Lone Star Closes Fifth CRE Fund with Money to Spare

The Dallas-based company closed its fifth commercial real estate fund with $5.5 billion in commitments.
John Grayken, founder & chairman of Lone Star Funds

John Grayken, founder & chairman of Lone Star Funds

Dallas—Global private equity firm Lone Star Funds of Dallas, on Tuesday announced the first—and final—closing of Lone Star Real Estate Fund V (U.S.) LP and Lone Star Real Estate Fund V (Bermuda) LP, having received, since its January launch, third-party commitments in excess of the fund’s $5.0 billion target and $5.5 billion hard cap.

The fund’s investment strategy, according to a prepared statement, “will be consistent with previous Lone Star Funds real estate funds, focusing on a broad range of financial and other opportunistic investment assets in commercial real estate debt and equity products in the Americas, Europe and Asia-Pacific.”

(Lone Star Funds was unable to provide requested additional information to Commercial Property Executive by press time.)

Since its founding in 1995, Lone Star Funds has organized 16 funds with commitments in excess of $65 billion, including four previous dedicated CRE funds.

A quick review of some major transactions by Lone Star Funds over the past 18 months or so illustrates why “opportunistic” is a well-chosen term.

In September 2014, Lone Star acquired a portfolio of 38 hotels from Hyatt Hotels Corp. for about $590 million. That same month, it acquired a 64-property, 20,439-unit apartment portfolio from Bell Partners Inc. and DRA Advisors LLC for more than $1.8 billion.

In June 2015, another giga-deal, when Lone Star acquired multifamily REIT Home Properties for about $7.6 billion. Then, in July 2015, a change of pace, as Lone Star bought three Class A and B office buildings for $25 million and two Marriott hotels for more than $61 million, all in Cincinnati.

Opportunistic indeed.