Lone Star Funds, the distressed real estate investor led by founder John Grayken, has begun raising a new property fund with a target of $5 billion.

The Dallas-based company has started seeking pledges for Fund VIII, with initial commitments scheduled for completion at the end of February, said Anthony Breault, senior investment officer for real estate at Oregon’s pension fund, one of Lone Star’s largest backers. The state plans to decide in the next few weeks whether to invest, he said.