With $4.2B raised, Carlyle Group, the world’s second-largest manager of alternative assets (behind only Blackstone), reached the top end of its target range for its seventh US real estate fund. With prices at record levels, the firms will expand investments in apartment buildings, warehouses, offices, senior housing, self-storage, mobile homes and retail properties in major markets, as well as two condominium projects on Manhattan’s west side.
Carlyle’s opportunity fund will seek about 20% of returns, but with real estate prices rising (18% above the 2007 peak), it’s getting harder to find bargains. "We have to be mindful of those risks," Carlyle head of US real estate Rob Stuckey says, adding that expected GDP growth should lead to gains. "I don’t see deal volume slowing down," he says.
Carlyle bet on rental apartments early in the market’s recovery, selling them off as prices surged. Its previous fund, CRP VI, spent more than one-third of its $2.3B on multifamily, producing a 24% net internal rate of return.
Since 2011, Carlyle has invested $1.4B of equity into 29,000 rental units, half of which Carlyle sold. In 2013, the firm sold 650 Madison Ave (shown) for $1.3B ($2,235/SF), setting a record for the highest square-foot price for $1B-plus US office properties. [Bloomberg]
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