Lone Star Funds, a real estate-focused private equity firm, said on Tuesday it has raised $5.9 billion for a new fund that will invest in the debt and equity of commercial property assets in the Americas, Europe and Asia Pacific.
Investors in Lone Star Real Estate Fund V include corporate and public pension funds, sovereign wealth funds, university endowments, foundations and wealthy individuals, Lone Star said in a statement.
Low interest rates in major economies around the world have helped to lift global property prices in recent years, fueling the popularity of real estate private equity funds.
Assets managed by real estate private equity funds, which generated annual returns of nearly 17 percent between 2012 and 2014, reached a record $742 billion in 2014, data from private equity information provider Preqin shows.
Lone Star said it started amassing the fund in January after setting an initial target of $5 billion, which was exceeded because of strong demand. A positive investor reception also allowed Lone Star to wrap up the fundraising after just one “close” or one round of canvassing, as opposed to multiple “closes.”
Founded in 1995 by John Grayken, Lone Star manages more than $65 billion.
A source familiar with fundraising activity said Lone Star Fund IX, which manages $7.2 billion and invests in debt holdings including corporate and consumer debt, has spent about 90 percent of its funds. A private equity fund typically starts raising a new fund once it has invested around three-fourths of its previous fund.
(Reporting by Koh Gui Qing in New York; Editing by Steve Orlofsky)
Photo: Chairman of Lone Star, John Grayken (R) leaves the Seoul Central District Court in Seoul as a protest holds a sign, while the court is adjourned for lunch, January 11, 2008. REUTERS/Han Jae-Ho