Following its commitment to Blackstone Real Estate Partners (BREP) VII in June, the New Mexico State Investment Council (SIC) has invested in another real estate opportunistic fund. The $15 billion state endowment has made a $50 million commitment to the Rockpoint Group’s current commingled vehicle, Rockpoint Real Estate Fund (RREF) IV. The commitment, which was approved at the SIC’s 23 October meeting, was based on a recommendation from The Townsend Group.
Despite its strategy of moving out of opportunistic and value-added real estate investments and more towards stable, income-producing investments, this represents SIC’s third investment in the non-core space this year, for a total of $175 million. Over the summer, the endowment committed $75 million to The Blackstone Group’s $13.3 billion mega-fund, marking its first non-core commitment in four years. Last month, SIC committed $50 million to Almanac Realty Securities VI.
Regarding the reason to contribute to RREF IV, documents from the SIC stated: “The committee was impressed with the management team’s experience and longevity and felt this would be an opportunistic investment for the SIC.”
Through RREF IV, Rockpoint Group is targeting roughly $2.5 billion of equity commitments. The fund is expected to follow a similar strategy as its predecessor, RREF III, with the focus largely on distressed properties in the US. In fact, RREF IV will focus 80 percent of its investments on the US – particularly the markets of Washington DC, Boston and northern and southern California – and 20 percent internationally. For international investments, the Boston-based firm traditionally has targeted opportunities in major coastal markets in Japan and Western Europe.
Investments generally include assets that have been underutilised, have large vacancies or require capital improvements. About 40 percent to 50 percent of Rockpoint’s investments have been in the office sector, 30 percent to 35 percent in hotels and 10 percent to 15 percent in apartments.
Rockpoint, which will co-invest $50 million in RREF IV, held a first close on $330 million in equity in November 2011, according to a filing with the US Securities and Exchange Commission. Although the firm declined to comment, PERE understands that, as of July, Rockpoint had raised about $1.4 billion on behalf of RREF IV. That month, the fund received commitments from the Florida State Board of Administration and the San Francisco Employees’ Retirement System.