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Alex. Brown closes seventh real estate fund

The Baltimore-based investment manager has raised $276 million for its latest value-add real estate fund from investors such as the West Virginia Investment Management Board, the Montana Board of Investments and Baltimore City Fire and Police.

Alex. Brown Realty has concluded fundraising for its seventh commingled real estate fund, ABR Chesapeake Fund IV, which is targeting value-add investments in the US. The fund collected a total of $276 million in commitments, exceeding its target of $250 million.

Follow-on commitments accounted for $129 million of the capital, while $100 million of the new investor capital came from two large institutions that each committed $50 million. Limited partners include the West Virginia Investment Management Board, the Montana Board of InvestmentsBaltimore City Fire and Police, as well as other pension plans, endowments, foundations, family offices and high-net-worth investors. Allegro Advisors acted as placement agent for the fund.

Alex. Brown launched the fund in August 2010 and held a first close on $46 million that same month. In a filing with the US Securities and Exchange Commission, the firm disclosed that it had raised $187.5 million as of 12 August 2011. The fund’s predecessor, Chesapeake Fund III, held a final close on $254 million in December 2006.

Fund IV’s original final close date was scheduled for November 2011, but Alex. Brown was granted an extension until 30 June of this year. Final approvals for some commitments, however, were not received until the end of July.

Chesapeake Fund IV, which to date has raised capital exclusively from US-based limited partners, will be open through 30 September to non-US investors. The vehicle has a small allocation to foreign capital that could potentially allow it to hit its hard cap of $300 million.

The fund will pursue a similar investment strategy to Alex. Brown’s previous funds and seek moderately-leveraged, value-add opportunities in mid-sized US properties generally valued between $10 million and $30 million. All of the assets will be acquired through joint ventures with local partners. The vehicle, which is targeting a 14 percent net return, will focus on investments that require financial restructuring, recapitalisation, repositioning or redevelopment.

Fund IV, which is expected to assemble a portfolio of 40 to 50 assets, to date has acquired 10 properties with a total value of $124.4 million. The fund has invested more than $44 million in equity in the 10 transactions and already has liquidated two investments.