AllianceBernstein on road for third RE debt fund – exclusive

The previous fund surpassed its $1bn target after wrapping up fundraising last spring. 

AllianceBernstein is seeking $2 billion for its latest real estate debt fund, which is targeting European investors but will deploy capital overseas.

The New York-based asset manager held a first close in January on $435 million for the vehicle, which will participate in deals involving private equity real estate firms, according to a source familiar with the situation.

The fund, which will invest in US office buildings and residential properties, has an eight-year life consisting of investment and harvest periods of, respectively, three and five years, this person said. The unlevered vehicle carries no incentive fee and a 0.85 percent management fee on invested capital. It will target returns of LIBOR plus 5 percent.

An AllianceBernstein spokesman could not be reached for comment.

The firm raised $1.55 billion for its most recent real estate debt vehicle, AllianceBernstein Commercial Real Estate Debt Fund II, which held a final close in April 2016 surpassing its $1 billion target, according to PDI data.

Fund II invested in directly originated senior whole loans while also purchasing the same securities, according to a statement at the time. The loan sizes range from $15 million to $125 million with loan-to-value ratios of 60-75 percent.

AllianceBernstein launched its real estate group in 2009 and added the debt strategy in July 2013 when it tapped Roger Cozzi, formerly of Gramercy Capital Corp., to lead the platform. Its debut fund closed on $750 million.

Earlier this month the firm announced a management shakeup when it ousted former chief executive officer and chairman Peter Kraus and installed Seth Bernstein and Robert Zoellick for those positions, respectively. Bernstein was also named president of the firm. The firm also drastically reconfigured its board, removing nine members and appointment of six new directors, according to media reports.