Carlyle raises $2.3bn for sixth fund

The Washington DC-based private equity giant has turned away approximately $500m of potential commitments as it sees its real estate opportunity fund, Carlyle Realty Partners VI, become oversubscribed.

Washington DC-based private equity firm The Carlyle Group has closed its sixth US real estate fund above its initial capital raising target, PERE has learned.

The firm has confirmed its Carlyle Realty Partners (CRP) VI attracted $2.34 billion in equity commitments. 

The opportunistic vehicle is seeking to invest predominantly in six property types: offices, hotel, retail, multifamily, senior living facilities and student housing although single property transactions too are possible. Carlyle will target assets in the major markets in the US, including New York, Los Angeles, San Francisco, Washington DC and Boston. 

Carlyle originally targeted $2 billion for CRP VI, which held its first close in September 2010. But after offering a third of the fund's investors reduced annual management fees, some as low as 0.75 percent of assets, the fund became oversubscribed.

As a result, the firm is understood to have turned away roughly $500 million of potential commitments because of the hard cap. Management fees for the remaining investors were set at between one and two percent.

Robert Stuckey, managing director and head of Carlyle’s US real estate funds told PERE that Carlyle was looking to raise funds for CRP VI during the downturn which subsequently prompted the offer of reduced management fees for the larger investors. The reason being that after fundraising during the recession, Carlyle could invest during the upturn. 

“We believe it's a good time to be investing,” said Stuckey, adding that he believes “LPs are increasingly willing to consider opportunistic funds.” 

Investors in the fund include the Pennsylvania Public School Employees’ Retirement System (PSERS), which approved a commitment of up to $200 million in June, and New Mexico's Public Employees’ Retirement Association, which has agreed in July to commit up to $25 million.

Carlyle’s previous fund, CRP V closed on $3 billion in 2006. It was producing a net IRR of 1 percent, as of June, according to a recommendation by PSERS to back the vehicle.