Lone Star Funds, the biggest buyer of delinquent mortgages, is leading the fundraising pack for real estate private equity with a $6 billion target for a pool to buy distressed commercial-property debt and equity.
The U.S. mortgage bonds that were exported around the globe and triggered the worst financial crisis since the Great Depression are now helping Europe’s banks and governments repair balance sheets after jumping in value.
John Grayken, founder of Lone Star Funds, has a record of generating more than 20 percent returns over two decades as the world’s biggest buyer of delinquent mortgages. What he doesn’t have is a designated successor.
Lone Star Funds, the Dallas-based firm that invests in non-performing mortgages and other real estate-related assets, is set to finish raising a $5 billion fund today, a person with knowledge of the situation said.
Commerzbank AG, Germany’s second- biggest bank, is seeking 2.5 billion euros ($3.25 billion) in the fifth capital increase in four years to repay debt from a government rescue. The shares fell to a record low.
Credit Suisse Group AG and Texas- based Lone Star Funds will pay 6.7 billion euros ($8.7 billion) for the assets of Royal Park Investments SA, a vehicle set up to manage toxic assets of failed Belgian bank Fortis.
Oregon’s state pension plan decided against increasing its investment in two real estate funds being raised by Lone Star Funds, the Dallas-based investment firm specializing in distressed mortgages and other property assets.