Carlyle Cuts Apartment Holdings After Rent Growth Slows
Carlyle Group LP (CG), the private-equity firm with more than a third of its $2.3 billion U.S. real estate fund in apartments, is reducing holdings of multifamily housing as rent growth slows from a post-recession surge.
The company is considering apartment sales as rising construction reduces multifamily shortages and price gains for rental properties make them less attractive for private-equity firms that seek returns of 20 percent or more, said Robert Stuckey, the Washington-based firm’s head of U.S. real estate investing. Carlyle has invested or committed about $800 million of equity in 61 multifamily properties since the start of 2011, he said.
“We went from an unusually high-growth market to a market that is growing and attractive but more stable,” Stuckey said in an interview. “Our capital was useful at the front edge of the recovery.”
Apartment-rent growth is slowing as the U.S. homebuying market rebounds and a wave of multifamily building adds to supply. In the third quarter, tenants on average paid 3 percent more than a year earlier after landlord concessions, down from 3.9 percent annual growth in effective rents in 2012, research firm Reis Inc. (REIS) said in a report today.
Effective rents averaged $1,073 in the three months ended Sept. 30, up from $1,042 a year earlier, and a 1 percent increase from the second quarter’s $1,063, data from New York-based Reis show.