REPE Fund Profile Series - Part Eight: Rockpoint Group

Welcome to Part Eight of our Fund Profile Series. We’re continuing to work our way through the top 50 global real estate private equity (REPE) firms according to the 2020 PERE 100 list.

Each Fund Profile briefly summarizes each fund’s history, as well as getting into the details of the funds themselves. And to help you get ready for your upcoming REPE technical interview(s), we also outline a few of each firm’s key real estate equity investment in recent years. 

As the next follow up from our Carlyle Group profile (in Part Seven), the eighth part of this series will examine the Rockpoint Group in more detail.

Key facts about the Rockpoint Group

Bill Walton and Keith Gelb co-founded the Boston-based Rockpoint Group in 2003 after branching off from Westbrook Real Estate Partners, L.L.C., their original real estate investment management firm (founded in 1994). Keith and Bill met at Morgan Stanley, where they worked in different departments prior to forming (in Bill’s case) and joining Westbrook.

Both Keith and Bill continue to manage Rockpoint jointly, taking responsibility for overseeing the entirety of the firm’s investment activities, as well as managing its overall operations and management.

To date, the firm has raised just under $20.3B for its 11 funds since 2003, the largest of which being its recent Real Estate Fund VI: an opportunistic fund holding $3.8B in total equity capital commitments (closed in 2020). 

The Rockpoint Group has a close-knit team of just over 100 staff members split between 4 offices. The firm’s headquarters remain in Boston, while you can find other domestic offices in San Francisco and Dallas. Internationally, Rockpoint also has a small outpost in London—though the vast majority of team members are based in the U.S.

Aside from its investment services, the Rockpoint Group also has an affiliated property management company called Rockhill Management, covering commercial and residential properties in cities throughout the U.S.

In 2018, the Blackstone Group acquired a minority stake in the Rockpoint Group.

An overview of Rockpoint’s real estate equity investment strategy

Rockpoint’s real estate equity investment portfolio spans across all major asset classes including retail developments, industrial and logistics assets, office properties, single family units, multifamily units, and hospitality and leisure properties, besides investments in other sectors such as student housing (see the University View deal in the section below).

The firm’s ‘value-oriented’ investment approach lies in using several established investment strategies across its funds—specifically the tried-and-tested ‘Core’, ‘Value-Add’, and ‘Opportunistic’ strategies:

The ‘Core’ approach

Rockpoint uses this strategy to focus on investing in well-located assets of good quality, with the aim of maintaining stable income in the long-term despite the impact of market cycles.

The ‘Value-Add’ approach 

Within this approach, the firm looks for opportunities to acquire assets with increased cash-generation potential. These are assets that can be managed to become more efficient and cost-effective, as well as assets with the potential to create more revenue streams. For an example of this in action, see the Boston Park Plaza deal in the section below.

The ‘Opportunistic’ approach

Here, Rockpoint’s strategy focuses on looking for prospective deals where an asset might have been priced incorrectly—for example, in distressed debt situations or where the firm needs to restructure and/or recapitalize certain assets or debts.

Some of Rockpoint’s notable REPE deals

To get to grips with the hows and whys of a real estate private equity firm’s investment strategy for your REPE technical interview, it's crucial to examine a firm’s track record with deals and funds. 

So, we’ve listed a few of the Rockpoint Group’s notable deals below to get you started:

RESICAP

In 2020, Rockpoint entered a joint venture project with RESICAP to acquire, renovate, and lease 4,500-5,000 affordable single-family rental homes. It first launched as a $1B project, later adding a $2B build-to-rent (BTR) project. 

As of 2021, the partnership has since expanded to add over 9,000 new homes with additional funding of $2B.

Highgate Holdings

Between 2010 to 2021, Rockpoint formed a solid partnership with Highgate Holdings, a specialist hospitality investment and asset management firm, for a series of substantial hotel acquisition, including:

Row NYC Hotel 

In 2010, the group bought the hotel for $200M and divided the asset into three distinct units-the land, the retail, and the hotel itself.

After $140M-worth of renovations, Deutsche Asset & Wealth Management bought the land portion of the hotel for $325M in 2013. Then, in 2014, Thor Equities acquired the retail portion for $64M. As of 2019, it appears the partnership still owns the third hotel portion.

Boston Park Plaza

In 2011, the two firms partnered with the Donald Saunders Family, LLC to acquire the Boston Park Plaza Hotel & Towers (as it was known at the time) from the Starwood Group for $126M. 

In 2013, the group sold the hotel to the Sunstone Hotel Investors REIT for $250M.

The Newbury Boston

In 2016, the partnership joined the New England Development consortium to purchase Taj Boston (its name at the time) from the Taj Hotels group for $125M.

After a period of extensive transformation (including a rename from Taj Boston to The Newbury Boston in 2019), it finally reopened in May 2021 after pandemic-related delays shifted its original reopening date from 2020.

University View

In 2016, Rockpoint teamed up with Greystar to purchase University View (a 1,573-bed / 507-unit student housing community made up of two high-rise buildings with 9,218 square feet of ground floor retail space) on the University of Maryland campus for $114.7M.

After a 2-year period of transformation, including significant upgrades to amenities and high-quality renovations, the joint venture sold the asset to the Scion Group (in partnership with the Singaporean and Canadian sovereign wealth funds) for $235M in 2018, making it the largest ever single-asset student housing deal in the U.S. at the time.

Northeast Logistics Portfolio 

Earlier in 2021, Rockpoint and Oppidan joined forces to invest $157.3M in three logistics assets (related to the life sciences industry) in Minnesota and North Carolina. When completed, the portfolio will include nine buildings on the three construction sites comprising just under 1.6 million square feet of space.

As of October 2021, the first phase of construction has started, with the first four buildings set to complete by 2023.

Office Portfolio in Tysons, VA 

Between 2013 to 2017, Rockpoint acquired several properties in the Tysons area of Virginia based on its status as a commercial hub, its amenities, and its timely local redevelopment for the area’s new transport links to surrounding regions:

• In 2013, Rockpoint and MRP Realty developed Tysons Overlook, an 11-storey, 308,000 square foot Class A office building for $120M. The two firms later sold the building to Pentagon Federal Credit Union in 2016 for $164M.
• In a second partnership with MRP Realty in early 2016, the firm bought Westwood Metro Tower, a 210,087-square-foot office building, for $53.7M. 
• In early 2017, the firm purchased the Shenandoah Building, a 198,000-square foot office property, for $55.3M.
• Shortly after the Shenandoah acquisition, the firm went ahead with acquiring Tysons International Plaza, a two-building, 471,367-square foot property, for $132M in mid-2017.

Now, over to you...

We hope you found this Rockpoint Group fund profile helpful to increase your industry knowledge for your REPE technical interview preparations. Now that you’re up to speed: do you have the right strategy to sell yourself well at your interview?

Let us help you set yourself up for your new career in real estate private equity: check out how we can support your career goals at Leveraged Breakdowns.

 

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About the Author: 

Melody Sadé Abeni is a London-based writer who specialises in commercial real estate content. As a generalist member of the Leveraged Breakdowns team, she crafts detailed posts geared towards those curious about the real estate private equity life. 

In her former professional life, Melody supported senior corporate executives as a global mobility consultant and did her time in both management consulting and specialist asset management firms.