Longpoint Realty Partners has closed on a $280 million debut fund, PERE has learned.
The Boston-based firm launched Longpoint Realty Fund I at the end of 2016 and closed after 20 months. The final close occurred in October 2018 but was previously not reported.
Longpoint held a first close in January 2017, raising $125 million from two large institutional investors.
Longpoint managing partner and founder Dwight Angelini said the firm missed its $375 million target because of the difficult fundraising environment, where many investors have opted to re-up with existing managers in the latter part of the market cycle, he said.
Longpoint Realty Fund I attracted a large number of foundations and endowments, some corporate investors, European investors, public pensions and sovereign wealth funds, according to Angelini. The Texas Permanent School Fund and the Santa Barbara County Employees’ Retirement System committed $75 million and $15.5 million, respectively, according to PERE data. The Chicago Teachers’ Pension Fund and the Montgomery County Employees’ Retirement System were also investors, according to pension fund documents. Though Longpoint was established in 2015, Angelini believed the team’s history and experience as former senior executives at Boston-based private real estate firm TA Associates Realty helped attract investors.
The debut fund targets value-add investments in logistics properties and neighborhood shopping centers around the US, targeting a 15-17 percent gross return. The fund focuses on the five primary markets of Boston, New York and New Jersey, DC and Baltimore, Miami and Dallas, and the five secondary markets of Austin, Houston, Nashville, Orlando and Atlanta, according to Angelini. The fund is approximately 25 percent invested and targets a 60-40 ratio of logistics assets to retail properties.
In logistics, the firm acquires underperforming assets that suffered from deferred maintenance or below-market rents, according to Angelini. The team improves assets by installing new property management and leasing teams, performing building maintenance and bringing in new tenants, he said.
In one instance, the firm bought a $30 million industrial portfolio with seven properties outside of Washington, DC through the fund. At the time, the asset was 78 percent leased. Within a year, Longpoint increased leasing to 96 percent and grew net operating income by 23 percent.
With neighborhood shopping centers, the firm focuses on buying properties that reflect current demographic trends in the specific market. All of the fund’s current retail assets are grocery anchored except for one. Longpoint believes it can create a retail environment that the community would want to congregate around by changing the tenant mix and bringing in a culturally relevant grocer as the center.
Through the fund, the firm acquired a retail asset in Austin, Texas anchored by Hispanic grocery chain Fiesta Mart that catered to the local population, chief compliance officer and founding partner Reid Parker said. Over 18 months, Longpoint brought in complementary tenants, brought in a new property manager and increased NOI by 22 percent, according to Parker.
Longpoint’s managing partners include Angelini, Nilesh Bubna, Reid Parker and Robert Provost. Prior to launching Longpoint Realty Fund I, the new firm raised $150 million in a family office separate account in February 2016.