Europe set to profit from Lone Star’s €4.8b fund

Lone Star, the Dallas-headquartered private equity company, has surpassed $5 bn (€4.4 bn) of commitments for its latest fund, some of which is aimed at Europe.

According to a document lodged with the US Securities and Exchange Commission (SEC), total subscriptions to Lone Star Fund XI stand at $5.5 bn (€4.8 bn), with another $2 bn (€1.75 bn) left to go before hitting a $7.5 bn (€6.6 bn) target.

Lone Star has been one of the largest buyers of non-performing loans (NPLs), distressed assets and other real estate-related investments in Europe in recent years, with large deals occurring in the UK and Spain, for instance. It has also been a big seller of late, taking profits off the table.

One recent gargantuan deal was the transfer of real estate assets from Spain’s CaixaBank to Lone Star in June. Lone Star acquired an 80% stake in a new company to own the assets, while Caixa retained 20%. The gross value of the assets stood at €12.8 bn and the approximate net book value was €6.7 bn, according to Caixa when it announced the deal.

That transaction was made on behalf of Lone Star Fund X, which ended fundraising in November 2016 having raised $5.5 bn (€4.8 bn).

Lone Star typically allocates certain percentages of its Lone Star Fund series to North America, Europe, Asia Pacific, and Latin America. The strategy is to make financial and other opportunistic investments, including in single-family residential debt and corporate and consumer debt products, as well as in other financially orientated companies.

A typical geographic weighting would be 40% US, 40% Europe, and 20% Japan.

Earlier this year it emerged the company’s head of Europe, Olivier Brahin, had left having led its acquisition drive for five years. His replacement was Donald Quintin.

Lone Star has been on a sales drive for the past 18 months. Sales include 25 hotels from the Amaris hospitality portfolio to LRC Group for €676 mln, the Jurys Inn portfolio, Spanish residential firm Neinor Homes, and UK petrol station operator MHR.

This article first appeared in EuroProperty, the weekly publication of PropertyEU


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