Lone Star is looking to raise up to $5bn (€4.5bn) for its next opportunistic fund, with a focus on Europe.
The US headquarted private equity firm will invest 80% of capital raised for its Real Estate Fund V in Europe and will target net returns of 20%, according to sources familiar with the matter.
The fund, which has a hard cap of $5.5bn, will also invest in Asia Pacific region and the Americas.
Lone Star, which has been raising capital for a month, declined to comment.
The manager’s previous fund, which closed in April last year, attracted $5.8bn in commitments.
Fund V will invest in individual assets and portfolios, as well as real estate operating companies. Both equity and debt positions will be sought for the fund across real estate sectors.
Teachers’ Retirement System of the State of Illinois recently approved a $300m commitment to the fund as a follow-on investment. The pension fund currently has $108m invested with Lone Star.
A $100m allocation to the Madison International Realty Liquidity Fund VI has also been approved by Illinois Teachers.
The pension fund told IPE Real Estate that Madison is a good fit for its existing real estate portfolio at a time when its investments are performing well. A positive 14.76% return was achieved from real estate investments last year.
Madison International is seeking transactions where it can take minority positions in existing US and European core office and retail properties.