Carlyle to raise €1.5bn European real estate fund

The US firm is set to launch its third European property fund next year as it ramps up its global real estate investment activities.

The Carlyle Group will tap investors for its largest European fund to date next year giving it the firepower to acquire €5 billion ($6.5 billion) of property.

Although the company has made no statement, it is reportedly preparing to hit the fundraising trail early in 2007 seeking a minimum of €1.5 billion of equity, which would give it an investment capacity of €5 billion when leveraged.

Investors will be told that the firm is aiming to deliver returns of more than 20 percent across all the property sectors by targeting opportunistic investments that require asset management.

Carlyle’s real estate team, which is headed in Europe by Paris-based Eric Sasson, first raised a European fund in 1998 when it attracted capital commitments of €436 million for Carlyle Europe Real Estate Partners I.

The second fund—Carlyle Europe Real Estate Partners II—closed in September 2005 with €760 million of equity. Approximately 90 percent of the fund has been committed thus far, including Carlyle’s recent acquisition of Colmore Plaza in Birmingham for €222 million.

The news coincides with rumors that the firm is pushing into new property markets around the world. Sources indicate that the firm is looking to establish a team in Latin America by the end of the year.

The firm will invest primarily in Brazil, though other countries may also be targeted. According to private equity sources in Brazil, David Rubenstein, Carlyle’s founder, and other senior members of the firm have recently made several trips to the country.

Earlier this week, Carlyle also made its first real estate investment in China, reportedly paying $120 million for 110 villas in Shanghai.