Lone Star is already raising money for a second fund targeting lower-risk property assets, just 18 months after its debut vehicle.

The U.S. private equity giant filed a notice with the Securities and Exchange Commission late last year stating that it would begin raising capital for Lone Star Value-Add Fund II.

Lone Star has traditionally managed opportunistic real estate funds, targeting high returns of 15% or more from higher-risk deals.

But in August 2020, it raised $751M for Lone Star Value-Add Fund I. Value-Add funds typically target returns of 10% to 15%. Deals undertaken by the first value-add fund include the purchase of a £315M portfolio of UK student accommodation assets.

More generally, Lone Star has been a significant investor in the hotel sector in the past 18 months. In November last year, it bought five luxury hotels across the U.S. from Host Hotels & Resorts for $551M. In June last year, it also became a lender to the UK hotel sector with a £100M loan.

The company, founded and still owned by John Graykin, undertook a significant reorganisation in June 2021, when it made a large portion of its Asian employees redundant and shifted the management of its Asian business to the U.S.

Its commercial real estate business is run by André Collin, and its value-add real estate funds are run by Jérôme Foulon.

Other traditional opportunistic investors including Blackstone and Morgan Stanley have raised money for less risky deals in recent years to expand their businesses.