Lone Star plots RE fund close in the spring – exclusive

The Dallas-headquartered firm has begun talking to investors about its fifth real estate fundraise, which it expects to close on about $5.5 billion in the spring.  

Lone Star Funds is gearing up for its next real estate fund just eight months after busting through its fundraising target for its fourth fund.

The Dallas-headquartered firm has been approaching investors to raise capital for its Lone Star Real Estate Fund V and plans to close it in the spring next year on about $5.5 billion, people familiar with the firm tell PDI. The firm has been putting money to work in its last fund quickly, PDI understands.

A spokesman for Lone Star declined to comment on fundraising.

The private equity firm finished fundraising on the Lone Star Real Estate Fund IV in April in a first and final close, as PDI sister title PEREreported at the time. That fund beat its $5 billion target by $900 million. The fund raised $5.5 billion in capital from institutional investors, with the balance drawn from its asset management company Hudson Advisors and Lone Star’s chairman John Grayken. Lone Star began raising money for the fourth fund at the end of 2014.

Sources have told PDI that the next fund is expected to be raised in a single close as well.

The real estate series of funds at Lone Star targets commercial real estate debt and equity investments in the Americas, Western Europe and Japan. The fourth fund planned to have a higher weighting to Europe than previously, with about 70 to 80 percent of the capital dedicated to the region. According to Lone Star’s website, the firm has made six investments with the aggregate price at $3.1 billion as of 30 June.

One of Lone Star’s recent large deals included the purchase of a portfolio of Irish loans. Earlier this month, the US firm joined forces with Irish property group Cairn Homes to buy the book, known as Project Clear, from Ulster Bank for €503 million. The loans have a par value of about €2 billion.

Lone Star Funds was founded in 1995 and now has nine offices across the US, Canada and Europe. The firm invests in private equity, real estate, credit and other financial assets and has about $60 billion in total assets under management.