Sonny Kalsi, the former global head of Morgan Stanley Real Estate Investing, is to create a merchant banking property platform in partnership with his former colleagues, John Carrafiell and Fred Schmidt.
The trio is believed to be in the process of finalising the venture’s structure, with their plan expected to be completed over the coming months.
Market sources have told PERE that the group hopes to raise capital targeting distressed Japanese real estate, continue the workout advisory activities already started by Carrafiell and focus on select US and Western European opportunities over the next several years.
The group hopes to raise capital targeting distressed Japanese real estate, continue the workout advisory activities already started by Carrafiell and focus on select US and Western European opportunities over the next several years.
Kalsi ceased day-to-day work for MSREI in February last year, resigning in October, and since then sources said he has been talking with peers and industry participants about his future.
In joining forces with Carrafiell – whom he worked with as joint global head of MSREI between March 2007 and December 2008 – and Schmidt – who Kalsi worked alongside when he was head of MSREI Asia between 1998 and 2006 – Kalsi is reuniting with some of private equity real estate’s most experienced professionals. The new platform they create will act as a principal investor and advisory firm based in London, New York and Tokyo.
The news – revealed in full in the April issue of PERE magazine – ends months of speculation about the future of Kalsi, who was placed on administrative leave from Morgan Stanley in February 2009 after it emerged “actions” by a former employee in China appeared to have violated the US Foreign Corrupt Practices Act. A nine-month investigation by Morgan Stanley – the findings of which were turned over to the US Department of Justice and Securities and Exchange Commission – ultimately found “no evidence that Sonny caused or authorised the alleged misuse of assets”, Kalsi’s spokeswoman said at the time.
In February, Tokyo-based Schmidt resigned from his position as head of MSREI Asia in order to launch his own platform alongside two former Morgan Stanley partners, raising a distressed real estate fund targeting Japan. Carrafiell stepped down as joint global head of Morgan Stanley’s real estate group in December 2008, setting up his own advisory firm, Alpha Real Estate Advisors. Kalsi was appointed sole global head of MSREI in January 2009 following Carrafiell's departure.
Last week, Carrafiell recruited Toby Phelps from Tishman Speyer to Alpha Real Estate Investors, according to a report by Property Week. Phelps, who was UK managing director at the New York-based developer and fund manager, previously worked under Carrafiell at Morgan Stanley, as head of UK investment for the MSREF fund series.