Global investment firm Carlyle Group closed its 10th U.S. real estate investment fund at $9 billion, exceeding its previous fund by $1 billion despite what executives called one of the most difficult fundraising environments for real estate in recent memory.
Carlyle Realty Partners X attracted commitments from institutional investors, including $300 million each from New Jersey's Division of Investment and Pennsylvania's Public School Employees' Retirement System, as well as smaller commitments, including $30.5 million from the Nebraska Investment Council, according to state regulatory filings.
The fundraising success stems from Carlyle's decision to avoid sectors hammered by remote work trends and economic uncertainty, according to Carlyle. The firm is steering clear of office buildings, hotels and retail properties that have struggled since the onset of the pandemic in 2020.
Instead, Carlyle is betting on demographic shifts driving demand for housing and industrial space. The fund plans to target multifamily apartments, single-family rentals, self-storage facilities and warehouses — sectors the firm believes will benefit from population growth and e-commerce expansion regardless of broader economic conditions.
The firm seeks to develop rental housing across income levels while capitalizing on demand for modern warehouse space to support e-commerce and logistics operations.

" This is a compelling moment to invest, as we see improving fundamentals across our target sectors coupled with an environment of relatively constrained liquidity," Rob Stuckey, who has led Carlyle's U.S. real estate team since its inception in 1998, said in a statement.
Up to 300 investments
The fund expects gross returns of 20% to 25% through ground-up development, renovations and redevelopment projects, according to Carlyle's presentations to state investment funds. Investments range from $25 million to $100 million in total capitalization. Such investments would require equity of $10 million to $40 million per deal and use 50% to 65% loan leverage over a 10-year term.
The fund is looking to make as many as 300 investments, Carlyle has said. Spreading the risk across a large diverse portfolio of property types helps ensure no particular asset can significantly impact overall fund performance, according to the presentations. The firm uses nonrecourse financing, meaning problems at one property won't affect others in the portfolio.
The fundraising comes as real estate investment firms struggle to attract capital amid high interest rates and economic uncertainty. Commercial real estate values have declined as borrowing costs make projects less profitable and investors more cautious.
Carlyle's focus is on supply-constrained markets where the need for housing and industrial properties has driven up rents and prices.
Recent examples of the fund's investment include buying a two-property industrial outdoor storage portfolio for $12 million in Lincoln Park, New Jersey, that it plans to redevelop; and acquiring the 51-unit Park Slope apartments in Brooklyn, New York, for $32.1 million.
The fund follows Carlyle Realty Partners IX, which raised $8 billion in 2021.