Morgan Stanley Real Estate Investing has closed its latest opportunity fund on $4.7 billion, after offering investors in MSREF VII Global the opportunity to reduce their commitments.
The New York-based real estate group had originally been targeting $10 billion of equity when it first launched the fund in late 2007.
“We did everything we could to listen to our partners and make accommodations to help them,” said Thomas.
MSREI also offered “significant” concessions to existing LPs in two predecessor funds, the $1.75 billion MSREF V US and the $8 billion MSREF VI International vehicles. The concessions related to management fees, including waiving some and materially reducing others.
The toughest time in your business is when you spend the most amount of time communicating. Now, one year later we’ve accomplished a tremendous amount to recover value for our investors.
MSREI president and chief
“The toughest time in your business is when you spend the most amount of time communicating,” said Mantz. “Now, one year later we’ve accomplished a tremendous amount to recover value for our investors.”
Thomas said the firm was actively sourcing new deals for the G7 fund, particularly in the US with the firm looking to access distressed equity through debt structures. “We have had a big drop in values in real estate around the world – and they have certainly been more precipitous in the US and various areas of Europe and Japan,” said Thomas. “That’s why our primary focus will be on those areas. This is a very unique cyclical opportunity to buy real estate because there is a lot of distress. There is a real chance to make a lot of money again for our investors and we are excited about the future.”
During a wide-ranging and in depth interview, PERE also spoke to MSREI’s regional leaders, including John Klopp, head of Americas; Olivier de Poulpiquet, head of Europe, Middle East and Africa; Yoshihiko Shigenari and Marcus Merner, chief executive officer of Japan and chief operating officer of Japan respectively; and Hoke Slaughter, head of Asia.
We have only seen the tip of the iceberg in terms of opportunities, and for G7 right now, the most active marketplace is the US.
MSREI head of Americas John Klopp
In May, MSREI closed one of its first US G7 deals, acquiring an equity stake in Terminus 200, a 564,000-square-foot office in Atlanta, developed by Cousins Properties and in need of recapitalisation.
“We have only seen the tip of the iceberg in terms of opportunities, and for G7 right now, the most active marketplace is the US,” added Klopp. “Over-leveraging is very widespread, the market is beginning to turn in terms of fundamentals and the logjam is beginning to break. We believe, as a team, the US will be very fertile turf for investing.”
To read the full interview with MSREI, see the June issue of PERE magazine – out next week – or click here for details on how to subscribe.