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Lone Star expects to raise $2bn for latest fund by August

The Dallas-based private equity and real estate investor is expected to garner up to $2bn in commitments by the end of August as part of its efforts to raise $20bn to target distress, according to Bloomberg.

Lone Star Funds is reportedly on course to secure $2 billion in commitments as part of its efforts to raise $20 billion for distressed investing, according to a report by Bloomberg.

Citing two people familiar with the matter, Bloomberg said the Dallas-based fund manager was hoping to garner the amount by the end of August.

Lone Star is targeting $20 billion for its two latest vehicles, $10 billion for its second property fund, Lone Star Real Estate Fund II, and $10 billion for its seventh buyout fund, Lone Star Fund VII. The vehicles will focus on distress, with the property fund investing in assets including commercial mortgage-backed securities and distressed commercial real estate.

Lone Star raised $2.5 billion for its first dedicated property fund last July, and $7.5 billion for Lone Star Fund VI. In February, PERE reported that the funds were 80 percent invested.

Distressed prices are attracting a plethora of investors to the real estate asset class, especially in mature markets such as the US and Europe, however raising funds has been extremely difficult. Roughly $13 billion of value-added and opportunistic vehicles were closed in the first half of 2009 – compared to a total of $68.9 billion and $85.2 billion for the whole of 2008 and 2009 respectively, according to PERE data.

In response to the difficult fundraising environment, many firms have lowered their original targets or allowed institutional investors to shrink previously agreed commitments. In February, New York-based Westbrook Partners allowed investors in its $2.5 billion Fund 8 to reduce their commitments by up to 10 percent without penalty.