For the past 20 years, Lone Star has concentrated on high-risk, high-return opportunistic investing, and raised some of the largest funds in the sector pursuing that strategy. But now it is following its peers in raising money for less risky deals — and already it has raised a big pot of cash and has started spending it.

Lone Star raised $751M for the Lone Star Value-Add Fund I in August last year, documents filed with the Securities and Exchange Commission showed. A line on its website in its list of funds states: “Lone Star Value-Add Fund I will target quality commercial real estate investments in developed markets of North America, Europe and developed Asia, with a view to executing on value-add strategies."

Lone Star is run by John Grayken, the U.S. investor who now lives in Ireland. Its sixth real estate opportunity fund raised $4.6B in June 2019, and it raised the money for the value-add fund in a year with the final close in August coming in the midst of the coronavirus pandemic. According to his LinkedIn profile, Montreal-based Jérôme Foulon is senior managing director and global head of CRE value-add strategy at Lone Star.

Opportunity funds typically target returns of 15%-plus, with value-add funds targeting returns of 11% to 15%. Other traditional opportunistic investors including Blackstone and Morgan Stanley have raised money for less risky deals in recent years to expand their businesses beyond their narrow field.

Lone Star has already begun spending the capital. It has bought a 2,621-bed UK student portfolio for £315M from Fusion Students. The portfolio includes buildings in Cardiff and Hatfield that are built and occupied, with others in Swansea and Sheffield due to open in September this year.

The purchase means it now owns residential businesses that cover the full age spectrum in the UK. It has owned build-to-rent multifamily developer Quintain for several years, and last year bought listed retirement home developer McCarthy & Stone for £630M, in the last major deal undertaken by one of its opportunity funds.