Oregon Investment Council went beyond the recommendation from its investment staff and pledged $300 million to Lone Star’s third real estate fund, which recently raised its hard-cap to $6.6 billion.
The original recommendation was for $200 million, but the council upped the commitment because of a more advantageous fee structure, according to a spokesperson with the Oregon Treasurer’s office. The spokesperson declined to provide details of the fees.
Lone Star’s initial hard-cap was $6 billion, but the firm increased that to $6.6 billion recently, according to a person with knowledge of the firm. Lone Star Funds declined to comment.
The firm expects to hold a first close on Real Estate Fund III in the near future, the person said.
John Grayken, who leads Lone Star, will contribute $330 million of his own money to the fund, according to the person with knowledge of the firm. Bloomberg reported Grayken’s commitment earlier.
Real Estate Fund III will focus on distressed debt and equity investments in multi-family and commercial real estate assets, according to pension documents. Its geographic breakdown is around 40 percent in the US, 40 percent in Europe and 20 percent in Japan, the documents said.
Oregon is a huge fan of Lone Star, having committed just over $2 billion to the firm’s previous funds. In fact, the pension system has committed to each of Lone Star’s past funds going back to 1995, according to documents from the pension system.
Lone Star closed its eighth flagship fund earlier this year on just over $5 billion. Oregon made a $400 million commitment to that fund in May, according to pension documents.
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