Carlyle Can’t Get Out of the Private Equity Box

Thirty miles south of London, residents of Tunbridge Wells are unhappy with Carlyle Group. In 2011 the private equity firm, along with property company Bellhouse Joseph, bought a dilapidated movie theater and failed to develop the site. The theater was demolished, and now the lot sits empty, surrounded by blue construction barriers. “It just looks awful,” says Ben Chapelard, a member of the local government. “If you stand on the street asking people to pressure Carlyle to do something, you collect a signature every 20 seconds.”

Carlyle’s investors are also frustrated with the company’s real estate efforts. One Carlyle European property fund has lost 80 percent in value, and another is barely breaking even. Carlyle’s real estate operation manages about $13 billion, a fraction of the $80 billion overseen by Blackstone Group. “I didn’t even know they were in the real estate business,” Tony James, Blackstone’s president, said on a July call with analysts after buying London office buildings from Carlyle.