SAN FRANCISCO-AMB Property Corp. has launched what it is calling the industry’s first open-end commingled fund with $136.5 million in equity. In line with the industrial REIT’s overall strategy, AMB Institutional Alliance Fund III will focus on US industrial facilities near key passenger and cargo airports, seaports and highway systems in major metropolitan markets.Twelve pension funds, foundations and private investors have invested in a private REIT that is now a limited partner in the fund. The fund allows new and existing investors to purchase shares in the fund at net asset value and to redeem all or a portion of their investment on a quarterly basis after the fund’s second anniversary.Already contributed to the Alliance Fund III fund are nine properties comprising 32 buildings totaling 2.9 million sf. The bulk of the properties are located in Los Angeles, New York, Seattle Boston and Miami. AMB acquired and pre-specified the initial assets for the fund as part of its earlier $481-million acquisition of the International Airport Centers portfolio.The current capitalization of Alliance Fund III is approximately $425 million. Total equity committed to the fund by the initial group of private investors is $136.5 million. AMB’s initial equity contribution to the fund is approximately $34 million or about 20%. The fund is expected to operate with a targeted leverage ratio of 60% of the aggregate gross value of the fund’s assets; currently, the Fund has total debt of approximately $254 million in existing long-term secured debt and committed financings.Alliance Fund III is the eighth fund AMB has formed and invested in with private capital investors since its IPO in 1997. AMB chief executive Hamid Moghadam says the funds “enable us to expand our operating platform and increase returns on invested capital while keeping our common equity scarce.”As the fund’s general partner, AMB will receive acquisition fees on future acquisitions and priority distributions for asset and portfolio management services. Every three years, AMB has the ability to receive additional incentive distributions if it exceeds certain internal rate of return benchmarks.

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