The Real Deal New York

Related closes fund that invests in One Mad. and Rector Square

January 23, 2012 02:30PM

Related Companies has closed the distressed asset fund that purchased debt on Manhattan properties including One Madison Park and 225 Rector Place (also known as Rector Square), BusinessWeek reported.

The Related Real Estate Recovery Fund garnered $825 million of commitments, $75 million more than it targeted, to invest mostly in distressed debt with an eye on taking ownership of the properties. The fund will also invest in Chicago, Boston, Los Angeles, San Francisco and Florida, and was used to acquire the office building at 511 West 25th Street.

“Our whole idea was to do all those deals that require heavy execution where there’s less competition so pricing is better,” Blau said.

According to the Financial Times, the fund was among the largest commercial real estate investment vehicles raised in 2011, and the largest run by a property developer. Vornado Realty Trust was a close second, raising an $800 million fund. Investors embrace these funds because they only pay fees to the operator, and not to a fund manager as well as the operator. [BusinessWeek] and [FT]