NEW YORK CITY-Vornado Realty Trust on Thursday said it hascompleted the first closing of its real estate investment fund withinitial equity commitments of $550 million, including $200 millioncontributed by the locally based REIT. Vornado expects totalcommitments of $1 billion for the fund, which is reportedlytargeting IRRs of up to 20% on high-quality office properties inkey markets.

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

According to a release, subsidiaries of Vornado will serve asthe general partner and investment manager. Vornado says the fundwill be its exclusive investment vehicle for all real estate andreal estate-related investments that fit within the fund’sinvestment parameters for its three-year investment period. Thispast April, the Oregon Public Employees Retirement Fund approved a$100-million commitment to the Vornado fund.