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Carlyle Group (CG) to Retreat From China Real Estate Market

Zacks

The Carlyle Group L.P. CG plans to phase out its Chinese real estate team by the end of this year, per a report by Bloomberg. The company, which has been trying to revamp its Asian Unit, has decided to shift its focus from the Chinese real estate market due to decline in investors’ interest for country-specific funds.

Notably, the company made key changes in its executive leadership team in 2017, which got into effect from Jan 1, 2018. Since then, the newly constituted team has been making moves to reconsider and improve the company’s strategy.

Initially, this team was focused on investing in China’s real estate market. However, Carlyle noted that there was significant demand for separately-managed accounts for investing in Chinese real estate, instead of its China-specific real estate investments. Therefore, the team decided to retreat from investing in the country’s real estate market.

On this, Brooke Coburn, deputy chief investment officer of Carlyle’s real assets segment, stated, “We discovered a nuance when it comes to investors and traditional funds in the Chinese market. Investors want to be more prescriptive on terms including the timing of the exit or pursue either smaller transactions or deals that require shared control.”

Subsequent to the team phase out, the company will invest in Asia’s real estate market through Carlyle Asia Partners V LP — its primary fund for investing in this market.

Per the fresh executive team, the company has created an integrated platform which focuses on one-team approach for its Asian business. Further, the company plans to focus on ensuring optimal allocation of strategic resources. This, in turn, will likely boost the company’s profitability over the long run.

The company’s shares have gained 1.1% over the past three months, as against the industry’s decline of 7.9%. The stock currently carries a Zacks Rank #3 (Hold).



Key Picks

A few better-ranked stocks in the same space are Lazard Ltd LAZ, Prospect Capital Corporation PSEC and Ameriprise Financial, Inc. AMP. All three stocks carry a Zacks Rank of 2 (Buy). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lazard’s earnings estimates for 2018 have been revised 3.2% upward over the past 60 days. Its shares have rallied 11.1% in a year’s time.

Over the last 60 days, the Zacks Consensus Estimate for Prospect Capital’s current-year earnings moved 13.3% north. Its share price has gained 7.2% in the past year.

Over the last 60 days, Ameriprise Financial’s 2018 earnings estimate inched up 1.3%. Over the past year, its share price has appreciated 4%.

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