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GreenOak holds capital closings for US and Japan

The brainchild of ex-Morgan Stanley Real Estate Investing triumvirate Sonny Kalsi, John Carrafiell and Fred Schmidt has enjoyed early capital raising successes, closing its US fund on $300m and holding a first closing of $200m for its Japan effort.

GreenOak Real Estate, the start-up private equity real estate firm launched by ex-senior executives of Morgan Stanley Real Estate Investing (MSREI), has held capital closings for its first US and Japanese funds.

The firm would not comment when contacted, but PERE understands GreenOak has held a final closing at $300 million for its US debut fund, GreenOak Real Estate US Fund I, and a $200 million first closing for its maiden Japan fund, GreenOak Real Estate Japan Fund I.

GreenOak, led by MSREI’s ex-global co-heads Sonny Kalsi and John Carrafiell and head of Fred Schmidt, and employing a number of other former MSREI professionals, was launched in 2010 since when it has formed platforms for the US, Japan and Europe.

While the Japanese fund hit the news first, the devastating Tohoku earthquake last March stalled the first closing as Japan’s markets and potential investors took stock of its ramifications. In the meantime, the residual dislocation and distress in the US markets, coupled with returning macro-economic health, has enabled private equity real estate funds focused on the US to benefit from renewed investor appetite. According to PERE’s Capital Watch, 2011 saw US value-added and opportunistic funds attract more than $20 billion from investors, far more than their Europe and Asia equivalent funds combined.

According to a prior PERE report, GreenOak raised the first $150 million for its US opportunity fund around April last year but brought the fund to the $300 million mark at the turn of this year. The fund was seeded with a commitment from General Motors, an investor well-known to have backed the Morgan Stanley Real Estate Funds (MSREF) programme of global opportunity funds.

GreenOak’s US platform is also understood to have made various investments for the fund, particularly in its home city of New York, where it has invested in four transactions. The fund now holds investments in offices, residential and high street retail properties in situations requiring capital restructuring or asset repositioning. Typical deals are thought to have been of between $10 million and $30 million of equity.

In Japan, fundraising is expected to continue with the firm targeting an ultimate haul of $500 million by later this year. The firm is expected to target deals resulting from the large amount of CMBS debt coming due currently and in the short-term future as well as bottoming prices in the country’s major office markets. According to research by property services firm Savills, ¥711 billion (€7.26 billion; $9.25 billion) of CMBS debt should mature in 2012 and a further ¥1.2 trillion in 2013.

Both the US and Japan funds are slated to be targeting typically opportunistic returns of approximately 20 percent IRR and a 2x equity multiple. GreenOak’s European fundraising endeavours are expected to materialise later this year.

It is understood that Spearhead Capital Partners and Eaton Partners are acting as placement agents for GreenOak.

In related news, Toby Phelps has left GreenOak, where he was a managing director in its Europe team, to join Investa Property Group, the Sydney-based real estate fund manager. At Investa, Phelps has been appointed fund manager of its Investa Office Fund, responsible for driving its long-term strategy and the performance of the fund, according to a caption on Investa’s website.