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July 01, 2020  

Lone Star Alum Launching Investment Shop

A former Lone Star Funds executive has formed his own investment firm with an eye toward capitalizing on the dislocation of property values.

Hugh Ward has been quietly setting up Palomar Capital since April, but just began reaching out to market pros about the initiative in the past two weeks. The New York firm is focused on value-added and distressed investments, particularly Class-B apartments, manufactured housing, industrial properties and full- and select-service hotels. It also will look at office and retail deals.

Palomar’s strategy includes buying properties, both outright and via joint ventures, and acquiring distressed debt to gain control of the collateral.

Ward started Palomar after parting ways with Constitution Capital Real Estate, a unit of Andover, Mass., investment manager Constitution Capital. He and a group of other Lone Star alumni joined Constitution in 2018 to build that firm’s real estate business. Several of those staffers are joining him at Palomar.

Ward’s group at Constitution set out to raise $500 million of equity for a commingled fund, but was unable to reach that goal, sources said. Ward is telling investors that while the fund-raising effort never gained traction, the strategy attracted institutions, family offices and wealthy individuals interested in investing via separate accounts.

Palomar will capitalize deals on a one-off basis. Ward’s sales pitch will likely highlight his experience in down markets. Before joining Constitution, he was senior managing director and co-head of real estate investments for Lone Star’s North American business. He started at the Dallas investment giant in 2010, and was actively investing in the years after the Great Recession. He previously spent nearly four years as managing director and head of real estate at Zais Group of Holmdel, N.J.

Ward started his career at GE Capital, where he spent almost 12 years. He was a managing director at GE, involved in buying distressed assets from the Resolution Trust Corp.