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Carlyle markets eighth US fund

The firm, which manages $35.7bn in real assets, closed its last opportunistic fund in December 2014 on $4.2bn.

The Carlyle Group is back in the market with its latest US opportunistic fund, executives said on the firm’s third quarter earnings call Thursday.

The Washington, DC-based alternative asset manager is pre-marketing Carlyle Realty Partners (CRP) VIII, chief executive David Rubenstein said on the analyst call.

“The reception to that [pre-marketing] has been pretty good,” Rubenstein said. “Our next opportunistic fund is pretty likely to be bigger than the last one.”

Carlyle launched the predecessor vehicle, CRP VII, in 2013 and closed it in December 2014 on $4.2 billion, above its $4 billion hard cap, PERE previously reported. CRP VII had $1.9 billion invested and a 1.2x investment multiple as of September 30, according to the third quarter earnings statement. Because the fund’s investment period began in March 2014, the “returns are not considered meaningful” and were not reported in the third quarter, Carlyle said in its report.

The fund series focuses on acquisitions, value enhancements and dispositions of mispriced and undervalued real estate assets in the US, primarily single-asset transactions involving office, residential, senior living, hotel and retail properties. On the earnings call, Rubenstein said the firm invested more than $300 million in real estate during the third quarter, with a particular emphasis on medical housing and senior housing.

Carlyle’s latest real estate fund launch comes as the firm has set a $100 billion capital raise goal across asset classes for the next four years, similar to the target that it set for the previous four-year period. Real estate and energy funds will comprise about one third of that capital raise, Rubenstein said. Sovereign wealth funds and family offices have been particularly keen on alternative investments, the CEO noted, and will continue to increase their allocations to funds, seeking better returns than they have found in public equities.

“$100 billion sounds like a lot, and it is, but we raised that same amount in the previous [four year period],” Rubenstein said. “It’s not that heroic to do it, and I’m fairly comfortable we can get there.”

Spearheading the real estate portion of the capital raise will be Lee Purcell, whom Carlyle tapped to replace Alok Gaur over the summer, PERE previously reported. Gaur, Carlyle’s former head of real estate fundraising, left in July to join Chicago-based LaSalle Investment Management as global co-head of its client capital group. Purcell resigned from his previous post at Greenhill’s capital advisory group in August to start at Carlyle this fall.

In addition to Carlyle’s opportunistic fund, the firm is continuing to raise capital for its new core-plus real estate fund, Carlyle Property Investors (CPI). In August, PERE reported that the firm had raised about $500 million for the vehicle and expects to raise another $500 million before the end of the year. In the third quarter, the firm raised $200 million in real assets, including an unspecified amount for CPI, for which it held a follow-on close during the quarter.

In the third quarter, Carlyle’s total assets under management were $169.1 billion, down 10 percent year-on-year, largely because of $8.7 billion in distributions during the three-month period, according to the earnings report. The firm managed $35.7 billion in real assets, down 11 percent year-on-year.