Carlyle cuts real estate fund management fees -WSJ

Nov 9 (Reuters) - Private equity firm Carlyle Group [CYL.UL] has cut the management fees in its latest $2.3 billion real estate fund in a bid to attract investors, the Wall Street Journal reported on Wednesday, citing unnamed sources.

Private equity fund managers are under pressure to offer sweeteners to bolster their fundraising efforts as investors become more risk-averse in turbulent financial markets and skeptical of the returns buyout firms promise given the difficulty to raise debt for deals.

Carlyle Realty Partners VI is set to reach fundraising close this month after dropping its annual management fees to as low as 0.75 percent and raising its hurdle -- the rate of return at which Carlyle can share in the fund's profits -- to up to 11 percent, the Journal said.

A Carlyle spokesman declined to comment.

The mean management fee for private real estate funds larger than $1 billion in size in 2011 has been 1.33 percent from a peak of 1.75 percent in 2007, while 70 percent of funds have a hurdle rate of at least 9 percent, according to data from market research firm Preqin.

Carlyle is looking to boost its assets under management as the firm prepares for a possible initial public offering. It acquired AlpInvest Partners B.V. and Emerging Sovereign Group LLC in July this year, creating a global alternative asset manager with approximately $153 billion of assets under management across 86 funds and 49 fund-of-fund vehicles. (Reporting by Greg Roumeliotis in New York, editing by Dave Zimmerman)