Carlyle Is Said to Be Parting Ways With Two Property Executives

(Bloomberg) -- Carlyle Group LP is parting ways with two of its most senior real estate executives as it reshapes its international business, according to people with knowledge of the matter.

Adam Metz, who was head of international real estate and based in Washington, recently left the firm, and Jason Lee, the company's Hong Kong-based head of Asia real estate, will soon depart, according to the people, who asked not to be identified because the departures have not been formally announced. Jordan DeJarnette, a Carlyle spokeswoman, declined to comment on the changes.

The changes come as Carlyle's new co-chief executive officers, Glenn Youngkin and Kewsong Lee, reconsider the direction of the firm's global real estate business. The duo, who took the reins from co-founders David Rubenstein and Bill Conway on Jan. 1, are seeking to focus Carlyle's Asian real estate efforts on China, said one of the people with knowledge of the plans.

Following the departure of Lee, a Carlyle employee since 1996, the remaining team will report to Xiang-Dong “XD” Yang, the chairman of Carlyle Asia excluding Japan, said the person. Yang already oversees the firm's growth and buyout activities in that region.

Carlyle's Asian real estate investments historically have been dwarfed by its activity in the U.S. and Europe. Since October 2016, the firm has been investing a $120 million fund, known as Carlyle China Realty. It previously invested two Asia-focused funds that managed about $900 million of total assets, including office towers in Seoul, Tokyo and Shanghai and malls in China.

‘Thriving and Growing'

In an investor presentation at a Citigroup Inc. conference last month, Carlyle highlighted some of its businesses, including U.S. real estate, which it described as “thriving and growing.” The group's global real estate funds appreciated 17 percent in 2017, trailing its private equity and natural resources funds, which rose 32 percent and 30 percent, respectively, last year.

Metz joined Carlyle in October 2013. He was previously the chief executive officer of GGP Inc., where he oversaw its bankruptcy and restructuring, as well as a senior adviser to the real estate group of private equity firm TPG.

After a nearly decade-long hiatus, the firm is raising a new European real estate fund, according to a regulatory filing. The firm hadn't tapped investors for European real estate since a $3.4 billion fund closed in 2008. That fund, Carlyle Europe Real Estate Partners III, is fully invested and has so far delivered a net internal rate of return of 1 percent. That compares with a 6 percent decline as of Dec. 31, 2013, with Metz having turned the fund around, one of the people said.

The pause in Carlyle's European real estate fundraising is in large part due to the poor performance of its second fund, Carlyle Europe Real Estate Partners II. It has lost 80 percent of its value partly due to exposure to development projects in recession-hit countries such as Italy and Portugal.

While Blackstone Group LP has witnessed exponential growth in its real estate arm, rival firms including Carlyle have lagged behind. As of Dec. 31, Carlyle's real estate funds managed more than $18 billion in assets across 11 active funds, according to its website, representing less than 10 percent of its $195 billion in total assets under management.

To contact the reporter on this story: Gillian Tan in New York at gtan129@bloomberg.net.

To contact the editors responsible for this story: Daniel Taub at dtaub@bloomberg.net, Christine Maurus

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