AMERICAS: Fighting to the finish

Even with a real estate team led by Goldman Sachs executives, a successful first-time fundraising was no slam-dunk for AllianceBernstein. Last month, the New York-based asset management firm announced that it had completed fundraising for its debut private equity real estate vehicle, raising $680 million in commitments, as well as approximately $220 million in co-investment capital. 

The final close was a major milestone for AllianceBernstein, which launched its private equity real estate business in September 2009, recruiting Brahm Cramer and Jay Nydick as co-chief investment officers. Cramer previously was co-head of Goldman Sachs’ Real Estate Principal Investment Area, while Nydick served in various senior roles at the investment bank, including co-head of the Asia ex-Japan corporate finance, M&A and real estate investment banking business.

“The environment has been very tough for fundraising in general, and even tougher for first-time funds and start-up entities,” said Cramer. “It was equally difficult for us.” 

The team had anticipated that fundraising would require 12 to 18 months, but ultimately it took nearly two years. The fund, which launched in June 2010, held a first close in October 2010 and had raised nearly $330 million as of January 2011 and some $642 million as of January 2012, according to SEC filings. In the interim, investors had approved a six-month fundraising extension for the vehicle, which had an original target of $1 billion.

In addition, “it was a much more global fundraising than we thought,” Cramer said, noting that the real estate group spent a lot of time with potential investors in Asia, Europe and Canada. “It was a very tough fundraising on the US institutional side.” 

In fact, about 25 percent of the fund’s limited partners were first-time investors in US real estate, including Singapore-based sovereign wealth fund Temasek Holdings and Canadian pension Alberta Teachers Retirement Fund. “For new investors coming into this market, they actually preferred the de-novo structure,” where no legacy assets were involved, Cramer noted. 

The real estate group also weathered a string of key departures, including Alex Gilbert, who was part of the team’s senior management; Grant Berlin, who had been responsible for capital raising; and Paul Vosper, who had been involved in strategy and investor relations. 

Cramer declined to comment, but PERE understands that Gilbert, who now is president of Artemis Real Estate Partners, moved back to Washington DC for personal reasons and left before the fund began making investments. Berlin, who joined Brookfield Asset Management last month as a managing director in its private funds group, did stay at AllianceBernstein through the end of the fundraising. 

Vosper, meanwhile, originally had been in charge of European marketing when the firm initially had been considering a separate European fund. He left to join RREEF after AllianceBernstein decided to focus on just a US vehicle.

The fund – targeting distress-driven US investments – had invested nearly $200 million between the first and final closings, and AllianceBernstein currently is in due diligence for two additional recapitalisations and two acquisitions. To date, between 20 percent and 25 percent of the fund’s capital has been invested or committed.