Carlyle Group LP, the famous American private equity firm, is reportedly planning to raise $4 billion for its seventh real estate fund. The target, if achieved, would make it the firm's largest property fund since the financial crisis, according to the Wall Street Journal.
Back in 2007, Carlyle Group raised something around $3 billion and anticipates achieving at least that much in its new fund. The group hopes to take full advantage of the improving real estate market of the country and believes that its investments will bear solid profits. Not much detail about the fund is available as the talks are still private, reports Bloomberg.
Moreover, the group has created some great publicity in the recent few months with deals like selling 650 Madison Avenue, a 27-story office high-rise in Manhattan and hiring a six-person energy investment team and expanding its investments in the energy division. It hopes that the positive buzz will act in favor of raising capital for its new fund.
Over the years, Carlyle has created an identity for itself and is now recognized as a sophisticated asset manger that trades anything from oil refineries to railroads, reports the Washington Post.
However the group is bound to face some stiff competition from its peers. Carlyle Group is the latest company to join the group of firms who plan to roll out a property investment fund in the wake of a real estate recovery. Big players like Morgan Stanley, TPG Capital and Blackstone are all gearing up to raise billions in a real estate investment pool.
Meanwhile, the real estate sector of the U.S. has become a global investment hot-spot. Investors from foreign countries like Russia, South Korea, Singapore and China are constantly looking for prospective assets in the country. At this crunch-time, real estate funds are a great way to pool in capital and invest in trophy assets as the returns are bound to be good. However, a potential risk of loss is always a looming threat.
When the housing bubble burst in 2007-08, a lot of money was lost. The current improving conditions of the market could possibly lead to another bubble. But experts think, the market is far from a bubble.
"Four of the next five years are likely to be improving years in the housing market. I don't say five because there's always the possibility of little hiccups in the housing market," said Lawrence Yun, chief economist for the National Association of Realtors to Inman.com.