It is a new era for John Carrafiell, who has decided to step down as global joint head of real estate investing at Morgan Stanley and take up a senior advisor role after 21 years at the bank.
The 450-plus real estate team learned of his decision at the end of December. Morgan Stanley's year end was November 30.
Carrafiell has been wearing a number of hats at the firm, including joint chief investment officer of the Morgan Stanley Real Estate series of funds (MSREF) and president of Morgan Stanley Real Estate Special Situations III, the $5 billion open-ended fund started in 2006.
He will be spending part of his time as a senior advisor to the firm, maintaining directorships at Morgan Stanley portfolio companies, including Multi Corporation, the pan-European developer of shopping centres, and Canary Wharf Group, the London docklands developer. The balance of his time will be spent on outside pursuits.
Those that know him well say his new role will make best use of his strategic ability. Glenn Aaronson, chief executive of Multi, said Carrafiell's ability to “comprehend and synthesise” the big picture of global real estate “and bring it into the specific situation at hand is second to none. As a senior advisor, in some ways it is the pinnacle of what John can bring to the market place.”
George Iacobescu, chief executive of Canary Wharf, added that Carrafiell had a great analytical mind and in terms of judgement “is one of the smartest investors I have met in my 30 years in business. He foresaw the current events and helped us strategically position for the downturn”.
Carrafiell helped advise Canary Wharf on its floatation at the end of the 1990s when Morgan Stanley was joint book runner. He then played a lead role on the principal side, taking the public company private. “He has a particular passion for Canary Wharf,” said Iacobescu. “His passion came out very quickly when talking about how projects can be put together and financed.”
Sonny Kalsi, the New York-based global head of Morgan Stanley Real Estate Investing, will now lead the real estate team single-handedly. He told PERE: “With 20 years of experience, John provides insights into the European investment market that few others can match. We will continue to benefit from his considerable knowledge and numerous relationships.”
The decision to step down and take up an advisory role is timed, partly, to coincide with the passing of his 20th anniversary at the firm (he stayed 21 years in total), meaning carried interest from investments and stock options can now fully vest.
Carrafiell, though, is also said to have stayed that extra year in order to deal with challenging investments within Morgan Stanley's global fund MSREF VI. Also, the firm is reportedly nearing the final close of Morgan Stanley Real Estate Fund VII Global but conditions may not be right for investment until towards the end of the year at the earliest.
Morgan Stanley Real Estate Investing, which employs around 140 professions in Europe and more than 450 globally, has been shrinking staff numbers along with the other large institutional property investors due to the slow down. In the past 18 months, the firm has made just one large European investment – the purchase of Berlin's Sony Center, where the team has extended and renegotiated the lease to Deutsche Bahn and leased all the vacant space.
Carrafiell is known as a hands-on operator, as well as being an instrumental figure in building out and managing the real estate team. Occasionally, he teamed up with private equity firms, such as TPG on an investment in UK pub group Punch Taverns, as well as Middle Eastern investors, such as Prince Al-Waleed.
He was also involved in MSREF's first deal in Europe – an office acquisition in Appold Street, London, in 1994. His deal history also includes involvement in steel company ThyssenKrupp's residential portfolio, which was acquired in 2004 and exited in 2006, and a 25 percent stake in London property company, Great Portland Estates.
In March 2007, he was made joint global head of Morgan Stanley Real Estate Investing when it became part of the bank's investment management division. As well as holding a directorship at Multi Corporation and Canary Wharf, he holds positions at other portfolio companies Deutsche Immobilien Chancen and Grupo Lar.