AllianceBernstein closes first private equity real estate fund(2)

The New York-based investment management firm’s debut offering attracted $900 million in equity from limited partners such as Singapore sovereign wealth fund Temasek, but it fell short of its $1 billion goal.

AllianceBernstein has held a final close for its first private equity real estate fund, AllianceBernstein US Real Estate Partners, clinching $680 million in capital commitments from investors that include Singapore’s Temasek, the Alberta Teachers Retirement Fund and institutions in the US, Hong Kong and Japan. The vehicle also received more than $200 million in co-investment capital, bringing the total equity raised to approximately $900 million. The fund, which launched in 2010 and focuses on the recapitalisation of distressed assets, initially had targeted $1 billion in commitments.

The closing marks a key milestone for the investment manager, which hired Brahm Cramer, the former co-head of Goldman Sachs’ Real Estate Principal Investment Area, and Jay Nydick, the former president of real estate specialty finance firm iStar Financial, in September 2009 to launch a private equity real estate platform.

“As a first-time fund, we are thrilled with the success of our capital raise within a very difficult fundraising environment,” said Cramer, who serves as co-chief investment officer of the real estate group along with Nydick, in a statement. “We believe this is a credit to the AllianceBernstein network, the favourable investment environment for real estate and the early investments we have made.”

To date, AllianceBernstein US Real Estate Partners has committed more than $200 million to six investments, including recapitalisations of distressed loans secured by office buildings in San Jose and suburban Seattle, a hotel portfolio and a residential land site in New Jersey. The fund also has acquired multifamily portfolios in Manhattan and in the southeastern US.

The fund, which is targeting a net IRR of 16 percent to 18 percent, focuses on debt and equity investments in various property types across the US, ranging from $20 million to $100 million in size. AllianceBernstein expects to invest through partnerships with local operators and existing owners and in conjunction with borrowers looking to recapitalise assets or entities.