CapRock Partners is on track to oversubscribe its latest industrial fund, despite the change in market conditions. CapRock Partners Industrial Value-add Fund III currently has $180 million in commitments, close to its initial $200 million target. The fund is scheduled to close fundraising at the end of the year.

“We had our first closing in February, right before the pandemic hit, and our target has always been to finalize the fund raise at the end of this year,” Jon Pharris, co-founder and president of CapRock Partners, tells GlobeSt.com. “We anticipate, based on investor interest, that we will be oversubscribed.”

Investor interest in the fund has not waned, despite challenges in performing due diligence and in-person meetings due to the pandemic. “What has changed is the onboarding process for new investors,” says Pharris. “It is more complicated to finalize due diligence efforts because of travel restrictions. Most investors typically like to do it onsite and meet key members of the staff. We have had to come up with a few creative solutions to do that, and some of those are video calls, video presentations to replicate the experience of an onsite visit and case studies. They get the sense of a site visit so they can continue with their due diligence efforts. That has been helpful in maintaining investor interest, despite travel restrictions.”

Investors have been very flexible and receptive to virtual presentations, tours and video conferences, and Pharris expects that this will be the new normal for some time. “Everyone is aware, at least in the near-term, that this is the new normal. Investors are relying more on previous track records, even though track record is not indicative of future performance,” he says. “They are weighing a lot of various factors in order to make additional investor commitments at this stage.”

Actually, the pandemic has helped increased demand for industrial investments. CapRock, which already had its fund open in the market, has been able to attract that new demand. “Through COVID-19, it has been clear that industrial has been the most resilient of all of these asset classes,” says Pharris. “As a result, there has been additional investor interest in allocating to industrial real estate. CapRock has been the beneficiary of the additional investor interest. We have already been in the marketplace raising this fund, and we already had our first close prior to the shelter-in-place orders.”