An independent real estate fund run by a pair of former private equity executives has raised £490M for a new vehicle, the largest UK property fund-raise this year.

Crosstree Real Estate, founded by former Blackstone Director Nick Lyle and former Starwood Director Sean Arnold, raised the equity for Crosstree Real Estate Special Situations Fund III in August, according to a filing with the Securities and Exchange Commission. PERE magazine first reported the news.

Rising interest rates have caused investment in UK and global real estate to drop sharply in 2023. First-half deal volumes were £14.4B in the UK, down 58% from the same period last year, data from MSCI showed.

The £490M raised by Crosstree eclipses the £350M it raised in 2019. The firm was originally backed by Swiss-Italian pharmaceutical billionaire Ernesto Bertarelli, but it has since expanded its investment vehicles to include outside investors.

The new fund can make equity and debt investments, PERE reported. Crosstree has focused recently on alternative asset classes, hotels, development schemes and lending to distressed residential schemes.

In September 2022, it bought the Canary Wharf co-living scheme of The Collective, which is in administration, for £190M. It is also backing Re:shape through a co-living brand called Ark, which has a scheme in Wembley.

Crosstree backed ghost kitchen company Karma Kitchens in January 2022 with an investment of up to £100M. In June last year, it was one of a consortium of lenders that provided a £772M loan to Chinese developer R&F to allow it to restart a stalled residential project in Nine Elms.

The Crosstree fund is also developing 1,500 homes above a shopping centre in Edmonton, north London, and it owns the fashionable Standard hotel in King’s Cross.