Lone Star Funds, the world’s biggest buyer of delinquent mortgages, finished raising its $6.6 billion commercial real estate debt and equity fund, a person with knowledge of the closing said.
The Dallas-based firm limited the second and last phase of fundraising to $600 million for the pool, Lone Star Real Estate Fund III, said the person, who asked not to be named because the details are private. Demand was so high that Lone Star could only accept one-third of the amount pledged by each investor in the final round, the person said.
Lone Star’s new fund is the biggest raised by a private-equity company for global property investments, according to Preqin, a London-based research firm for alternative assets. Additional capital pledges from Lone Star founder and Chairman John Grayken, the firm’s partners and employees of Hudson Advisors, its asset-management arm, brought the total raised to $7.1 billion, according to the person. Lone Star has said it expects to invest half of the new pool in Europe.
Blackstone Group LP is raising the largest Europe-only fund, with a target of 5 billion euros ($6.9 billion), according to Preqin. Blackstone, based in New York, has raised about $2 billion for the fund, its fourth focused on European real estate.
Grayken’s firm has produced returns exceeding 20 percent in the past two decades and has never had a losing fund, attracting repeat investments from investors such as pension funds. Lone Star in May finished raising $5.1 billion for a residential-focused pool, Lone Star Fund VIII, which also is buying soured loans from Europe’s banking crisis.
Jed Repko, a spokesman for Lone Star at the public relations firm Joele Frank, Wilkinson Brimmer Katcher, declined to comment on the new fund.