Ex-MSREF trio find backing for new platform

Sonny Kalsi, John Carrafiell and Fred Schmidt, a trio of former Morgan Stanley real estate investing heads, form new property firm GreenOak Real Estate with $110m of backing from Dutch listed company, Tetragon. The firm has formed ahead of an expected surge in distressed loan disposals, fire sales, and MBS workouts.

Sonny Kalsi, John Carrafiell and Fred Schmidt, three former professionals at Morgan Stanley Real Estate Investing, have formed GreenOak Real Estate as an investment and advisory business.

The decision to form their own vehicle – first revealed by PERE in March – has won backing from Dutch-listed investment company Tetragon Financial Group, which is providing $110 million to the new venture, said Reuters.

Tetragon is a company with a market capitalisation of $525 million staffed by three co-founders of Polygon Credit Management; Paddy Dear, Reade Griffith, Alex Jackson. It raised $300 million through its listing on the Amsterdam stock exchange in April 2007.

Kalsi, Carrafiell and Schmidt were all at Morgan Stanley together until they left between 2008 and February 2010. At one stage, Kalsi and Carrafiell were global co-heads of the business.

They have set up GreenOak ahead of an expected surge in distressed loan disposals, asset fire sales and mortgage-backed security (MBS) workouts in its core target markets of Europe, Japan and the United States, reported Reuters .

It is likely to initially focus on securing advisory mandates in complex property restructuring cases across Europe and make an immediate play for distressed physical real estate as well as mortgage buys in Japan a principal investor, Reuters cited market sources as saying.It will pursue both strategies in the US from the outset.

The $110 million backing from Tetragon involves a $10 million working capital loan and a $100 million co-investment. Tetragon's investment will fund a limited fixed percentage amount of any GreenOak investment deal and will take a 10 percent equity stake in GreenOak under terms of the arrangement. Entities “linked” to Tetragon, including Polygon Management LP, are considering additional infusions of capital into GreenOak in the future.

Tetragon’s Dear, who serves as investment manager and principal of Polygon, said in the statement: “We think there are significant opportunities in the real estate market, including widespread distressed opportunities.”