Shopping list

Here’s what’s on Carlyle’s real estate shopping list

From homes to hotels, shopping malls to supermarkets, private equity firms have piled into European property as they seek to roll out a vast mountain of dry powder.

Carlyle is among those leading the charge. The US buyout giant, which closed a €540m European property fund in 2019, wasted no time in acquiring assets on the continent in a series of sector plays.

One such game is self-storage, a market where occupancy levels and rents have skyrocketed since the pandemic as a surge of movers and businesses seek space to store goods. .

This week, Carlyle signed its latest deal in the sector, selling a portfolio of self-storage assets in the Netherlands and Belgium to Safestore, representing the 80% stake in a joint venture the two companies have formed in 2019.

Marc-Antoine Bouyer, co-head of Carlyle Europe Realty (CER) and head of acquisitions within the European real estate group, hopes to make other similar JVs in the future.

“We are definitely exploring other investment opportunities together,” he said. Private equity news.

“It’s a beautiful marriage of our purchase and construction [strategy] and the private equity culture and operational efficiencies that Safestore could bring.”

The white-hot warehouse industry, spurred by the e-commerce boom, also caught Carlyle’s attention.

“Everyone loves logistics, but it’s been around 54% of our investments over the past 5 years,” says Bouyer.

READ MORE: Carlyle signs new consultancy deal with Fortitude Re

In logistics, Carlyle is particularly focused on urban distribution centers, where packages arrive from trucks and then vans deliver them to their destination.

He says: “There is an imbalance between rising demand and the market struggling to produce enough supply. As landlords, we find that we are in a position of strength vis-à-vis our tenants. We have pricing power and therefore you benefit from the growth in rents. »

Like some of its US rivals, Carlyle is also making a big move into rental housing. Residential represents 17% of CER’s portfolio.

Rising house prices and a broader cultural shift away from home ownership are driving the move.

But while many investors have snapped up multi-family rental assets such as newly built apartment buildings, Bouyer wants to target the single-family rental market.

“Your typical tenant in a single-family home would stay for four years based on what we see in our US portfolio, but a multi-family residential tenant would stay longer than 18 months.

“This is because single-family renters are more likely to be young, less mobile families. If they have children, they are more likely to stay in a watershed, as opposed to multi-family hyperurban mobile renters.”

Retirement property is also on his radar. In November 2020, the group acquired Beechcroft, a British developer specializing in the sale of senior housing.

“We’re selling a purely residential product that’s just tailor-made for seniors. We have seen increasing demand due to demographics and Covid. People are increasingly realizing that they cannot stay in their old homes, and nursing homes may be seen as the option of last resort.

One of Europe’s hottest property markets is its office sector, but with the massive shift to working from home, investors’ appetite for workplace assets remains uncertain.

“In my opinion, it’s an investment market that has contracted,” says Bouyer.

“It’s obviously a very large asset class in Europe, but I feel like investors these days really only want office properties that are conveniently located and heavily laid out.”

To contact the author of this story with comments or news, email Sebastian McCarthy