Vornado Realty Trust has held a $550 million first close on its debut private equity real estate fund.
The US diversified REIT said in a statement it had garnered $350 million in commitments from limited partners, coupled with $200 million of co-investment capital from Vornado itself.
The firm is targeting $1 billion of equity for the vehicle, Vornado Capital Partners, after launching fundraising last summer.
Vornado added that the commingled fund would be the firm’s “exclusive investment vehicle for all real estate and real estate-related investments that fit within the fund’s investment parameters for its three-year investment period”. Vornado declined to comment further.
Vornado has promised institutional investors eyeing the real estate fund that its entire acquisition team will be focused on finding new deals for the commingled vehicle over the next few years – ahead of sourcing potential investments for the REIT’s general activities.
Oregon Investment Council, which committed $100 million to the vehicle, said in May that Vornado was charging a 1.5 percent management fee on called capital, with target gross IRRs of between 15 percent and 20 percent.
The fund is targeting high quality office and urban retail opportunities in New York and Washington DC, however it will not be able to invest more than 20 percent of its equity in a single deal, with LPs offered the chance to co-invest additional capital if large-scale transactions are available.