Carlyle raises $3 bn US real estate fund

PRIVATE EQUITY WATCH

Carlyle Group, the private-equity firm run by David Rubenstein, raised $3 billion to invest in US office buildings, hotels and retail properties as corporate buyouts dwindle.

The fund is Washington-based Carlyle's fifth focused on US real estate. The four earlier investment pools have acquired assets with a total capitalisation of $15 billion, the firm said today in a statement.

``While the capital markets are experiencing turbulence, we remain focused on sectors and markets in which real-estate fundamentals are poised to improve,'' Robert Stuckey, head of Carlyle's U.S. real-estate team, said in the statement.

Average prices for U.S. commercial real estate may fall as much as 15 per cent in the next two years as rising borrowing costs force some property owners to accept less, according to Matthew Ostrower, an industry analyst at New York-based Morgan Stanley. Stuckey said Carlyle ``is pleased to have available capital in this environment.''

Leveraged-buyout activity has dropped during the past two months as firms and their investment banks struggle to raise the money to fund the record $726.2 billion in private-equity deals announced so far this year, according to data compiled by Bloomberg.

The value of announced private-equity transactions fell to $19.2 billion last month from $87.4 billion in July and $131.1 billion in June, the data show.

More than 100 real-estate funds may raise a record $69 billion this year, according to London-based research firm Private Equity Intelligence Ltd.

In June, Morgan Stanley, the biggest real-estate investor among Wall Street banks, said it raised $8 billion for the largest global property fund. Goldman Sachs Group Inc. attracted $4.07 billion for a real-estate fund, twice as much as it originally sought.

Blackstone Group LP, manager of the world's largest buyout fund, also invests in real estate. New York-based Blackstone agreed to buy Hilton Hotels Corp., the second-biggest U.S. hotel chain, for $20 billion in July. Stephen Schwarzman's firm had $23.1 billion in real-estate assets under management as of June 30, according to Blackstone.

Carlyle targets markets including New York, Washington, San Francisco and Southern California, according to its statement. Previous investments include 14 Wall Street, a 37-story office building in downtown Manhattan; the 1,192-room Chicago Downtown Marriott hotel; and the Orion, a 550-unit, 60-story condominium development in Midtown Manhattan.