Lone Star closes fifth CRE fund at $5.9bn

The Dallas-based firm finished fundraising in five months, a similar timeline to fundraising for its predecessor vehicle.

Lone Star Funds has closed its latest opportunistic real estate fund in just five months, garnering $5.9 billion, the firm said Tuesday.

The Dallas-based firm launched Lone Star Real Estate Fund (LSREF) V in December, according to a filing with the US Securities and Exchange Commission. The firm had a $5 billion target and a $5.5 billion hard cap for LSREF V, and ended fundraising in a single close. The real estate series of funds at Lone Star targets commercial real estate debt and equity investments in the Americas, Western Europe and Asia Pacific.

PERE understands that the investor base comprised 95 percent of returning investors, which included corporate and public pension funds, sovereign wealth funds, university endowments, foundations and high net worth individuals. Major investors in LSREF V included Oregon Public Employees’ Retirement Fund, Teachers’ Retirement System of the State of Illinois and the South Dakota Investment Council, which all allocated $300 million, according to PERE Research & Analytics.

The firm drew about $385 million of the fundraising total from its affiliates, including asset management company Hudson Advisors and Lone Star’s chairman John Grayken, sources familiar with the fund told PERE.

None of the capital from LSREF V has yet been deployed, PERE has learned.

The private equity firm launched LSREF IV at the end of 2014, closing the fund in April in a first and final close, PERE reported at the time. That fund beat its $5 billion target by $900 million. The firm raised $5.5 billion in capital for the fund from institutional investors, drawing the remaining equity from affiliates. The firm has made nine investments with capital from the fund, according to its website.

Lone Star Funds was founded in 1995. The firm invests in private equity, real estate, credit and other financial assets and has about $60 billion in total assets under management.