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EXCLUSIVE: MSREI reorganizes in Asia as $1bn core fund nears

The investment bank platform embarks on an organizational shift, which includes the creation of country heads, and hires leadership ahead of the launch of its first Asia core fund.

Morgan Stanley Real Estate Investing (MSREI), the real estate investment management business of New York-based investment bank Morgan Stanley, has restructured the senior hierarchy of its business in Asia.

According to an internal memo, seen by PERE, the firm has appointed heads of China, Hong Kong and Singapore in an effort to transfer leadership and day to day management responsibilities to individual countries – moving away from its previously more centralized model.

The memo read: “As we prepare the platform for the future, we are announcing several important organizational changes in Asia.” MSREI’s Susan Sun will assume the role of head of China, based in Shanghai. In addition, Noah Wangh becomes head of Hong Kong and Kevin Kow becomes head of Singapore – both newly created positions. Also, Toru Bando becomes head of acquisitions for Asia as well as head of Japan.

The shift means long-serving head of Greater China and South East Asia, Calvin Chou, is to depart from the bank after 16 years at the end of the year. It is thought that Chou will next look to start his own private real estate investment business in the region and he will remain in Hong Kong. In the memo, MSREI said: “Calvin’s career with Morgan Stanley has included multiple roles over the course of 16 years and he has played an important part in building the MSREI franchise in Asia, for which we thank him.  We wish Cal well in his future endeavors.”

However, it will be the additional hire of Paul Keogh from Australian superannuation fund, AustralianSuper, that is likely to most catch the eye. The former RREEF executive has been hired to lead the management of MSREI’s incoming Asia core property investment fund.

The bank is joining the increasing ranks of investment managers looking to offer lower-risk, lower-return investment strategies for the more mature private real estate investment markets in the region.

Others in that space include Invesco Real Estate, M&G Investments, SEB Asset Management and Pramerica Real Estate Investors.

MSREI is to launch an open-ended property fund through which it will acquire properties in Asia’s gateway cities. On its target list are Australia, Japan, Shanghai and Beijing although Hong Kong and Singapore might figure too.

Given the fund’s evergreen nature, there is not understood to be a specific capital raising target for it. However, it is expected to attract between $500 million and $1 billion from institutional investors in the first instance.

Its governance and infrastructure should resemble MSREI’s well-established, multi-asset class vehicle in the US which has grown to beyond $11 billion in net asset value.

Keogh is expected to go on three months of gardening leave and so the Asia fund launch is not likely to happen until that is over and he starts at MSREI, in December.

A successful capital raising for the Asia fund would further add weight to claims that MSREI is back as a credible force in the institutional private real estate investment arena. It suffered reputation and investor attrition issues after one of its pre-global financial crisis Morgan Stanley Real Estate Fund (MSREF) Global opportunity funds suffered severe valuation hits and that led to a wide belief that support from investors had been damaged.

However, a successful $1 billion first closing for its eighth MSREF fund this summer, including considerable backing from China Investment Corporation and Future Fund, the state investment funds, has done some way to reversing that belief.

Indeed, in the memo, MSREI said: “With our recent success in fund raising now in hand and multiple new products about to roll out, MSREI is once again posed for growth.”

A spokesperson for the firm confirmed the content of the memo but would not comment further. None of the individuals mentioned would comment.