REAL ESTATE - The Rockpoint Group has raised approximately $500m(€387m)of equity for its newest commingled fund, Rockpoint Finance Fund I.
The commingled fund has a unique investment strategy. The large majority of its transactions will be land banking for parcels geared for single-family development.
Rockpoint figures that there are many public home builders who are going to need these land parcels when the single-family market comes back in a positive way. These companies don’t want to have these assets on their books now, but will want to buy them in the near future. The commingled fund figures to hold onto the assets for a couple of years.
The principals of the Rockpoint Group do have a history investing in residential land development. These involve 70 properties in 20 markets with the transactions having a total value of over $5bn. These investments were done for several commingled funds. These are Rockpoint Real Estate Funds I and II and Westbrook Partners Funds I through IV.
There will be several types of investment structures used by the commingled fund. This would hybrid equity and mezzanine debt. There could be some transactions for the fund that would not involve land for single family developments. These could be for the development of office buildings and apartments.
The main investor target for Rockpoint Finance Fund I was large state public pension funds. The Oregon Public Employees Retirement Fund committed $100m. Pennsylvania State Employees Retirement System allocated $50m.
Rockpoint was a co-investor in the fund for 1.5% of the total equity raise. The projected returns for investors in the fund are a 16% gross IRR and a 1.5x equity multiple. This return is based on a two-year investment period.
Most of the deals for the commingled fund are anticipated to be in the range of $10m to $25. Leverage on the commingled fund will be around 55%. There is a three-year investment period for the fund. Deals will be considered nationwide in the United States. Some initial transactions for the fund are being considered now.