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CHICAGO-Walton Street Capital LLC is launching its fourth private equity investment fund, which is expected to grow to $600 million from a $30-million investment by the principals of the private real estate investment company. The three previous funds raised $1.1 billion, with the principals kicking in about 10%, or $111 million.

Walton Street Real Estate Fund IV will target office properties in financial or market distress and full-service hotels that have been hurt by the economic downturn. The fund will use leverage in the range of 65% to 70% and shoot for 20% returns.

“We believe the time is right for Fund IV,” says principal Eric Mogentale in a statement. “Real estate remains cheap relative to other financial assets. The cost of debt is at historical lows. We believe that rents and real estate values in certain markets will recover and accelerate as the U.S. economy recovers.”

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