New $900M Fund Targets Transitional Real Estate

A new fund has entered the fray, offering to originate floating-rate first mortgage whole loans secured for transitional US commercial real estate

AllianceBernstein announced that it completed the first closing of its fourth US Commercial Real Estate Debt fund, which has secured nearly $900 million in capital commitments. Equitable will be the lead investor.

CRED IV, which is part of AllianceBernstein’s transitional real estate lending strategy, will hold the loans on an unleveraged basis. Since its launch in 2013, the firm’s platform of CRED funds has originated more than 100 loans and raised nearly $7 billion in capital commitments from institutional investors worldwide.

“Our CRED strategy provides strong credit diversification and attractive yield premium relative to public credit. We’re confident these attributes will continue to attract investor interest, as we look toward future Fund IV closings,” Matthew Bass, head of Private Alternatives for AllianceBernstein, said in prepared remarks.

CRE-related fundraising has been occurring at a brisk pace for both debt and to acquire real estate. 

Earlier this week, real estate development and investment firm Hillpointe closed a $110 million fund to develop Class A apartments for workforce tenants. 

The firm blew past its target of $100 million and plans to develop high-quality housing for workers who earn between 60% and 120% of area median income, the company said in a statement. The fund will provide capital for the firm’s next eight workforce housing projects representing around 2,400 units across the southeastern US.

Multifamily is also a target for Chicago-based Waterton. It closed its Waterton Residential Property Venture XIV with $1.5 billion in equity commitments in mid-February, making it one of the largest dedicated multifamily funds in the US. Waterton raised capital from a diverse group of global institutional investors, according to the company. Including debt, the fund has the capacity to purchase $4 billion in more than 50 multifamily properties. 

In late February, Electra America, a platform specializing in the multifamily and residential sectors, and AKA, a leader in luxury hotel residences, partnered to form Electra America Hospitality Group. The fund is in the process of raising $500 million in capital from investors for the acquisition of distressed independent hotels in major gateway markets. 

AllianceBernstein has also been active in raising funds. It closed a European Commercial Real Estate Debt platform in Q4 2020, which launched with nearly 1.5 billion euros in capital. The ECRED platform, led by industry veteran Clark Coffee, expects to announce its first loan origination since joining AB in the coming weeks.