Lone Star Funds, the Dallas-based investment firm, has raised more than $1.2bn for two funds that will invest in commercial real estate and securities, according to a person familiar with the matter.

The firm secured pledges for more than $500m for Lone Star Fund VII and about $725m for Lone Star Real Estate Fund II, said the person, who declined to be named because the firm is private. Lone Star declined to comment.

Distressed investors such as Lone Star, Apollo Global Management LLC and Colony Capital LLC are seeking to buy assets at discounts as traditional private-equity deals remain elusive. The global real estate crisis has driven $138bn worth of US commercial properties into default, foreclosure or debt restructuring, according to New York-based Real Capital Analytics.