AllianceBernstein became the latest of the nine firms awarded the right to take part in the U.S. Treasury's toxic debt investment plan to seek capital from the equity markets.

Foursquare Capital Corp., a real estate investment trust majority-owned by AllianceBernstein has filed for an initial public offering of up to $500 million, according to a prospectus filed on Wednesday.

The REIT, which specializes in commercial and residential mortgage-backed securities, aims to capitalize on government programs to buy assets at reduced prices.

AllianceBernstein beat out more than 90 other managers to work with the Treasury in the Public-Private Investment Plan, or PPIP, meant to rid banks' balance sheet of assets whose values have been decimated though the financial crisis.

Foursquare plans to use a significant amount of the proceeds for AllianceBernstein's participation in PPIP, according to the prospectus filed with the U.S. Securities and Exchange Commission.

Foursquare said the current distressed condition in the financial markets would allow it to buy mortgage assets at significantly depressed trading prices and higher yields.

Another REIT, Western Asset Management Mortgage Capital Corp, filed for an IPO last month. Its parent, WAMCO, is among the fund managers the U.S. Treasury selected for PPIP.

The IPO market has remained a challenge for a number of issuers. In June, Invesco Mortgage Capital -- owned by PPIP manager Invesco -- slashed the size of its IPO by more than half, raising about $170 million.

Foursquare's IPO will be led by Bank of America Merrill Lynch and Morgan Stanley, according to the filing.

Foursquare plans to qualify as a REIT for U.S. federal income tax purposes starting with the taxable year ending December 31, 2009.

(Reporting by Phil Wahba and Al Yoon)