Carlyle raises $500m for core-plus fund – Exclusive

The Washington, DC-based private equity firm is due to close on a much larger equity haul for its new real estate strategy by the end of the year.

The Carlyle Group has amassed approximately $500 million during two closes for its new core-plus real estate fund, Carlyle Property Investors, PERE has learned.

The Washington, DC-based private equity firm netted $260 million during its initial close in May, according to two sources familiar with the matter. Carlyle subsequently raised additional capital from limited partners at the end of last month, bringing the equity haul to date to between $450 million and $500 million, those sources said.

The capital raise includes a general partner co-investment, which typically represents 5 to 10 percent of a fund's capital.

PERE understands that the firm is expected to collect an additional $500 million by the end of the year, which would take its core-plus real estate fundraising to about $1 billion. The Washington, DC-based private equity firm announced during its second-quarter earnings call last month that it held a first close on the vehicle, but it did not disclose the amount. Limited partners in the fund include the Kentucky Teachers' Retirement System, which committed $60 million in May. Carlyle declined to comment.

David Rubenstein, the firm's co-chief executive, said during an earnings call in July 2015 that it was exploring a core-plus real estate strategy. A week later, PEREreported that the firm had hired one of its senior real estate executives, Mark Schoenfeld, to head up the new business, with US head of real estate Robert Stuckey (pictured) overseeing the new fund and Schoenfeld acting as portfolio manager.

Carlyle Property Investors will be an open-ended fund with a two-year lock-up, according to a March document from the Burlington Employees' Retirement System (BERS). The vehicle will be focused on the US, with a geographic distribution that will target 30 percent of the fund's capital to be deployed in the East, 20 percent in the South, 20 percent in the Midwest and 30 percent in the West. Carlyle has not yet invested any capital from the fund, one source said.

In terms of property sectors, the targeted distribution will be heavily weighted toward niche or non-traditional real estate strategies, with a goal of 45 percent of the fund's capital to go into senior housing, medical office and storage properties. Of the remaining equity, 25 percent would go into apartments, 5 percent into industrial, 15 percent into office, and 10 percent into retail. Carlyle would employ a maximum leverage of 55 percent on the fund's transactions.

The fund would carry a fee of 100 basis points on the first $100 million of committed capital, according to the BERS document.

Carlyle is one of a number of traditionally opportunistic real estate investors that have raised or launched core-plus offerings in recent years. Last month, PEREreported that Rockpoint Group amassed $800 million for the initial close of its closed-ended second core-plus real estate fund, Rockpoint Growth and Income Fund II. The Boston-based private equity real estate firm previously raised $1 billion for the predecessor vehicle, Rockpoint Growth and Income Fund I, in 2014.

The Blackstone Group, which held a $1.7 billion first close on its debut open-ended core-plus property fund, Blackstone Property Partners in December 2014, had attracted nearly $12 billion of capital for the strategy as of June 30, according to its second-quarter earnings results. Also, Brookfield Asset Management began marketing its first core-plus real estate fund, Brookfield Premier Real Estate Partners, earlier this year.