US - Oregon Public Employees Retirement Fund has demonstrated its ongoing commitment to Lone Star Funds by committing a further $400m (€273.6m) of capital to the distressed real estate debt specialist.
The pension fund has invested in all seven of Lone Star's previous investment vehicles to the effect that Lone Star has become Oregon PEFR's largest real estate manager in terms of assets under management, representing approximately 16.5% of all of its real estate holdings.
Oregon PEFR has committed $1.37bn to Lone Star investments since 1995, of which $162m remains as an unfunded commitment.
The pension fund will increase its commitment by allocating $100m to Lone Star Fund VII and $300m to Lone Star Real Estate Fund II - two global vehicles which are being managed side by side.
The move comes even though the opportunistic sector within Oregon PEFR's real estate portfolio overshot its target weighting in the summer.
At the end of June 2009, the pension fund's weighing to opportunistic real estate was 35%, five percentage points above its target weighting of 30%.
A report by the Oregon Investment Council said: "Staff and consultant believe that Lone Star's long successful track record investing in distressed debt and equity real estate warrants investment at this time to take advantage of the distressed market conditions.
"As the financial markets stabilise, we will restructure the portfolio to the desired balance."
The two active Lone Star funds are targeting a combined equity raising of $20bn and are aiming to deliver returns of approximately 25% by investing globally in distressed debt, distressed property and real estate entities such as banks and finance companies.
For the first time, Lone Star has also adopted a two-fund approach, to split its investment strategies in two, enabling investors to allocate accordingly at their discretion.
Lone Star Real Estate Fund II will concentrate on all commercial real estate activity, while Lone Star Fund VII will focus on residential distressed debt and acquisitions of finance entities, such as banks.