Rockwood Closes $1.1B Fund, Nabs Watergate Building

The multinational investor base consists of public and private pension funds, foundations, endowments, insurance companies, family offices and high-net-worth individuals.
Watergate Office Building in Washington, D.C.
Watergate Office Building in Washington, D.C.

New York–Rockwood Capital LLC, a private real estate investment firm, closed its latest fund with $1.1 billion in capital commitments and reportedly acquired the famous 12-story Watergate office building in Washington, D.C., as one of the fund’s first nine purchases.

Rockwood Capital Real Estate Partners Fund X LP is a value-added fund that will target office, residential, retail and hotel assets in growing and evolving urban and “suburban-core” mixed-use neighborhoods in the United States.

As of the final closing, approximately 30 percent of Fund X is committed. Nine investments that cover the office, retail and multifamily sectors have been completed.

“Fund X has consummated nine investments to date that we believe will deliver compelling, risk-adjusted returns as we execute our patience to identify and take advantage of opportunities that are consistent with our investment strategy,” Tyson Skillings, a Rockwood managing partner and Fund X portfolio manager, said in a prepared statement. “We will focus on speed-to-income, or how quickly value creation can be executed and a durable income stream put in place.”

Several media outlets are reporting that the Watergate, a 205,000-square-foot office building at 2600 Virginia Ave., NW, in Washington, D.C., was one of the nine completed transactions. Rockwood declined to release details, including a price, but the iconic building that was the site of the 1972 Watergate break-in that led to President Richard Nixon’s resignation reportedly sold for between $75 million and $80 million. Penzance, a Washington private-equity real estate investment company, acquired the building in November 2011 for $76 million from Capri Capital Partners LLC, according to a Commercial Property Executive story. Earlier this year, George Washington University took a full-floor lease boosting occupancy to 90 percent, according to Bisnow.com. Other tenants include Sage Publications and the National Trust for Historic Preservation.

Fund X has a diverse, multinational investor base consisting of public and private pension funds, foundations, endowments, insurance companies, family offices and high net-worth individuals. The firm stated that more than 60 percent of the investors have previously contributed to Rockwood-sponsored funds.

Investors in the current fund include the Minnesota State Board of Investment, Illinois Municipal Retirement Fund and Nebraska Investment Council, according to Pensions & Investments.

Park Madison Partners was Fund X’s placement agent in North America and Threadmark LLP served as the placement agent in Europe.

“In addition to reaching the fund’s hard cap (of $1.1 billion in capital), we were able to further diversity Rockwood’s investor base with high quality institutions including sovereign wealth funds, public and private pensions, foundations and new consultant relationships,” said Nancy Lashine, founder & managing partner of Park Madison, a New York-based real estate capital raising and advisory firm.

Rockwood, which has offices in New York, Los Angeles, San Francisco and Seoul, manages a portfolio of about $3.6 billion in net equity value in approximately $8.8 billion of gross real estate value. Founded in 1995, the firm provides equity capital and real estate operating experience to reposition, recapitalize, develop and redevelop retail, hotel, residential, office and research and development space throughout the U.S. The firm and its principals have invested approximately $23.3 billion of real estate on behalf of their clients through 10 value-added vehicles and eight separate accounts.

Image courtesy of Yardi Matrix