Alto to hold second close for third fund – Exclusive

The firm raised $80m for the vehicle in December.

Alto Real Estate is preparing to hold a follow-up close for its latest value-added fund on $50 million, PERE has learned.

The Israeli-backed private equity real estate firm declined to comment. The firm, which has offices in New York, Dallas and Tel Aviv, launched ALTO III in February 2016 with a $300 million target and a $500 million hard-cap, PERE previously reported.

In December, the firm held a first close for ALTO III on $80 million, and expects to hold the second close before June 30, according to a source familiar with the matter. PERE understands that ALTO III’s investor base is currently about 50 percent international institutional investors.

The firm is targeting a 12-15 percent net internal rate of return for ALTO III. From realized investments in its prior funds, Alto has generated a net return of 30 percent for its investors.

On behalf of its third fund, the firm plans to invest largely in US retail, including mixed-use properties. The firm’s first acquisition through the fund was the purchase earlier this month of The Shoppes & The Plaza at College Hills, a 246,000 square foot shopping center in Bloomington, Illinois. Alto bought the mall for $22.9 million in a joint venture with M&J Wilkow, a Chicago-based real estate firm that will manage the property. Located at 314 South Towanda Avenue, the mall is 97 percent occupied.

Alto closed the predecessor vehicle, which is now fully invested, on $138 million in September 2015. Capital for the second fund came from Israeli institutional investors, with a $20 million co-investment from the firm.

In February 2016, the firm hired Scott Onufrey, a former executive at New York-based real estate investment trust Kimco Realty, as managing director in its New York office to lead fundraising, acquisitions and dispositions. In the last year, Alto also hired a head of acquisitions, Alex Schaefer, who previously worked at real estate investment trust VEREIT, and a head of asset management, Douglas Scott, who came from CBRE.

Alto manages about $1 billion in assets.