Carlyle expands European real estate portfolio

The US private equity firm has quadrupled the size of its European real estate portfolio with the acquisition of a portfolio of 36 properties from the Italian government.

US private equity firm Carlyle Group has acquired a portfolio of 36 commercial properties in Italy from the Italian finance ministry in the firm’s largest single real estate transaction.


Carlyle is paying E230m for the commercial property portfolio, which covers a total of 290,000 square metres. The buildings are located on the outskirts of Milan and Rome as well as in the centre of Bari, Genoa, Naples and Reggio Emilia.


The properties have a 40 per cent vacancy rate at the time of the transaction, which Carlyle intends to improve to increase yields rapidly and increase the value of the portfolio.


The portfolio was put up for auction on January 22 2003 in a single lot, giving potential bidders until February 24 to respond. The transaction is set to close by the end of the month.


“The portfolio fits our strategy to acquire commercial buildings in off-prime business districts across France, Italy and Germany,” said Eric Sasson, a managing director of Carlyle Group, who heads up the firm's European real estate team. By directing active asset-management programmes from within our own team we are able to take swift action to improve the properties we acquire, offering very attractive commercial space to tenants operating in a highly cost conscious environment.”


The sale of the portfolio is the penultimate lot put up for auction by Italy's Ministry of Economy and Finance as part of a E1.5bn three-year disposal programme.


Elsewhere in Europe, Terra Firma saw its proposed acquisition of a E1.9bn portfolio of social housing from the state government of Cologne fall through, due to political wrangling in the city’s governing bodies.


Carlyle's European real estate team has been investing since 2001. The team has completed twelve acquisitions across France, Germany, and Italy. It targets mid-sized properties in the E20m to E80m range that can be used as offices or industrial and logistics centres.


In the US the firm currently manages investments for its third US real estate fund, Carlyle Realty Partners III, which was launched in February 2002 with $571m in capital commitments.