GreenOak to launch second US fund

The New York-based private equity real estate firm is readying the rollout of a second US-focused investment vehicle of up to $500 million, less than one year after completing fundraising on its first US fund.

GreenOak Real Estate is expected to hit the fundraising trail again this year, with a follow-up vehicle to its debut US real estate fund, GreenOak Real Estate US Fund I, which held a final close in August.

The New York-based real estate fund manager, which was co-founded in 2010 by former Morgan Stanley Real Estate Investing executives Sonny Kalsi, John Carrafiell and Fred Schmidt, has not yet begun marketing a second fund. However, in a January 11 note sent to investors and seen by PERE, GreenOak indicated that it has made 11 investments on behalf of Fund I and that the vehicle currently is about 70 percent invested. In light of this, the firm has had preliminary discussions with its major institutional investors about the likelihood of raising a second US fund in 2013.

Officials at GreenOak declined to comment, but sources familiar with the matter said the launch is anticipated to occur during the first half of the year. Fund I, which was said to be about 50 percent invested at the time of its final closing, is anticipated to become fully invested within that time period.

GreenOak has not indicated to investors its fundraising target for the new vehicle, which will be overseen by Kalsi and US head Chris Niehaus. However, sources said the firm is looking to raise between $300 million to $500 million for the fund. The range is similar to that of Fund I, which along with a sidecar vehicle, ultimately collected $310 million in commitments after about 15 months in market. The fund manager, however, is said to be optimistic that its second US capital raise will reach the upper end of the targeted range, given the fact that it is no longer a first-time fund manager and has built an investment track record.

To date, GreenOak has made two dispositions, both of which were New York office buildings, on behalf of Fund I.  According to the investor note, on December 26, the firm sold its first investment, 256 West 38th Street, to American Realty Capital for $48 million and, on January 10, signed a contract to sell 218 West 18th Street to an undisclosed buyer for $111 million.

Those two transactions are said to have returned about a third of the capital called to investors. GreenOak, in joint ventures with local partners, had paid $30 million and $62 million, respectively, for the properties.

PERE understands that Fund II is expected to continue the investment strategy of its predecessor fund, focusing primarily on acquisitions of office, residential and retail assets that require capital restructuring or asset repositioning. Investments for the fund, which will target 15 percent to 20 percent net returns, will be concentrated on the gateway cities of New York, Los Angeles, Boston and Miami, sources said.

Meanwhile, GreenOak continues to raise its first Japan-focused fund, GreenOak Real Estate Japan Fund I, which held a first close on $200 million in early 2012.