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Tuesday, 22 March 2016

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

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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.


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Data Digest







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




cppichart FP



CMBS 2.0 Spreads


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





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