number of core-plus opportunities over the years while sourcing deals for its opportunistic funds.

Core-plus is now considered to be a long-term strategy for Rockpoint, and complementary to its existing business, since both strategies are viewed as helping the firm to access deals it otherwise may not see. The company is expected to continue to raise and manage a series of core-plus funds as it has done in the opportunistic space.

Rockpoint, which was founded in 2003 by former Westbrook Real Estate Partners executives Bill Walton and Keith Gelb, has been marketing back-to-back funds as of late. PERE understands that in addition to closing CPF, the firm also recently has launched its next opportunistic fund, Rockpoint Real Estate Fund V, with a $2.5 billion target. The launch of CPF, meanwhile, came less than a year after the final close of Fund IV, which closed on $1.95 billion in commitments and $380 million in co-investment capital in March 2013.