Lionstone raises $100m for US fund

The Houston-based firm has held a first close for its second opportunistic fund focused on US infill land sites and is seeking a total of $250 million from high-net-worth individuals.

The Lionstone Group has closed on nearly half of the desired capital for its second opportunistic real estate fund. A statement from the Houston-based private real estate investment firm revealed that the Lionstone US Land Two fund has closed on $100 million in commitments from high-net-worth individuals. Lionstone, which plans to raise a total of $250 million for the fund, anticipates a final close in November. 

Bryan Sanchez, a senior vice president of Lionstone who serves on the investments team, told PERE that the fund’s investors are high-net-worth individuals because most institutional investors currently are focused on “cash-flowing real estate” assets.

Through US Land Two, Lionstone plans to invest in large infill land sites in select US cities, hold them for capital appreciation and sell the sites to developers and users at opportunistic prices. In most cases, Lionstone plans to partner with local operating partners with experience sourcing and managing land investments. 

Lionstone founding partner Tom Bacon said in a statement: “We believe investing in infill land is one of the best large-scale real estate investment strategies available today. Infill land investing has been a cornerstone of the Lionstone investment platform since our inception.” 

When Lionstone buys large land tracts, it determines the best uses for those assets and then develops a flexible master plan for the land. Once the time is right for development, the firm then selects buyers “who will develop the property in a manner that creates additional appreciation for the remaining parcels,” Sanchez explained.

“Generally, bulk land trades inefficiently because there are few investors who want land today,” said Sanchez. “This is where we feel we can really add value due to our real estate knowledge.” 

The target investment size on behalf of the fund is $10 million or larger. Lionstone has not yet made any investments on behalf of US Land Two. 

Lionstone’s first commingled vehicle, US Land One, raised $75 million in equity from high-net-worth individuals in 2010. US Land One is fully invested in assets in Denver, Dallas, Charlotte, Austin, Washington DC and Pleasanton, California. 

Formed in 2001 by Bacon, Dan Dubrowski and Glenn Lowenstein, Lionstone has more than $2 billion of real estate assets under management.