AllianceBernstein L.P. (AB), a global investment management firm, announced the closing of its second commercial real estate debt fund with total commitments of $1.55 billion, surpassing its $1 billion target.
AB’s second fund (Fund II) received commitments from a diverse range of global insurers, pensions, and foundations and closed at a size double the $750 million predecessor fund, AB Commercial Real Estate Debt Series I-B (Fund I).
In connection with Fund II’s closing, investors for Fund I also extended their commitment period, which increased total commitments in AB’s private commercial real estate credit platform to in excess of $2.3 billion.
Building off the success of Fund I and growing client demand for high-quality alternatives to traditional fixed income strategies, Fund II will continue to directly originate and purchase senior whole loans secured by transitional commercial real estate assets across the U.S.
The loans are held on an unleveraged basis, aiming to generate stable, diversifying sources of floating rate income for investors.
The strategy remains consistent with that of Fund I and primarily focuses on loan sizes ranging from $15 to $125 million, targeting loan-to-value ratios of 65 percent to 75 percent and strong diversification by geography and property type.
“We think the risk-adjusted returns in transitional U.S. commercial real estate debt, particularly when accessed through an unleveraged model, are very attractive, and the continued strong demand from clients across the globe is a testament to the success of our team, the differentiation of our strategy and our rigorous underwriting approach,” said Roger Cozzi, CIO of Commercial Real Estate Debt.
The Real Estate Group was formed in 2009 as part of AB’s efforts to expand its alternatives platform.
Today, the Real Estate Group has closed more than $5 billion in capital commitments across dedicated opportunistic private equity and debt whole loan strategies.
AB’s broader alternatives platform totals more than $23 billion in assets and includes multi-manager offerings, absolute return equity and fixed income strategies, as well as private market offerings targeting commercial and residential real estate, middle market lending, and infrastructure.
“In about six years, we’ve been able to build a robust real estate platform at AB from scratch and we are both fortunate and pleased that our disciplined approach has resonated with clients,ˮ said Jay Nydick, Co-CIO of AB’s Real Estate Group.
“Both of our recent equity and debt funds have significantly exceeded their original fundraising targets and our broader alternatives platform has continued to grow both in size and product offerings.”