AllianceBernstein has closed on its latest private equity real estate fund, AllianceBernstein US Real Estate Partners (ABREP) II. The New York-based investment manager raised a total of $1.2 billion, exceeding an original $1 billion target, in nine months.
The fund attracted nearly the double capital of its predecessor, ABREP I, which collected $680 million in 2012. All of ABREP I’s limited partners re-upped in the new fund at the same or greater size commitment, while a slate of new investors also committed to the vehicle. The investor base for ABREP II included Asian sovereign wealth funds and insurance companies; European corporate pensions and insurers; Canadian sovereign wealth funds; UK public pensions and insurers; and US high-net-worth individuals and family offices, which accounted for a third of the capital raised.
Brahm Cramer, co-chief investment officer of AllianceBernstein’s real estate group, noted that its latest capital raise was far quicker and easier than that of its debut fund, when the fundraising environment was extremely difficult. “It took people a very long time to make a decision and pull the trigger,” he said. “That was the environment in 2010.” The firm also faced the additional challenge of being a first-time fund manager, and ultimately took two years to raise $680 million, falling short of its original $1 billion target.
By contrast, Alliance Bernstein circled all of its commitments for ABREP II in six to seven months. This time, the firm had the benefit of a track record with its debut fund, which currently is outperforming its mid-teens net return target. “One of the things that was material in helping us raise money was that Fund I effectively returned the bulk of everyone’s capital,” Cramer added. Many of the commitments to ABREP II represented the investment of return proceeds, he said.
ABREP II’s strategy will be similar to its predecessor fund, focusing on opportunistic special situations in US real estate markets. To date, the firm has committed approximately $170 million of the new fund’s capital to five investments. Like its predecessor, ABREP II will house 30 to 40 deals, said Jay Nydick, co-CIO of AllianceBernstein’s real estate group.
The firm’s property business, which was launched in 2009, now has $4 billion of assets under management, split roughly equally between equity and debt. In addition to its private equity real estate funds, the firm also raises and invests commercial real estate debt vehicles. The first fund, AllianceBernstein Commercial Real Estate Debt Fund, attracted $750 million in commitments in 2013, and targeted first mortgage loan investments backed by transitional properties in the US. AllianceBernstein declined to comment, but PERE understands that the investment manager already has raised $1.2 billion for the successor vehicle, exceeding a $1 billion target, but is expected to continue to raise capital for an additional three to six months.