Carlyle's fifth

The Carlyle Group has closed its fifth US-focused private equity real estate fund on $3 billion—an amount more than triple its previous fund raised two years ago.

The private equity real estate arm of private equity giant The Carlyle Group has closed its fifth US-focused property fund, Carlyle Realty Partners V, on $3 billion (€2.1 billion). The firm's previous fund closed in 2005 on $950 million.

“We've attracted some new investors, and, since our returns have been attractive, we have retained nearly all of our existing investors,” said Rob Stuckey, a managing director and head of Carlyle's US real estate team. Like the fourth fund, Carlyle Realty Partners V will focus on major markets in the US across the office, hotel, industrial, retail, residential and senior living sectors.

Recent mayhem in the credit markets has not hindered the firm's investment pursuits. “In general, discontinuity creates opportunities,” Stuckey said. “We look for situations where fundamental values are undervalued by the capital markets—those situations are more likely to occur when the capital markets are experiencing turmoil.”

Carlyle has pursued a multi-pronged investment strategy and looks for any way it can add value, Stuckey said. “We have 70 employees who are located in five offices,” he said. “Also, we align with local operating partners. Our team has been successful at identifying and driving the key factors that affect the success of an investment.”

Stuckey, who is based in Carlyle's Washington, DC office, is optimistic about continued investor interest in real estate.

“At this point, it is too early to say how the level of investment from various sources will be affected,” Stuckey said. “There's a lag effect: Pension funds have already made their allocations which will sustain investors for another year or so and many investors have increased their allocated share to real estate—that should positively affect the next generation of activity as well.”

The effects of increased pension money to the sector will carry forward through time and buoy the real estate market, Stuckey said. “While the current credit crunch has an effect in the short intermediate term, in terms of delaying investments, the basic level of equity investment capital will remain intact in the near term and the intermediate term.”

The Carlyle Group has more than $75 billion in assets under management. Earlier this year it was ranked the largest private equity firm in the world by direct-investment capital raised over the past five years, according to sister publication Private Equity International.

CalPERS diversifies into infrastructure
The California Public Employees' Retirement System (CalPERS) has established an inflation-linked asset class that would include an allocation of up to $2.5 billion (€1.8 billion) in a pilot infrastructure program. CalPERS' board of administration also moved to reclassify $573 million of existing investments into the new inflation-linked asset class, which will comprise commodities, inflation-linked bonds and timber in addition to infrastructure. The pension currently has approximately $450 million in commodities investments as well as $123 million in timberland, inflation-linked bonds and infrastructure investments. The new infrastructure program will target investments in the construction of roads, bridges, airports, utilities, water systems and other projects.

Cobalt raises $410m industrial vehicle
Cobalt Capital Partners has reportedly closed a second industrial property vehicle on $410 million (€295 million) from institutional investors. With leverage, the vehicle would have an investment capacity of approximately $1 billion. Cobalt Industrial REIT II will target light industrial properties, between 50,000 and 250,000 square feet, in target markets throughout the US. The fund will have a lifespan of 5 to 10 years. The firm's initial industrial property fund, Cobalt Industrial REIT, has more than $227 million in commitments from institutional investors. The fund targeted light industrial properties in target markets throughout the US including Atlanta, Dallas, Houston, Chicago, Phoenix and Philadelphia.

Beacon closes $4bn fund
Boston-based Beacon Capital Partners has closed its fifth fund, Beacon Capital Strategic Partners V, on $4 billion (€2.8 billion). The closed-ended, value-added fund will target office properties in the US including New York, Boston, Washington, Los Angeles, San Francisco, Seattle and Chicago as well as the European markets of London and Paris. These cities represent urban markets with constraints on new office supply, according to the firm. The portfolio currently has seven investments totaling 43 buildings and 14.5 million square feet of space, including the AXA Tower in Paris; CityPoint and Mid City Place in London; the Aon Center in Los Angeles; Financial Square in New York; and a portfolio of properties in Seattle and the DC metro area. The investments comprise approximately 74 percent of the total equity in the fund.

Oregon pension increase property allocation
The Oregon Public Employees pension has increased its target real estate allocation to 11 percent, a 3 percent jump from its previous target of 8 percent. At an August meeting of the Oregon Investment Council, the board mulled over possible investments in Rock-point Real Estate Fund III and Blackstone Real Estate Partners VI, according to state documents. The pension had close to 5 percent invested in real estate at the end of 2006 and had approximately $62.5 billion in total assets at the end of the second quarter.