Lone Star’s latest global real estate fund has closed after raising $5.9bn (£4.1bn) of equity.
Lone Star Real Estate Fund V is the latest in a string of mega funds launched by the private equity sector over the past two years.
It follows last week’s final close by Brookfield of $9bn for its latest global fund.
Lone Star beat a fundraising target of $5bn and achieved the feat in less than five months with backers including pension funds, sovereign wealth funds and high net worth individuals.
The fund will target opportunities in Europe, Asia and the Americas including real estate debt and direct real estate assets.
It is the second fund raised by Lone Star of such a size in the past year. Its predecessor, launched in April last year with the same investment criteria, attracted $5.8bn from investors.
Lone Star’s vast resources have made it one of the most active buyers in Europe since the financial crisis, particularly in the non-performing loan market. It has also bought listed companies such as Quintain, which is developing the Wembley Park scheme in north-west London.
2016 TOP GLOBAL FUNDS AT FINAL CLOSE
| Fund | Size ($bn) |
|---|---|
| Brookfield Strategic RealEstate Partners II | 9 |
| Rockpoint Real Estate Fund V | 3.3 |
| Westbrook Real Estate Fund X | 2.9 |
| PW Real Estate Fund III | 1.6 |
| Alliance Bernstein CommercialReal Estate Debt Fund II | 1.6 |
It has been a successful year for some of the world’s largest and most respected fund management businesses, which have been able to attract large amounts of capital since the beginning of 2015. Brookfield, Oaktree and Blackstone have all raised more than $3bn for their global real estate strategies.
Each was fundraising for less than nine months.
COMMENT Bill Thompson, managing director and co-head of Greenhill Capital Advisory
The barbell-shaped world of capital raising now involves a select group of mega-managers getting 40-50% of the capital on one end, and a large number of mostly niche managers getting the capital on the other end.
In between is what I call the “messy middle”. It’s a tough place to be, unless you are highly differentiated. This new reality is caused by limited partners reducing the number of manager relationships they have, and trying to deploy a substantial amount of capital efficiently.
This has also led to large managers offering multiple products. Years ago this was anathema to investors. “Do one thing,” they said. Today that has changed.
Once an investor finds a manager they can trust, they are more interested in expanding the relationship in adjacent strategies.
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