Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Tuesday, 22 March 2016

Lone Star Gets $300Mln Commitment for Latest Real Estate Fund

Written by 
Rate this item
(0 votes)

Commercial Real Estate Direct Staff Report

Oregon Public Employees Retirement System has committed to invest $300 million in Lone Star Real Estate Fund V, a proposed $5 billion opportunistic investment vehicle.

The pension fund has been investing in Lone Star's offerings since 1996, when the Dallas investment manager got off the ground. It started investing in its real estate funds when the first was launched in 2008. It committed $100 million to that vehicle and so far has generated a 6 percent internal rate of return.

Over the 20 years it has invested in Lone Star's offerings, it's generated a net 19.4 percent IRR and 1.5x multiple, according to minutes of a recent meeting of the Oregon Investment Council, which oversees the pension.

Its $200 million commitment to Lone Star Real Estate Fund II, which it made in 2010, so far has generated a 28 percent IRR. It funded $194 million of its commitment and has gotten back $242 million.

Real Estate Fund V is similar to Lone Star's previous funds, in which it shoots for hefty returns by buying properties, loans, securities and other real estate-related instruments that can be had at significant discounts to their ultimate value. Because such opportunities are now rare in the United States, it's pursuing them overseas. It is expected to invest 75 percent of its capital in Europe. Roughly 15 percent of its capital will be invested in the Americas and the remainder in Asia. Up to 10 percent of its investments in the Americas will be in South America.

Lone Star manages its investments through its Hudson Advisors operation.

It completed raising $5.8 billion for the predecessor, Real Estate Fund IV, only last May. But, according to Oregon PERS, it has been investing its capital far quicker than anticipated. So it started raising the follow-up fund sooner than expected.

The latest vehicle is expected to invest its capital within three years and would have an eight-year life that can be extended by up to two additional years.

Founder John Grayken and other entities capitalized by Lone Star and Hudson Advisors staff are committing $375 million, or 7.5 percent of the capital for the latest fund.

Comments? E-mail Orest Mandzy, or call him at (267) 247-0112, Ext. 211.



weekly-call-to-action

“The Weekly”

“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

  • Breaking mortgage, CMBS, and REIT news

  • Quarterly league tables with rankings of B-piece buyers, book runners, and lenders

  • Industry moves and changes in “The Insider“

Additional Info

  • Syndicate to Realpoint: No
  • Subject: Institutional Investment (INS), Opportunity Funds (OPPY)
  • Private: No
Read 1183 times

Data Digest

 

CMBS DELINQUENCY VOLUME

dqdataFP1

 

CMBS SPECIAL SERVICING VOLUME

sschartfp

Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

cppichart FP

 

 

CMBS 2.0 Spreads

AAAspreads

Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

REITCafe

  • Challenging Retail Environment Weights on REITs
    Mixed economic news is weighing on retail markets, pushing REIT performance down in 2015. This week, the National Retail Federation announced that back-to-school spending is expected to be down 9.3% in 2015. This news came on the heels of a report from the Commerce Department stating that retail sales declined 0.3%...
     
  • US REITs Feeling Effects from Turmoil in Greece and China
    International economic forces have taken center stage this week, affecting both US stock markets and REITs. The crash in the Chinese stock market and ongoing concerns about the future of Greece in the eurozone drove markets down during the first half of the week. REITs fared better than the overall market...

  • What Does Increased Construction Mean for Apartment REITs?
    REITs so far this year have raised $17.1 billion of capital through the sale of unsecured notes, bringing the total raised over the past two and a half years to just more than $75 billion. That’s more than they raised during the previous five years. The massive volume shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark...
shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark against which most REIT’s price their bonds
warehouse-backstage