Rockpoint Group has held a final closing for its fourth real estate opportunity fund. The Boston-based real estate investment management firm announced today that it has garnered $1.95 billion in equity commitments for Rockpoint Real Estate Fund (RREF) IV.
RREF IV received commitments from public and corporate pension plans, foundations, endowments and government entities from the US and Canada, as well as investors in Asia and the Middle East. In addition to Rockpoint itself, which co-invested approximately $30 million in RREF IV, investors in the vehicle include the Florida State Board of Administration, the San Francisco Employees’ Retirement System, the New Mexico State Investment Council, the New York State Teachers' Retirement System, the Employees Retirement System of Texas and the South Dakota Investment Council. Rockpoint did not use a placement agent to raise the fund.
RREF IV follows a similar strategy as its predecessor, RREF III, with the focus largely on distressed properties in the US. In fact, RREF IV will focus at least 80 percent of its investments on the US – particularly Washington DC, Boston, New York and northern and southern California – and no more than 20 percent internationally. However, though Rockpoint has historically targeted opportunities in major coastal markets in Japan and Western Europe, the firm anticipates the vast majority of RREF IV to be invested within the US and does not expect to invest a material amount of the fund internationally.
Investments generally include assets that have been underutilized, 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. Through RREF IV, Rockpoint is targeting a gross IRR of about 20 percent.
To date, RREF IV has committed approximately $470 million of equity to 12 transactions. Investments made on behalf of the fund thus far include the acquisitions of 1440 Broadway and Eastgate Tower Hotel, both in New York, and the purchase of the Air Rights Center in Bethesda, Maryland, via a joint venture with Washington DC-based MRP Realty. The firm currently is one year into its four-year investment period for the vehicle.
Launched in 2011, RREF IV held a first close on $330 million of equity in November 2011. By July 2012, Rockpoint had raised about $1.4 billion on behalf of the fund. The firm stopped marketing the vehicle in November 2012.