The Real Deal New York

Carlyle eyeing expansion of US real estate holdings

New offering would target “core-plus” assets
June 11, 2015 09:30AM

Carlyle Group is considering a new U.S. real estate strategy that would focus on core-plus holdings — offices, apartment buildings and retail facilities that need a little extra work to boost their values.

A potential new offering of these types of holdings would target 10 percent returns, Carlyle co-founder David Rubenstein said at Morgan Stanley’s financials conference Tuesday, according to Bloomberg News.

“We are looking seriously at the core-plus business,” said Rubenstein. “Core-plus is likely to be a very great growth business in real estate, critically in the United States. Nine to eleven percent, because interest rates have been so low, is a very attractive range for a lot of investors now.”

Carlyle, which is the world’s second-biggest manager of alternatives to stocks and bonds, already manages about $15 billion in real estate. But in the past, it has used an opportunistic strategy, targeting returns of 15 to 20 percent.

Blackstone, the world’s largest alternative asset manager, has $5 billion plus in core-plus holdings alone, after starting the offering in 2013. [Bloomberg News] — Tess Hofmann