Carlyle buys major Portuguese luxury hotel for new Europe fund

US private equity giant Carlyle is on the verge of acquiring the Penha Longa Resort in Portugal for its latest European real estate fund, PropertyEU can reveal.

Penha Longa, currently run by Ritz-Carlton, is being bought for a price in the region of €100 mln from a fund managed by German asset manager DWS, according to well-informed market sources.

Located in the resort town of Sintra, north of Lisbon, it includes a luxury hotel with 194 rooms, two golf courses and a spa, part of which is built in a 14th century monastery. The asset is being bought by Carlyle Europe Realty fund, advised by broker CBRE, in a joint venture with hotel operator Marriott International.

Carlyle Europe Realty is the Washington, DC-based group’s first European fund since the global financial crisis. It has raised €478 mln of equity since launching in December last year.

The vehicle – run by European real estate veteran Peter Stoll - is targeting total equity of €500 mln at final close, a far cry from the €2.2 bn raised in 2007 by Carlyle’s previous European fund, CEREP III. In 2005 the group’s second European fund had raised €762 mln.

Both funds have been showing disappointing performance, with CEREP III reporting a net IRR of just 1% and CEREP II showing a negative internal rate of return, as of the end of September this year.

Carlyle’s European investments have recently focused on logistics assets, including deals in France and Italy with Prologis and CBRE GI, as well as on flexible offices in the UK.

In September the US group also raised its largest-ever US property fund, the $5.5 bn Carlyle Realty Partners VIII.


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