StepStone Real Estate is investing $87.5m (€82.9m) in HRI Properties, a US hotel and residential developer and owner.

The investment manager, founded by Jeff Giller, Josh Cleveland and Brendan MacDonald, recently raised $700m for its third fund.

“The HRI investment provides us with diversified exposure to high quality assets in major urban markets,” said Brendan MacDonald, a partner at StepStone Real Estate. 

New Orleans-based HRI specialises in urban in-fill projects and the reuse of historic buildings.

The firm owns and operates a portfolio with over 3,000 hotel rooms, 1,500 apartment units and 165,000 sqft of commercial space.

Stepstone’s investment will fund the expansion of HRI’s portfolio into urban markets.

With committed co-investment capital, StepStone last month said it will have over $1.1bn to invest in special situations in the US and Europe.