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Carlyle holds first close on new US fund

After nearly a year on the market, the Washington, DC-based private equity firm has raised approximately one-quarter of its latest property vehicle’s target.

The Carlyle Group has completed the first round of fundraising for its latest US opportunistic real estate fund, Carlyle Realty Partners (CRP) VII. The Washington, DC-based firm has collected more than $1.1 billion in commitments for the first closing of the fund, which occurred at the end of last month, according to a filing with US Securities and Exchange Commission. Carlyle declined to comment.

Carlyle has been marketing CRP VII since at least June 2013, when the Wall Street Journal reported the launch of the fund. Limited partners in the new vehicle include US pension plans such as the San Diego City Employees’ Retirement System (SDCERS) and Kentucky Teachers’ Retirement System, which committed $50 million and $60 million, respectively, in February; and the Pennsylvania Public School Employees’ Retirement System (PSERS), which agreed to invest up to $100 million last month, according to documents from those pension plans.

With a target of up to $4 billion and no hard cap, CRP VII would be the largest of Carlyle’s real estate funds if the firm proves to be successful in reaching its equity goal. Carlyle’s largest property vehicle to date, CRP V, attracted $3 billion of capital in 2006 and was generating a 1.29 net multiple on invested capital and a 8.05 percent net internal rate of return (IRR) as of March, according to documents from PSERS and SDCERS. The successor fund, meanwhile, gathered $2.34 billion in 2011 and was yielding a 1.29 net multiple and 24.39 percent net IRR last month, the documents noted.

With CRP VII, Carlyle will pursue an investment strategy similar to its previous funds in the series, focusing on acquisitions, value enhancements and dispositions of mispriced and undervalued real estate properties in the US. The firm will seek to capitalize on the commercial real estate recovery, particularly in the hotel, office, industrial and retail sectors, as well as the housing recovery, including apartments, senior living facilities, self-storage properties and manufactured homes. The fund is targeting gross returns of at least 20 percent and net returns of at least 16 percent.