NEW YORK CITY-Vornado Realty Trust on Thursday said it has completed the first closing of its real estate investment fund with initial equity commitments of $550 million, including $200 million contributed by the locally based REIT. Vornado expects total commitments of $1 billion for the fund, which is reportedly targeting IRRs of up to 20% on high-quality office properties in key markets.

The Wall Street Journal first reported a year ago that Vornado was planning to launch a private equity fund with a focus on distressed properties, particularly in areas where the company already has a presence, including New York City and Washington, DC. Reportedly known as Vornado Capital Partners LP, the fund is Vornado’s first with institutional investment limited partners.

According to a release, subsidiaries of Vornado will serve as the general partner and investment manager. Vornado says the fund will be its 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. This past April, the Oregon Public Employees Retirement Fund approved a $100-million commitment to the Vornado fund.