The Teacher Retirement System of Texas is backing Lone Star’s fifth fund with a commitment of $278m (€245m).

Lone Star Real Estate Fund V will target opportunistic real estate in developed markets.

Lone Star will invest about two-thirds of the capital in Europe and the remainder in Asia and the US.

It is planning to raise $5bn for the fund, with a hard cap of $5.5bn and a $375m co-investment.

The fund will seek to capitalise on market dislocations, buying commercial real estate-related investments at a significant discount to intrinsic value.

Lone Star is considering equity real estate investments, investments in or origination of loans, securitised investments and derivative investments.

Texas Teachers also made a $200m allocation to DivcoWest Fund V, a value-add fund managed by DivcoWest Properties.

The manager is looking at a total $1.5bn capital raise, with a final closing set for this year.

The fund is to acquire office and R&D properties in the US, looking to complete improvements planned for properties and selling them to core buyers in future.

DivcoWest targets assets in areas with strong economies, skilled workforces and major tenant bases.