Related Fund Management Closes Debt Fund at $792M

The Alloy Block. Image courtesy of Alloy Development

Related Fund Management has reached the final closing of Related Real Estate Debt Fund LP (RDF), with capital commitments of $792 million, exceeding its target of $750 million.

The fund is a real estate credit vehicle that provides debt financing, structured as first mortgage whole loans, B-notes, mezzanine loans and preferred equity secured by a diversified set of real estate assets, including residential, office, industrial, hospitality, retail and specialty-use. “The vehicle specializes in identifying opportunities to provide capital at varying stages of the investment lifecycle,” according to Related.

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RDF capitalized on strong market activity in 2021, as of year’s end having closed seven transactions totaling more than $247 million of fund equity. RDF has originated debt positions collateralized by multifamily, office, hotel, retail and mixed-use assets.

Brian Sedrish, a managing director of Related Fund Management, said in a prepared statement that the strong investor interest in RDF was largely attributable to its strong investment track record, expertise originating unique, off-market transactions and its ability to leverage Related’s 50-year history in development, construction and rehabilitation.

The Arizona State Retirement System and Menora Mivtachim Holdings Ltd. were among the fund’s lead investors.

Evercore’s Real Estate Capital Advisory group was the global capital advisor for the fund raise.

Funding sustainability

Among RDF’s deals to date was a slice of the $240 million financing package, nailed down last summer, for the first phase of The Alloy Block, a mixed-use development at 80-100 Flatbush in Brooklyn. The project will encompass New York City’s first all-electric residential tower, the Kahlil Gibran International Academy high school and a public elementary school, all with immediate access to the Long Island Railroad’s Atlantic Terminal, a public transportation hub.

The 44-story residential tower will have 396 market-rate apartments and 45 affordable units, along with 30,000 square feet of retail space. In a future phase, a second tower will include housing, retail and office space, as well as a new cultural center.

Goldman Sachs and funds managed by the Real Estate Group of Ares Management joined RDF in the financing. The developers are local entity Alloy Development and the New York City Educational Construction Fund.