Rockpoint launches next real estate fund – Exclusive

The Boston-based private equity real estate firm is expected to raise half of the vehicle’s target in a first close this summer.

The Boston-based private equity real estate firm is expected to raise half of the vehicle’s target in the initial close this summer.

Rockpoint Group is coming to market with its third lower-risk real estate fund, Rockpoint Growth and Income Fund III, less than six months after closing on its predecessor, PERE has learned.

Rockpoint declined to comment, but PERE understands that the Boston-based private equity real estate firm is targeting more than $2 billion for the fund and already has attracted significant interest from investors. In fact, Rockpoint is expected to hold an initial close exceeding $1 billion this summer from primarily existing investors.

The launch of RGI III comes less than six months after the final close of its predecessor, RGI II, which amassed a total of $1.7 billion in December. Rockpoint launched the closed-ended vehicle in June 2015, with a target of $1.5 billion to $2 billion in total fund and sidecar commitments. Limited partners in the fund included the Indiana Public Retirement System and New York State Teachers Retirement System, which each committed $50 million; the Public Employees Retirement Association of New Mexico, which pledged $75 million; and North Carolina State Treasury, which earmarked $100 million, according to PERE data.

The firm has quickly returned to the fundraising trail as RGI II is now said to be 75 percent deployed with the close of the acquisition of Spring Creek Towers, a 5,881-unit affordable housing complex in Brooklyn. Rockpoint acquired the property, which is still often called by its former name, Starrett City, in partnership with multifamily-focused real estate investment firm Brooksville Company for $905 million.

With RGI III, Rockpoint is understood to be pursuing a similar strategy to the predecessor funds in the series, which targets stabilized assets in major US coastal markets with strong existing cashflows and less capital-intensive business plans than Rockpoint’s opportunistic fund investments. The firm is said to target 11-12 percent gross returns, with a 50 percent leverage cap, for its lower-risk funds. Rockpoint Core-Plus Fund was generating a since-inception net return of 12.2 percent and an equity multiple of 1.2x as of June 30, 2017, according to NYSTRS’ 2017 annual financial report.

Rockpoint launched its lower-risk fund series in 2013, closing on a total of approximately $1 billion for RGI I a year later. The firm originally named the series Rockpoint Core-Plus Funds but subsequently renamed the vehicles to better reflect their focus on generating returns through active asset management as opposed to higher leverage.

Rockpoint also is expected to officially begin fundraising later this year for its sixth opportunistic real estate fund, Rockpoint Real Estate Fund VI, which received an early $10 million commitment from the San Antonio Fire and Police Pension Fund in August.