Lennar Corporation recently announced that its Rialto Capital subsidiary has completed the first closing of a real estate investment fund that will target REOs and other non-performing properties and mortgage assets.

Rialto raised $300 million for the fund, of which Lennar itself committed $75 million. The fund will extend the company’s buying power for distressed real estate and mortgage debt for the next three years.

Miami-based Lennar has been in the homebuilding business since 1954. It’s one of the largest players in its sector, and the builder’s diversified business strategy has ensured that it remains so when a downturn in the real estate markets cuts into its primary business.

Lennar says acquiring and working out distressed real estate loans was a large and extremely profitable part of its operations during the last major real estate down cycle in the early 1990s. When things began heading south again in 2007, the company launched Rialto, which in addition to distressed investments, focuses on asset management and workout strategies.

In February of this year, Lennar purchased $3 billion in troubled residential and commercial real estate loans from the FDIC that the federal agency had picked up as a result of 22 failed bank receiverships. Rialto was tasked with conducting the day-to-day management of the portfolio and the loan workouts.

More recently, the Lennar-Rialto venture acquired around $740 million in loans and distressed real estate from three large financial institutions. The October deal was the company’s first major purchase from the private sector.

Lennar CEO Stuart Miller said at that time that Rialto was “uniquely positioned to underwrite and purchase pools of distressed assets and generate earnings from the resolution of those assets, one asset at a time.”

According to Lennar’s latest financial report, Rialto’s distressed asset investments added $7.7 million in net operating earnings to the company’s bottom line in the third quarter.