The Carlyle Group has tapped one of its senior real estate executives, Mark Schoenfeld, to head up its new core-plus real estate business.
The platform is to be part of its overall US real estate business headed by Rob Stuckey. The appointment comes as the Washington, DC-based private equity firm begins raising its first fund in the strategy.
Schoenfeld, who is based in Washington, DC, is a managing director focused on US real estate opportunities, and responsible for sourcing investments in Washington, DC, New York and Boston, as well as identifying hotel transactions nationwide. Additionally, he sits on Carlyle’s real estate investment committee and is part of a team of capital raisers for its US real estate funds.
Schoenfeld was Carlyle’s first real estate employee when he joined the firm 23 years ago. He is now part of the 100-strong US property team led by Stuckey.
Core-plus real estate – where assets generally have strong existing cash flows and less capital-intensive business plans than opportunistic investments – is one of the firm’s newest real estate strategies. The alternative asset manager is said to have started developing its strategy for the new real estate platform late last year, and tapped Schoenfeld to spearhead the effort early this year.
Carlyle declined to comment, but PERE understands that the firm recently began raising capital for its debut fund in the strategy, and has structured the vehicle as an open-ended fund. Stuckey will oversee the fund, while Schoenfeld will act as its portfolio manager.
Although it is unclear how much the firm will raise in the initial closing for the vehicle, or when the close is anticipated to occur, the fund ultimately is expected to reach billions of dollars in size, according to multiple people familiar with the matter. The new fund will provide a new product for the firm’s limited partners at a time when many institutional investors are seeking to reduce or limit the number of manager relationships.
Unlike its primary opportunistic business, which typically pursues net returns in the high teens, Carlyle’s core-plus platform will target returns between 9 percent and 11 percent – a range that is considered attractive for many investors, given the current low interest rate environment. “That has turned out to be a very interesting part of the business and I think other firms who are in the opportunistic business are also going into the core-plus business,” said David Rubenstein, Carlyle’s co-chief executive, during the firm’s second-quarter earnings call last week.
Carlyle is the latest opportunistic real estate fund manager to throw its hat into the core-plus ring. Last month, PERE reported that The Rockpoint Group had launched its second closed-ended core-plus fund, Rockpoint Core Plus Fund II, with a target of $1.5 billion to $2 billion. Like Carlyle, The Blackstone Group also is raising an open-ended core-plus fund, Blackstone Property Partners, and had attracted more than $5 billion of capital for the vehicle as of April. Angelo Gordon also has raised core-plus funds.
Carlyle had $42.2 billion in assets under management in its real assets business as of June 30. About one-third, or $14 billion, of that amount was in real estate, of which US real estate accounted for more than $10 billion.