Aetos Capital lures China pro from Morgan Stanley

Aetos Capital has hired a ten-year veteran of Morgan Stanley, Kenny Tse, to lead the alternative investment firm’s push into Chinese real estate.

Tse was a managing director at the investment bank, where he was head of real estate research for China and Hong Kong. At Aetos, Tse will be a managing director of Aetos Capital Asia and head of China real estate. He will be based in Hong Kong.

According to his bio on the Aetos website, Tse was the top-ranked analyst by Greenwich Associates in 2006. He joined Morgan Stanley in 1997 and previously spent three years at Fidelity Investments.

Aetos Capital runs both opportunistic real estate funds and a hedge fund of funds platform. To date, Aetos has primarily focused on property investments in Japan. The firm closed its first opportunity fund in November 2003 on $740 million (€570 million) and its second fun two years later on $2.2 billion. Based on data on the firm’s website, Aetos Capital Asia Fund I invested heavily in residential assets (44 percent) and in greater Tokyo (40 percent). By contrast, the firm’s second fund has a much higher concentration in office properties (58 percent) and in the greater Osaka region (51 percent). According to information on the CalPERS’ website, the firm’s first real estate fund has generated an IRR in excess of 40 percent since inception.

Today, Aetos is beefing up its focus on the Chinese property markets. The firm also recently hired Sean Sullivan, formerly with AvalonBay Communities and Tishman Speyer, as a managing director in the firm’s Hong Kong office.

In addition to Tse, Aetos has a number of other Morgan Stanley veterans in its ranks. The firm was founded in 1999 by James Allwin, the former head of Morgan Stanley’s investment management business, which encompassed private equity and real estate. And Scott Kelley, who co-founded Aetos’ real estate platform with Allwin, was formerly the co-head of Morgan Stanley’s global real estate investment banking team.