Co-invest with The Carlyle Group: established commercial real estate portfolio in central London

Only for experienced investors with significant assets – deadline 13 December 2019

This is a rare opportunity to co-invest with top private equity firm The Carlyle Group (“Carlyle”) in Uncommon (“Uncommon” or the “Company”), an established real estate portfolio of five freehold co-working offices in prime central London. 

This type of deal is normally only open to certain institutional or private investors who are expected to commit £10 million or more. 

Wealth Club has negotiated access for its investors. Our clients’ money will be aggregated, allowing you to invest from as little as £25,000. 

However, the US-headquartered firm Carlyle has very strict eligibility criteria, including that you must be able to self-certify that you and your spouse/civil partner together have investments of at least $5 million (currently around £3.8 million). 

Highlights

  • Portfolio of five flexible co-working offices in central London
  • Freehold prime assets at attractive valuations
  • Four sites already operational and performing ahead of projections
  • Fifth site just acquired off-market
  • Carlyle believes its interests are strongly aligned with those of investors
  • Uncommon is an established brand with an experienced management team
  • Exclusive co-investment opportunity
  • Minimum investment £25,000 – normally c.£10,000,000 if making a direct investment

Important: The information on this website is for experienced investors. It is not advice nor a research or personal recommendation to invest. If you’re unsure, please seek advice. The interest in this limited partnership is unregulated and is not covered by the Financial Services Compensation Scheme. Investments are long term. They are high risk and illiquid and values can increase or decrease so you could get back less than you invest (including losing all your contributed capital).

It only takes a few minutes to apply online. Please note: you'll need to self-certify you have investments of at least $5 million to be eligible.

The offer

Carlyle acquired Uncommon in 2016. At initial acquisition, the Company owned and operated just one site. Less than three years on, Uncommon owns five: four already operational and a fifth, 85 High Holborn, which it acquired in September 2019. 

Once the latter is up and running, Uncommon is expected to become one of the top 10 co-working platforms in London with 4,175 desks across 218,000 sq. ft, forecasting an estimated market valuation of £208.6 million for the combined portfolio. This is based on Carlyle’s estimates at 30 September 2019.

Access to this type of deal is normally restricted to certain institutional and private investors who are expected to commit in excess of £10 million. 

Uncommon is jointly owned by two Carlyle investment vehicles, The Carlyle Europe Realty Fund (“CERF”) and Carlyle Europe Realty Net.Works, L.P. (the “Fund”). CERF is syndicating a small portion of its own investment in Uncommon and Carlyle has agreed to give eligible Wealth Club investors an opportunity to participate with an exclusive minimum investment of £25,000. 

Carlyle believes returns will be largely in the form of capital growth. But Carlyle currently seeks to start distributing dividends once the development of 85 High Holborn is complete, expected in the last quarter of 2020. 

Returns, exit timeframes and yield projections are not guaranteed. There can be no assurance that Carlyle will be able to implement its investment strategy or achieve its investment objective. There can be no assurance that any assumption forming a part of the estimates contained herein will continue to be true. While such assumptions are deemed reasonable by Carlyle under the current circumstances, a number of risks, market events and other similar factors could result in such assumptions no longer being accurate. Any changes in the applicability of key assumptions may have a material effect on the estimates contained herein.

Uncommon portfolio overview

Uncommon’s portfolio currently includes four operational sites in central London, in close proximity to transport hubs in Zone 1 and its periphery.

In September 2019, Uncommon acquired its fifth site, 85 High Holborn, from Northwood Investors. Formerly the home of London Underground Ltd, the building is expected to become Uncommon’s flagship site, providing flexible workspace for over 2,000 people. 

Uncommon completed the acquisition at an off-market price of £80 million (£129 million all in, after development costs). Carlyle has underwritten a comprehensive refurbishment plan to renovate the asset as a co-working building, applying the same formula used in its previous sites. Development is expected to complete in the last quarter of 2020.

The five-site portfolio is expected to comprise 4,175 private desks and 218,000 sq. ft. 

For additional portfolio data and valuation metrics, please refer to the Uncommon Confidential Information Memorandum (as amended and restated from time to time, the “Information Memorandum”). The Information Memorandum is dated July 2019; however, some of the figures on this page are as at September 2019.

Business model

Uncommon provides flexible office space to a range of clients, from individuals to corporates.

As of 30 June 2019 the portfolio contained 113 tenants across the four operational assets, with limited dependence on large tenants or certain sectors. 

The market

According to Cushman & Wakefield, London co-working office take-up has more than doubled in the last six years to 16% in 2018, up from 7% in 2012. 

The flexibility this setup offers compared to traditional offices is attractive to startups and small businesses as well as large corporates. From tech giants such as Facebook, Apple and Amazon, to banks such as Santander and HSBC, a growing number of established companies are adding flexible workspace to their traditional offices.

The manager

The Carlyle Group, established in 1987, is one of the world’s largest global investment firms with $223 billion assets under management as of 30 September 2019. Carlyle employs 1,777 people with 673 investment professionals. Of those, more than 149 are Real Assets investment professionals. 

The Carlyle European Realty investment business is led by Peter Stoll, Managing Director and Head of Carlyle European Real Estate. He has over 20 years of investment experience and the wider senior investment team averages over 18 years of experience.

Structure of the investment

Eligible Wealth Club investors’ monies will be aggregated within a nominee account. The nominee account will, in turn, commit capital to the Fund, whose sole investment is Uncommon, which is managed by Carlyle via a general partner entity. 

The nominee will become a Limited Partner in the Fund and the underlying investors of the nominee will be bound by the rules of the Fund. 

Typically, in private equity, the money investors commit, also known as committed capital, will not be invested in full immediately. Instead it will be drawn over time and some of the committed capital may never be drawn at all. Returns are based on the money actually invested rather than committed capital.

Unusually, when your application is accepted, you will be required to make a payment for the full amount you wish to commit, plus introducer fees and other costs and expenses. 

Potential exit options

Carlyle currently believes there are several potential exit routes. Carlyle would expect strategic buyers already active in the sector to have an interest in acquiring Uncommon. The portfolio might also be attractive for investors looking to enter the sector, as they would acquire what Carlyle believes is a first-class management team in addition to the assets. Carlyle is currently targeting an exit in June 2023. There can be no assurance that exit opportunities will be available on the expected timeline or at all, or that Carlyle will be able to consummate such opportunities on favourable terms. 

Risks – important 

This is a long-term and very illiquid investment, only available to Wealth Club clients who have successfully completed an Elective Professional Client Application and confirm they meet stringent ongoing eligibility criteria. 

Capital is at risk: you should not invest money you cannot afford to lose. Returns are not guaranteed.

Many factors could affect the performance of the investment. Please carefully read the relevant section of the Fund Limited Partnership Agreement (the “LPA”), the Fund Subscription Document and the Information Memorandum for more details on certain material risks. In addition, investors should be aware that there will be occasions when Carlyle and its affiliates may encounter potential conflicts of interest in connection with the Fund. Please see the Information Memorandum for more details on certain material conflicts of interest.

As is typical for private equity deals, this is a limited partnership (LP). Investors will need to confirm they agree to the terms of the Fund. Wealth Club investments will be made via a nominee; however, underlying investors will remain liable as if they were a limited partner. 

The Fund has the right to call on funds at any time. Approximately 90% of committed capital is currently expected to be drawn down shortly after the nominee is admitted as an investor in the Fund. In addition, investors should be aware that there is a provision in the LPA for a certain level of distributions to you to be recalled by the Fund. You should familiarise yourself with the terms of the Fund LPA and subscription documents before investing.

Carlyle’s acceptance of Wealth Club investors’ aggregate subscription will depend on a total amount of £1,000,000 being committed. If this minimum is not met, Wealth Club will not be able to complete the investment and funds will be returned to investors.

Fees and expenses

Management fees and expenses are in addition to your committed amount. There is an annual management charge payable to Carlyle of 1.25%. There is a fundraising fee of 3% of your committed amount, as a one-off charge payable to Wealth Club, which will be in addition to your committed amount. 

As an investor coming in after the 15 October 2019, there is an additional payment due to CERF, equivalent to the 8% per annum preferred return for limited partners. This will be in addition to your committed amount. Your capital will be committed on 15 December 2019, and therefore new investors will be required to pay 62 days of interest at 8% to CERF. Please note, should you invest, you will then become a beneficiary of the 8% preferred return going forwards. 

In addition, there is a 20% performance fee on distributed profits, which becomes payable to Carlyle once investors have received back all of their invested capital, expenses, and preferred returns. Full information on fees and expenses can be found in the Information Memorandum and the Fund LPA and subscription documents: please read them carefully.

Our view

In our view, this is a compelling opportunity to co-invest alongside one of the world’s leading private equity firms.

This type of investment is not usually accessible to private individual investors unless they commit £10 million or more. However, eligible Wealth Club clients can now invest from just £25,000. 

As one would expect from a private equity deal, the investment is illiquid and there are considerable risks.

Next steps

  • Carefully read the documentation and ensure you are happy with the considerable risks
  • Follow the link to apply online
  • Ensure you have cleared funds available
  • We will be in touch with details of how to pay and the additional agreement you will need to sign with the UK nominee. At that point we will also ask you to send us copies of your passport/driving licence and a utility bill, to meet Carlyle’s identification requirements

Register your interest – no obligation

THE INFORMATION CONTAINED IN THIS MARKETING DOCUMENTATION RELATING TO CARLYLE EUROPE REALTY NET.WORKS, L.P., THE CARLYLE GROUP AND ANY OF ITS AFFILIATES (“CARLYLE”) AND ITS INVESTMENTS HAS BEEN DERIVED AND/OR TRANSLATED BY WEALTH CLUB LIMITED FROM MATERIALS FURNISHED BY CARLYLE, PROVIDED THAT WEALTH CLUB LIMITED IS OFFERING THE INVESTMENT DESCRIBED HEREIN BASED ON AN UNDERTAKING TO CARLYLE THAT CARLYLE SHALL HAVE NO RESPONSIBILITY FOR ANY SUCH INFORMATION OR ANY OTHER INFORMATION SET FORTH HEREIN. CARLYLE MAKES NO REPRESENTATION REGARDING SUCH INFORMATION OR ANY OTHER INFORMATION SET FORTH IN THIS MARKETING DOCUMENTATION TO THE INVESTORS AND EXPRESSLY DISCLAIMS ANY LIABILITY OR RESPONSIBILITY TO THE INVESTORS THEREFOR. CARLYLE HAS NO RESPONSIBILITY FOR UPDATING SUCH INFORMATION. THE HISTORICAL INVESTMENT PERFORMANCE OF CARLYLE PROVIDES NO ASSURANCE OF THE FUTURE PERFORMANCE OF CARLYLE. 

INVESTORS SHOULD BE AWARE THAT WHILE WEALTH CLUB LIMITED IS OFFERING INVESTORS THE INVESTMENT OPPORTUNITY DESCRIBED HEREIN, NO INVESTOR WILL BE A DIRECT INVESTOR IN CARLYLE EUROPE REALTY NET.WORKS, L.P. IN PARTICULAR, INVESTORS WILL HAVE NO CONTRACTUAL RELATIONSHIP WITH AND NO DIRECT RECOURSE AGAINST CARLYLE EUROPE REALTY NET.WORKS, L.P., CARLYLE AND ANY OF ITS AFFILIATES OR ANY DIRECT OR INDIRECT INVESTOR IN CARLYLE EUROPE REALTY NET.WORKS, L.P. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION WITH THEIR OWN ADVISORS OF THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. INVESTORS SHOULD NOT CONSTRUE THE CONTENTS OF THE CONFIDENTIAL INFORMATION MEMORANDUM OF CARLYLE EUROPE REALTY NET.WORKS, L.P. AS LEGAL, INVESTMENT, ACCOUNTING OR TAX ADVICE. 

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.

The details

Type
Commercial real estate portfolio
Manager
The Carlyle Group
Minimum investment
£25,000
Deadline
13 December 2019
Last updated: 6 December 2019