GreenOak Real Estate, an investment firm started by former Morgan Stanley executives, is seeking $800 million to buy properties and loans in Japan, where prices have fallen for 19 straight years, according to two people with knowledge of the plans.
GreenOak plans to begin investing by the first quarter, according to the people, who asked not to be identified because the information is private. Fred Schmidt, a GreenOak co-founder in Tokyo, declined to comment.
Land values in Japan, which have declined by about half since the peak in 1991, are starting to attract investors, as has the prospect of acquiring properties put up for sale by owners needing to pay off loans. Tokio Marine Property Investment Management Inc., a Tokyo-based unit of Japan’s largest casualty insurer, said earlier this month it plans to raise 50 billion yen ($598 million) to buy rental apartments in the capital in a bet that prices are near the bottom.
Average land prices dropped 3.7 percent in the 12 months ended June, compared with a 4.4 percent decline a year earlier, according to a Sept. 22 report by the Ministry of Land, Infrastructure, Transport and Tourism. About 1.23 trillion yen of commercial real estate-backed mortgages are due this year, according to an estimate by Credit Suisse Securities (Japan) Ltd.
GreenOak was established by Sonny Kalsi, former global head of New York-based Morgan Stanley Real Estate; John Carrafiell, who had been co-head of the unit; and Schmidt, who previously led Morgan Stanley’s property division in Japan.