Sonny-Kalsi_Real-Estate-Capital

Sonny Kalsi (0:00 - 0:34)

I actually lived and worked in six different countries in my 18 years there, plus California, which some people think is a different country, So I was actually only in New York for five of my 18 years at Morgan Stanley. And to me, I think that was, if I get asked what is the single thing I think I did from the professional standpoint, which kind of really helped me the most, it was being open-minded about both moves to go to the West Coast and then go to London and then Stockholm, and then go to Australia, which was as far away as you can get from New York or the East Coast, which then ultimately led to Hong Kong and Tokyo.

Nancy Lashine (0:35 - 3:28)

Hello, and thanks for tuning in to Real Estate Capital. I'm your host, Nancy Lashine of Park Madison Partners. Capital is the lifeblood of the real estate industry, but the decisions on where and how it's allocated are driven by people and personalities.

Who are they? What motivates them? What can we learn from their experiences?

On this show, we introduce you to some of the real estate industry's most influential thought leaders and decision makers. And we talk about what is important to them, how they make critical decisions, who has influenced them, and a lot more. Our guest on today's episode is Sonny Kalsi, Co-Chief Executive Officer of BGO and the newly appointed President and CEO of SLC Management, which stands for Sun Life Capital Management.

It's the institutional management arm of Sun Life Financial, the Canadian insurance company, which operates a multi-asset alternatives platform with $280 billion in AUM, spanning real estate, infrastructure, and credit. BGO is itself one of the world's leading global real estate investment management firms with about $90 billion in assets under management. In 2025, Private Equity Real Estate recognized Sonny as one of the top 10 most influential figures in private equity real estate globally, a distinction that, having watched him build and lead at numerous stages of this industry's evolution, feels entirely well-earned.

I had the privilege of working with Sonny and the GreenOak team prior to the Bentall Kennedy merger, and I can tell you firsthand that he is one of the most thoughtful leaders in this business and a great relationship builder. Now, Sonny has taken on what he calls the biggest challenge in his career, stepping into the role of President and CEO of SLC Management, Sun Life's global alternatives platform with an ambition to more than double assets under management to over $600 billion. In our conversation, we discussed Sonny's career from his formative years at Morgan Stanley, including nearly a decade living and working across Asia, to the entrepreneurial leap of founding GreenOak in the aftermath of the global financial crisis, to the strategic thinking behind the BGO merger and the growth of the platform from $45 billion to nearly $90 billion in assets today, and now the newest challenge of leading SLC Management. We also discussed Sonny's leadership philosophy, his commitment to diversity, philanthropy, and what he stands for beyond the business.

It's great to see you. I think you were one of our first guests when we started doing a podcast about six years ago. It was just pre-COVID, and we were all fatter and happier then.

Maybe not happier, but more innocent.

Sonny Kalsi (3:29 - 3:29)

For sure.

Nancy Lashine (3:30 - 3:39)

But GreenOak was, what, $9 billion or something like that, and you're now running a $280 billion platform?

Sonny Kalsi (3:40 - 3:42)

$309 billion is the latest number.

Nancy Lashine (3:42 - 4:05)

I'd love to talk a little bit about the arc of your career and how you see the industry going forward. Let's just dive in. You started out at Morgan Stanley.

You were there for 18 years. You lived in Asia and New York. Tell us a little bit about what you took away from your time at Morgan Stanley that allowed you to begin this arc.

Sonny Kalsi (4:05 - 6:39)

Well, thanks for having me back. I've got to say that. It's awesome.

I always enjoy my time with you, even if it's on Zoom or Riverside or whatever it is. As I said before, I didn't come from a real estate background at all. I backed into the career.

I was really lucky to get that job at Morgan Stanley, and it happened to be in real estate. I said yes without really knowing what I was getting myself into. Maybe because of that, I tried to always take a very open-minded approach to my career.

You mentioned Asia and New York. I actually lived and worked in six different countries in my 18 years there, plus California, which some people think is a different country. I was actually only in New York for five of my 18 years at Morgan Stanley.

To me, I think that was, if I get asked what is the single thing I think I did from the professional standpoint, which really helped me the most, it was being open-minded about both moves to go to the West Coast and then go to London and then Stockholm and then go to Australia, which was as far away as you can get from New York or the East Coast, which then ultimately led to Hong Kong and Tokyo. I would encourage young people to do this all the time. The two things that I really got from going away from the home office, if you will, were one, it just comes with a lot more autonomy, the better or worse, you're out there. You're usually part of a smaller team. You get more responsibility, probably earlier than you're going to get at being in the office.

Then number two, you get a lot more exposure. I remember when we were raising one of our Asia funds at Morgan Stanley, the senior people would come out from all of our institutional investors. If you're sitting in New York, or you'd go to Cleveland, or you'd go somewhere else, you'd see them for an hour in the conference room.

When they came to Asia, they were stuck with you for a day or two. You were stuck with them. That's how you really develop relationships.

You really get to know them because they're there. You go on site tours. You have dinner with them.

Whatever else, they're there. I just remember actually all this quality time. I didn't appreciate it at the time at all.

That combined with, this is a great firm with a bunch of great people. If you look at the alumni network that has come out of Morgan Stanley in this industry, it's unbelievable how deep it is and how wide it is. Actually, most of us are all still pretty close.

That part is also a great takeaway from what I got. What I really look at in hindsight, and the further I get away from the painful ending, I just remember the good parts about it.

Nancy Lashine (6:39 - 6:54)

You're one of the great relationship builders in our business. Was there a moment in your career early on that you realized the importance of building those relationships or a mentor? Is that something that you just brought with you to the table?

Sonny Kalsi (6:55 - 8:22)

I grew up the son of a nuclear engineer who had a super high IQ. I did not have his IQ, but he also had a pretty good EQ for how smart he was. I realized at a young age how important the EQ side of things were.

We didn't have fraternities at Georgetown, but if there had been a fraternity head, it would have been me. I was in high school, very involved in student government. I've always just liked people.

I've always just taken a personal interest in people and their story and getting to know them. I didn't really consciously connect that very much from a personal business standpoint. It just came naturally.

I actually think it's the reason I really like the real estate group at Morgan Stanley because there are a lot of interesting people there from a more variety of background in terms of educational and other stuff than maybe some of the other groups. I definitely like the people we did business with. What a group of cast of characters and the different people I've met around the world.

I really mean this. It wasn't actually until I got back to New York, which at that point was 15 years into my career, where I realized that, all these people I'd spent all this time with, they would come through Asia. I was there for 10 years, actually.

I knew some of the senior people at Townsend much better than my colleagues did because I'd spent a lot of time with them. I think it's something I just backed into, but I've also been really lucky that I haven't had to fake it.

Nancy Lashine (8:22 - 8:34)

One of the things that I've learned as a parent watching my kids, that EQ is probably more important than IQ in being successful in careers in larger organizations. It is so critical.

Sonny Kalsi (8:35 - 8:42)

Well, now that everyone's IQ is in here through Claude or-

Nancy Lashine (8:42 - 8:46)

For those who are listening, you're holding up your phone. 

Sonny Kalsi (8:46 - 9:01)

Now that you've got this superhuman IQ with PhDs and everything in your pocket, I think now in the world of AI and the availability of AI, I think the EQ became that much more important.

I think it's going to be a differentiator.

Nancy Lashine (9:01 - 9:18)

That's comforting. That's a very comforting thought.

When you were at Morgan Stanley, you managed something at huge scale, a thousand people, multiple countries. I would think when Morgan Stanley got up to about 90 billion of AUM at one point, maybe even higher.

Sonny Kalsi (9:18 - 9:20)

Maybe 99.8, never got to 100.

Nancy Lashine (9:22 - 9:39)

I think there's a rounded possibility there. I'm going to ask two questions. You talked about a painful ending.

I want to touch on that. Then when you decided what to do next, what did you take away from managing something at scale that informed what you wanted to do next?

Sonny Kalsi (9:40 - 9:42)

Do you want me to talk about that part or you want to talk about the painful ending?

Nancy Lashine (9:44 - 9:53)

I actually mentioned the painful ending again for a very specific reason, which is that one of the themes that we're focused on right now in the podcast is resilience.

Sonny Kalsi (9:54 - 9:54)

Yeah.

Nancy Lashine (9:54 - 10:14)

I think it's such an important thing for people to remember. I mean, look, people look at you as one of the most successful people in the real estate investment business, but resilience is critical to who you are. There were moments when it didn't feel like this.

How did you pick yourself up and make this all happen?

Sonny Kalsi (10:14 - 10:47)

I had a great network around me. I have a lot of friends and I have an amazing family. I put a lot of time and energy into them, honestly, and they put a lot of time and energy into me when I needed it. 

My wife of almost 28 years now, when I was laying in bed that first day after I'd been told not to come back into the office, I was curled up on a wall. As someone who's a very positive, glasses out, always half-full person, she kicked my ass and I needed my ass kicked.

Nancy Lashine (10:49 - 10:53)

I love this. Wait, this is a woman who also has a great poker game, right?

Sonny Kalsi (10:53 - 11:52)

Great poker game, player, whatever. Honestly, my friends and my colleagues from Morgan Stanley rallying to me, my friends and life came rallying to me. The resilience part, I'll admit, if I didn't have that support group around me, I don't know how.

I think I would have ultimately gotten up and dusted myself off and whatever, but I think that helped a lot. I think it's one of those things in life. I think if you put good karma out there, you get it back.

I've always tried to put karma out there and I definitely got it back. Resilience is super important. We talk about our kids.

Nancy, I think it's the biggest thing we can try to help our kids with is being resilient. It gets harder and harder. I always say I'm really lucky. I lost my dad last year and that really sucked.

Until then, that was the worst thing that I've ever been through, getting fired from a job, which by the way, the greater scheme of things ain't so bad.

Nancy Lashine (11:52 - 11:56)

Well, silver linings, right?

Sonny Kalsi (11:56 - 14:48)

I remember everyone telling me when one door closes, another will open and whatever else and all that stuff. I was just please save that nonsense for yourself.

I feel really terrible right now and they were right. I think that it's interesting because of the way the settlement worked with Morgan Stanley. They really are focused on imposing a 12-month non-compete.

I'm not allowed to talk about my settlement. Let's just say they helped me with seed capital for my new business. But there's a 12-month non-compete and that 12-month non-compete was at the time I was really pissed about it.

I was 41 years old and I was ready to go and I had a big chip on my shoulder and I had something to prove. In hindsight, it's the best thing that happened because I don't think that I would have started a business if I had been ready to go in three months. Because if I had been ready to go in three months, I got really lucky.

There were a couple of big organizations that wanted to hire me and it would have been my fastest way back in. It was 2009 and there was so much dislocation, stress. I couldn't do it.

I wasn't allowed to do it. In fact, one of them, one of the biggest names in the industry tried to hire me and they said, we'll get Morgan Stanley to let go of the non-compete. Then they called me back a few days later and said, they really don't like you right now.

I think they're all kicked out, but back then they didn't realize that they're imposing the non-compete. Look, my kids were nine and six years old. I've said this before.

I said, my kids would have told you I was a mediocre dad and my wife would say I'm a much worse than mediocre husband. The benefit of really making them a priority then and then onwards, even when we started GreenOak, I mean… I think my kids would both tell you I'm a pretty good dad. Michelle would probably say I'm a mediocre husband, which is probably where I'm capped, which I'll take compared to where I was.

It informed a lot of things for me. Honestly, part of it is a personal part. At the risk of using too many cliches, we all know this is a marathon, not a sprint.

This marathon the right way is to make sure it's part of your whole life. I would say often, if you're not happy professionally, you're probably not going to personally and definitely vice versa. And so having a better life and a better sense of balance, making sure I've made the sporting event or I've made the play or whatever, which I didn't always make before doing all that.

But then I also said, I don't want to be part of a big company again. The morning selling business was a great business until it wasn't. And it was almost $100 billion in 33 countries.

70 to 75% of it was value-add opportunistic, highly levered. And we really always thought that that diversification would help us. And it didn't matter whether the GFC came and everything correlated to one and blew up together.

We just had that many more fires to fight and whatever. And I said, look, if and when I do something next, I want it to be smaller, simpler, more targeted.

Nancy Lashine (14:48 - 14:54)

The famous last words, Mr. Kalsi. You're looking very sheepish, by the way.

Sonny Kalsi (14:55 - 15:34)

Well, it's because I tell my kids all the time, they're now 26 and 23. So it's a different dialogue, discussion with them now. But I would say be careful keywords, always and never.

They're really hard to stand behind long term. But look, when we started GreenOak, it was myself and John and Fred and John was in London and Fred was in Tokyo and really, it was ambitious. But it didn't feel so ambitious after running that other big platform.

And we basically said, this is what we're going to do. There's dislocation. We're going to take advantage of it.

We're not just in three countries, we're kind of in six cities, right?

Nancy Lashine (15:35 - 15:40)

You had a thesis that you had to invest in the major cities, that that's where the opportunity was.

Sonny Kalsi (15:41 - 16:26)

And that's what we wanted to take advantage of. But here's the challenge. When you start building a business like that, and when you start recruiting people to join you, and we were really fortunate.

We had a lot of our former colleagues that wanted to join us. Even if you're happy to be part of a smaller, slower growth organization, if you get the right people, they're not going to be. That's not what drives them.

That's not how you're going to retain them and keep them. And so when we grew this thing organically, I think we were 12 billion or so when we partnered with Sun Life or Bentall Kennedy. Even that growth had been kind of slow, and then it kind of took off.

Even then, I was feeling like, wow, I can't believe we have 100 people now. We have 100 employees. I'm like, how do we have 100 employees?

And we said, this wasn't going to be.

Nancy Lashine (16:27 - 16:37)

You said something about you wanted it to run more like a family restaurant, which I totally appreciate it since that's the genesis of Park Madison Partners came out of the Park Madison coffee shop.

At some point you become a franchise or a chain.

Sonny Kalsi (16:37 - 17:00)

I worked for my friend, Sean Fong Chu's China Garden Restaurant, family restaurant in Oak Ridge, Tennessee, growing up as a busboy. But it was one of the things I'm most proud of is how long our team has been together.

We've had incredible retention. Going back to our time at Morgan Stanley, but the people that joined us, so many of them are still with us today.

Nancy Lashine (17:01 - 17:19)

Talk about that though for a minute, your longevity of relationships and employees and loyalty and investors too. What builds that culture? What can you say you've consciously done within the organization and have you communicated to the team to build that culture?

Sonny Kalsi (17:20 - 17:32)

I think I'm a very transparent person and maybe sometimes transparent to a fault. Nancy, when we worked together way back when, when you helped us, our second fund.

Nancy Lashine (17:32 - 17:38)

GreenOak US 2 and 3 and Europe 1, which was the Spain fund.

Sonny Kalsi (17:38 - 17:47)

But the first one that we went out the road together on, I remember you made a comment to me like something along the lines of “ you don't have to spend so much time apologizing.”

Nancy Lashine (17:47 - 17:51)

Oh yeah. I called it the Morgan Stanley Mea Culpa tribute.

Sonny Kalsi (17:51 - 20:10)

Back to the transparency point. I felt it. I personally feel, and I felt responsibility and I wanted people to know that.

I wanted the team to know that for sure, but I wanted investors to know that. People, potential investors, prospective investors. When General Motors, when Jamie Behar and her team backed us when we first started GreenOak, and I remember she called me when I was still in the fog of like what was going on and Nancy who had never, who was her CIO at the time, they called me together and they basically just said, we know you're going through a terrible time right now.

We think you got a raw deal. When you come through the other side of this, we want to talk to you because we'd love to talk to you about backing you.

It was six months later that in my head like “did I have that conversation? Did they really call me?” when they closed and supported us, I got asked all the time, how long did it take you to get GM?

And I said, 20 years. And I really meant it. And I felt it, I may be meeting Jamie and Joseph Stecher and the team there and they backed MSREF 1.

And I was one of the youngest people on the team carrying the books around when we did all of that and spending time with them, looking at assets and all that. And it's a little bit easier to appreciate this as we get further into our careers, but these things take time, I think… my father used to always say this. He'd say, “look, people can say a lot of things. You should judge them on what they do as opposed to what they say. Do that. That takes time”. And so with investors and with our partners that we've got, I feel, they've developed and we're, by the way, we don't bat a thousand.

At BGO, we've got things we've done well. We've got things we haven't done as well. We're very open and transparent about it.

I would say with the team, we're very open and transparent about it, we have one of the- I talked about how long people have been around. I think there's two reasons for it.

I think one, we have a very flat organization. I think the most junior person can talk to me or John or Fred about anything. I think that's important.

And I think because we model that behavior, our senior team models that behavior. But number two, we share the firm with them. We have a hundred, shareholders of BGO, hundred employee shareholders of BGO.

Nancy Lashine (20:10 - 20:25)

When you merged into Bentall Kennedy, which is a hundred year old Canadian firm, it feels like there was a great opportunity for a culture clash. How did you meld those cultures?

Sonny Kalsi (20:26 - 20:41)

I think both sides are super respectful to the other side. Gary Whitelaw and Amy Price, that team, and Amy was a little bit of a double agent because she had worked with us. But I think they understood.

Nancy Lashine (20:42 - 20:44)

But she wasn't a secret double agent to your point.

Sonny Kalsi (20:45 - 22:19)

Yeah, she wasn't a secret double agent. But I think one of the things that they understood coming in is that we were a younger, more entrepreneurial organization, but we had come from an institutional background. So we kind of got that.

And I think from our standpoint, as we looked at it look, this organization has been around for a hundred years. The funds they manage, the BGO, the Odyssey fund and the Canadian version of it had been around since the early eighties.

How do we kind of come up with the right mix of the two? I would actually tell you COVID helped. We closed merger July 2nd of 2019 and within six, nine months we're in the pandemic.

So even though we got to spend less time with each other in person, we did much more of this. We were on Zoom together and we were doing whatever people were spending time. And the next thing, someone is making martinis in their living room on a Thursday and whatever.

And they're, just as my dog is here in the office today, the dog that was around back then would always be over my shoulder. And I think in a way it kind of accelerated that coming together and it just kind of happened over time.

If you ask me what the culture of BGO is, I would say it's probably two parts GreenOak and one part, Bentall in terms of what's kind of ended up happening and how it's on. And that's only because, it's a firm that still had really a lot of growth ambitions, and that, entrepreneurism was important. 

Nancy Lashine (22:19 - 22:30)

Let’s just jump on that for a sec, you went from about 45 billion in 2019 to about 90 billion just in the BGO piece today. How did you grow? What did you do to grow the business?

Sonny Kalsi (22:31 - 22:38)

I would say that it was during a time period, which was not necessarily easy for real estate.

Nancy Lashine (22:38 - 22:40)

It's been a terrible five years, by the way.

Sonny Kalsi (22:41 - 23:12)

Nine months in, we got COVID hit, I'd say a couple of things.

One, we did spend a lot of time in advance of kind of coming together, really just talking about business plan and strategy and where do we see the growth opportunities. And I would say we were all kind of 80% on the same page, which is good. We talked about geographic opportunities here.

We think there's some product opportunities here, the first strategy we launched was a core plus spot because Bentall had this great long history and core and ODCE, etc. 

Nancy Lashine (23:13 - 23:17)

Was that an open end core plus in the U.S.?

Sonny Kalsi (23:18 - 23:24)

Core plus of the launch of the U.S. and put two portfolio managers on it.

One came from BG... one came from GreenOak, one came from Bentall. 

Nancy Lashine (23:24 - 23:25)

And how did you seed it?

Sonny Kalsi (23:26 - 23:55)

So Sunlife seeded it, but then we got a big state Texas bond when we launched it with some seed assets in the beginning of 2020 and then COVID hit. And we were deep in discussions with a big Texas pension fund who ended up coming in for 400 million. And they basically said, we don't really love the seed assets. Not because we don't think they're necessarily good assets. There's three assets, but because we're just worried about how do we get comfortable with valuation.

Nancy Lashine (23:56 - 23:57)

Right.

Sonny Kalsi (23:58 - 24:33)

Sunlife to their credit said, we'll keep them. And by the way, of the many things I'm appreciative of that Sunlife did, again, the benefit of a partner that's been around for 160 years is they take a long-term view on things.

But it kept those assets. And, we were able to start with a threshold of money post COVID and that fund has done super well as I understand it. And I'm just, as I understand it, it's a number one performing core plus fund last one, three, five years.

But we also had the benefit of kind of starting with a threshold of money.

Nancy Lashine (24:33 - 24:33)

Right.

Sonny Kalsi (24:36 - 25:20)

But it brought the two firms together in a way of the U.S. that was, I think, accelerated kind of people kind of working together. The great thing now is Nancy, no one talks about where they came from.

The U.S. was, it was the Canada was spent all only Europe and Asia was very local. The U.S. was the only place where both businesses had a platform overlap. That kind of thing accelerated.

And then we said, okay, we don't have a value like credit business in the U.S. we have one in Europe. We should do that. We have a senior credit business because we've made a size general account.

It was just kind of picking the places that, where there was some white space where we thought, we either have the team or we can bring in the team to take advantage of it.

Nancy Lashine (25:20 - 25:23)

Did you buy businesses too, or did you mostly build?

Sonny Kalsi (25:23 - 25:29)

Very little. Most of that growth was organic. The only business we really bought was the former metropolitan business Carlyle.

Nancy Lashine (25:30 - 25:32)

For secondaries. 

Sonny Kalsi (25:32 - 25:35)

Which I kind of viewed as completely different. I love the team.

Nancy Lashine (25:35 - 25:35)

Right.

Sonny Kalsi (25:35 - 25:39)

And they were one of our initial investors. So I thought they had good judgment.

Nancy Lashine (25:40 - 25:41)

Amazing judgment.

Sonny Kalsi (25:41 - 26:00)

David Sherman and the whole team, I really liked them a lot. And when we had an opportunity to do something with them or was happy to do it, I think everything else has been organic, which not sure that's necessarily the path that we're going to have going forward, especially with my new hat that I- but then he obviously, we just announced yesterday, the bell transaction.

Nancy Lashine (26:00 - 26:08)

I just heard back from Lily is great. And that's incredible. And you're going to keep them as a bell platform.

Sonny Kalsi (26:08 - 26:39)

I think one of the things it's funny, cause I've been obviously talking to a lot of the bell investors who are a number of whom are also BGO investors. The first thing I say is, promise you, trust me, I have one very simple objective.

We're just not to screw this up, not to mess it up. So what has been working for a long time for bell and Lily and her team are awesome.

We don't want to screw it up. I said, the way I kind of think about it is the family used to own 70% of that business. We were replacing the family.

We're not replacing the management team.

Nancy Lashine (26:39 - 27:14)

What it is about this business and it's funny. It's the like sins of omission. If people talk about the sins of commission. 

Everyone in my family are doctors and my brother-in-law is doctor from Tennessee and he invested with Bell, early on long before Lily had come along. And I just thought of them as this Southern syndicator. And I thought Lily is very special, but I couldn't get my head around this family ever being truly institutional.

And I messed that up big time because they're spectacular.

Sonny Kalsi (27:14 - 27:28)

They're spectacular but as we talk about people earlier. It's people's business.

They're great. They're good people Lily, Joe and Nikolai and that senior team. They're awesome.

Amy and Lily have been friends and that's a big positive.

Nancy Lashine (27:28 - 27:50)

Talk about as you're building out the broader platform now, the Blackstone model of building or buying platforms and operators and being vertically integrated versus the traditional Morgan Stanley and GreenOak, partnership model and disintermediation of fees and how that's all coming together.

Sonny Kalsi (27:50 - 29:48)

I think that's a big part of the thesis behind Bell or the business that the BGO business outside of the U.S. is, broadly speaking, pretty vertically integrated. We actually have a thousand person property management in Canada that does third-party but also manages everything that Sun Life's general account, the core fund, but also our value add strategy.

So that's how the business works there. Europe, 75% of what we do is industrial. We basically couldn't do it ourselves, we've got the expertise to be able to do it.

And we might work with a local partner here and there, if they have a sourcing angle or something else, 75% of what we do is direct in Europe and Asia. In Japan, 90% of what the team does is directed. I would say a hundred because that's what they would say, but there have to be exceptions, but it's like 90% plus direct and non-Japan is probably still 50 or 60% direct.

So the U.S. has been the outlier. Now, interestingly, the core fund does a lot. They have most of the assets they own, they own directly.

They might have a partner, but it's not really in the typical sense. So the real outlier was the legacy GreenOak value add business. The truth of it is the diversified funds fund one did great fund two did not.

And part of it is the office exposure that the fund had, but part of it is just, and I look, I'm not blaming our operating partners at all. It didn't end up being the right model for us. And this is that has done the best for us on the value add side or the U.S. has been an industrial.

And it's partly been because we're more direct. The industrial side may have some characters, but there are a few partners. We can do a lot more.

We can sell out. We got a hundred million square foot business now in the U.S. And so we basically said, we got all this white space in the multifamily.

We're under allocated. That's only 25% of our portfolio. We should have more, but we should do this little operator.

Nancy Lashine (29:49 - 29:59)

When you own the business, like an industrial, do you own it on your own balance sheet or do you share the platform value amongst the funds? How are you doing it?

Sonny Kalsi (29:59 - 31:53)

In that case, we never really went and bought a business. We've kind of just, it's our own team internally that does it. So that business is owned by the firm that does this done by the firm.

And I would say for most of it, there's, for example, no double fees or any double promotes like that in there, that's part of the reason what was important to Lily and the team with Bell they wanted to keep their day-to-day autonomy and all that. But we wanted to have that as well, because we wanted to stop them away where, in fact, the stuff we're doing that BGO had been doing in multifamily, broadly speaking, is going to go under that.

They've got 70,000 units. I think BGO has got about 20,000 units away from them. And I think the goal is over time to really just have that be the vertically integrated platform.

So my long answer to your question, Nancy, is the U.S. can end up looking a lot more like the rest of the world for BGO. And I don't know if there's a right or wrong answer. I spent a lot of my career, really the first of my model working with operating characters, obviously with GreenOak and BGO, it's been more of a hybrid based on the market and all that.

I do think that operating capabilities are more important than ever. We're in an environment now where, I don't know what the 10 years is going to be in a month or three months or six months, but it's going to be higher than anyone really thought it was going to be, than most people thought it was going to be. And I think we're just structurally at a higher rate environment going forward.

And the only reason that that will not be the case is if AI is so deflationary that it, whatever, I'm just, I'm not smart enough with tech bro to kind of be able to think about that scenario. So I think in a world where the 10 years is closer to four than it is to two, you got to make money the old fashioned way, which is you got to roll up your sleeves and do the hard work on the asset. And I think having an operating capability is going to be an important differentiator there.

Nancy Lashine (31:53 - 31:59)

The other piece of this, less popular to say is reprice somebody's assets.

Sonny Kalsi (32:01 - 32:07)

When you go to sell these assets, you understand what the repricing is.

Nancy Lashine (32:09 - 32:29)

What do you think, when you think about going forward, just before we leave the subject of vertical integration versus operators, where do you see the business going more broadly? obviously the very large public players, some of them have built platforms, some of them have not. What do you think the future looks like?

Sonny Kalsi (32:30 - 32:31)

For real estate specifically?

Nancy Lashine (32:31 - 32:32)

For real estate specifically

Sonny Kalsi (32:32 - 33:38)

I think at scale, you're going to see more and more people with operating capability. I think it's going to be important. You mentioned Blackstone.

They've been an early adopter of this, but even if you think about some of the other, like Ares has been very active as an acquirer, they've been buying operating platforms. And then one other area, which has proliferated very significantly have been the secondary players, The GP let recaps or some of the other strategy.

If you just think about, if you're an institutional investor, you're thinking about how to put together a portfolio, maybe the best way to do it is, I want to make these commitments to these verticals in terms of those different strategies. But if I want to place something across the board in terms of being able to provide recap capital or do other stuff, I do it through the secondary vehicles. And if you just think about where the scale of the money is going in terms of investors committing capital to the space, they're committing big chunks of capital to the space, to these different platforms operating, but they've committed a fair amount of capital to the secondary vehicles out there.

But the recent capital raises at Stepstone, at Landmark, at Goldman Sachs, they're big.

Nancy Lashine (33:38 - 33:50)

They're big. It makes sense.

You mitigate the J curve, you get to take advantage of distress situations. To be perfectly honest, they look a little bit like the old style opportunity funds.

Sonny Kalsi (33:50 - 34:40)

That’s my point. You just said it more succinctly than I did, if I just think about where I see things going, that's kind of where I see it going.I think there's always going to be an opportunity for people who are really good at sourcing and originating to be on the recap side of things.

I will tell you, if I think about what BGO, what GreenOak was in 2010, when we first started raising the first couple of funds, I would not want- I think it'd be really hard to be out there trying to raise a $300 to $500 million fund to be an allocator. I think that'd be really hard to do right now. The single biggest thing that has disappointed me about the industry is, and it's on all of us, is when we started the firm way back then, and we were an emerging manager, it was really hard.

I actually think it's harder to be an emerging manager today than it was even then.

Nancy Lashine (34:40 - 35:07)

A hundred percent. We've done 14 first-time funds at Park Madison. And every year, our funnel gets, threading the needle is tighter, tougher and tougher because the market's more mature and investors just have less room for new managers.

Which is really why the recaps and the secondary players have a lot of white space.

Sonny Kalsi (35:08 - 35:09)

They do.

Nancy Lashine (35:09 - 35:16)

Let's talk a little bit about your new role. I guess it's online.

Sonny Kalsi (35:16 - 35:22)

Today's April 1st and it got into official as of today.

Nancy Lashine (35:22 - 35:30)

It's official today. Let's make it official tomorrow also.

I'm not going to go there.

Sonny Kalsi (35:30 - 35:36)

It has been unofficial for a while and I've been wearing two hats as of today, only wearing one hat.

Nancy Lashine (35:36 - 35:40)

So share with the audience, tell us about what the new role is.

Sonny Kalsi (35:40 - 36:47)

The new role is, I would say it's the next iteration of the old role, what was the old role?

The old role was, if you asked me why we entertained doing something with Bentall, with Sun Life, is I had a view, which I know you shared at the time, that investors, institutional investors are going to do more and more with fewer platforms, that people wanted fewer GPs, that everyone wanted to be able to have a broader relationship because most of them are understaffed and overworked. Most of the institutional investors, it would be easier to manage that business, but also you get the benefit of fee breaks, get the benefit of a bunch of stuff if you give fewer people And by the way, you asked how BGO grew so much.

We just picked up market share because we were able to convince people that we could do more than one thing for them. There might be an industrial lesson, European credit, and then Asian equity, U.S. core plus. And so we were able to pick that up.

So we got the benefit of that. So that was a trend we identified correctly and we got benefit. This next thing, I have a view that that's one of the alts now

Nancy Lashine (36:47 - 36:57)

So real estate and alts will get bucketed in for an investor's minds and they will look for a single manager who can solve that for them.

Sonny Kalsi (36:57 - 37:12)

Or a small group of managers who can solve that for them and do multiple bids for them. and especially as we've gotten bigger when the first Asia fund was $250 million, this last one was $5 billion. As we've gotten bigger and our investors have gotten bigger.

Nancy Lashine (37:13 - 37:39)

Wait, can we double click on that for one sec? I heard you talking, by the way, you did a great podcast with Leading Voices. It used to be called Leading Voices earlier this year.

And I heard you talk about your best investment idea is Asia. And you talked about that so many North American investors kind of followed you to Asia. That was really interesting.

Can you just talk about why?

Sonny Kalsi (37:40 - 38:04)

I'd say two things. I'd say one, the most North American investors, actually global investors outside of Asia, were under allocated to Asia because it's perceived as harder. It is harder if you're a North American based investor or GP.

Number two, it's, especially now, which is all over the place, it's becoming increasingly non-correlated.

Nancy Lashine (38:05 - 38:09)

Within Asia or Asia and North America?

Sonny Kalsi (38:10 - 38:15)

Asia and the rest of the world. I think the world is less correlated with each other right now.

Nancy Lashine (38:16 - 38:17)

Globalization, if you will.

Sonny Kalsi (38:18 - 38:28)

Globalization. So the team's done a great job. Why?

Because guess what? They overweighted Japan. So Japan is 100% of fund one, 80% of fund two, 70% of fund three.

Nancy Lashine (38:29 - 38:32)

So what's next after Japan? Are you in India, for example?

Sonny Kalsi (38:33 - 38:49)

We are not. The fund is not in India. We are in India as a lender.

We're using, partnering with Sun Life, with the Birla organization, where Sun Life had a long partnership with them. I think India is very interesting. I'm not sure it should go with Japan, Korea and Australia.

Right. That's like three developed markets.

Nancy Lashine (38:49 - 38:51)

Right. Developed versus emerging.

Sonny Kalsi (38:51 - 39:30)

It's also a lending up business in India. It's not an equity business for us, at least yet. So we're handling that separately.

So it's that reason. And then, honestly, Nancy, when we were moving towards the final close of that fund is when the administration started talking about Liberation Day and other stuff like that. So a lot of investors, including some U.S. investors said, do you have some room for us to put a little bit more in Asia? Because they basically said we can get developed Asia. We're probably going to be a little bit more shy about the U.S. in the near term. When that fund had its final close about a year ago, we saw we raised two billion dollars in the last 45 days.

Nancy Lashine (39:30 - 39:33)

Oh, my gosh. That must have felt good.

Sonny Kalsi (39:34 - 40:21)

Now we've got to deploy it. We've got to do a good job. Back to the other question.

So I would say for the last year, when you raise a fund of that size, all of a sudden you're talking to a different type of investor. We have a bunch of investors. We've had some in the Middle East.

We now have a bunch of investors from the Middle East. We've got a bunch of big other sovereigns. And their dialogue is absolutely, OK, you got it on real estate.

You hear a lot of people talk about TPA, Total Portfolio Approach to Investing, Total Portfolio Analysis. All that is, is basically just looking at your book and saying, where do I think the best return opportunities are? So instead of telling my real estate team, you can do 50 percent in core and 30 percent of this.

You just tell your whole corporate, this is what I want you to do.

Nancy Lashine (40:22 - 40:25)

So does that mean that when you go to I.C., you have to fight for allocation, right?

Sonny Kalsi (40:26 - 41:44)

It does, but it also or you don't, if you're basically going in saying, I got 10 percent, I have a 10 percent return opportunity, half of it coming from cash flow. And here's kind of what I think the risk of it is and blah, blah, blah, blah, which means you probably get a lot more for real estate credit than you would be for real estate opportunities. And so when I started hearing from investors, we have a big credit business.

We have 25 billion of credit. They'd be asking me about what are you doing in infrastructure credit and what are you doing on private credit? And how do you think that compares to real estate?

And I think increasingly the buy decision by investors is going to be credit, investment grade to non-investment grade across asset classes. And I could argue now that I have a little bit of visibility on private credit, the attributes of private credit, infrastructure credit and real estate credit have a lot more to do with each other than real estate credit and real estate equity have to do with each other. The correlations definitely have more to do with each other.

And so to me, look, I think if we make this successful, rolling these businesses up, it will be partly because that thesis is we're making the right call. Invest with us that way across the top of the placket.

Nancy Lashine (41:44 - 41:57)

And headhunters are saying that most of the firms have put their credit teams now together. They've put their real estate team, credit team together with their private credit team. They all belong together.

Yeah.

Sonny Kalsi (41:57 - 43:01)

Yeah. And by the way, we're seeing the move on investors, too. The investors are increasingly doing the same thing where their real estate credit teams are moving over to be part of their broader credit teams, where their infrastructure and real estate equity teams are coming together to be real assets.

And so, again, it makes actually logical sense to me. one of the things we did in this whole process that we meant in all the articles is we worked really closely with a couple of consultants, including McKinsey. I have all these McKinsey terms in my head, like industrial logic, the industrial logic of behind something, the industrial logic of putting Bentall Kennedy and GreenOak together.

And then it bore itself out. I think the industrial logic of this makes sense. I'll tell you in five years whether it's borne out or not, like if it ends up happening.

But the growth you have seen and the big alts managers, Blackstone, Brookfield, Ares, Apollo, Blue Owl. Blue Owl couldn't do anything wrong for five years. Now they can't catch a break for five weeks, right?

Nancy Lashine (43:02 - 43:03)

They'll come out of it.

Sonny Kalsi  (43:04 - 43:10)

Yeah, they'll come out of it. They're smart. They're really good at what they do.

They'll come out of it. But the industrial logic so far has made sense.

Nancy Lashine (43:12 - 43:40)

That's really interesting. I feel like we're just getting going and we could go on for another hour. I know we have a hard stop.

A couple of questions. I think when you did this deal that when you sold BGO, GreenOak to BGO, it was a five-year something in your mind. And then you were going to go on and do something else with your life.

And here you are. You have now taken on the next mantle. How did your mind change?

How did you change your mind? What was it?

Sonny Kalsi  (43:40 - 46:52)

Yeah, so it was a seven-year deal, which ended at December 31st of 2025. I say it's two things. One, Sun Life came to me about two years ago and said, this is going really well.

We think we're really happy. Are you happy? Yeah, I'm happy.

It's all great. And I still have that two years. And I didn't think I would leave on January 1 of this year.

I thought I would stick around in some capacity, hand over the reins, stick around on our investment committees and some other stuff and whatever. And they said, well, look, we've got this quick call coming up for you, but also for Crescent, the private credit business, and Infrared, the infrastructure business. Would you help us think about what we do?

And they said, you and the team. And I said, look, let's talk about the team. So we figured it out for the team.

And by the way, they wanted me to do it because the founders at Crescent had already signaled they're older. They had already signaled they were done as part of their earn-out. The Infrared founder had already stepped down.

And then John, my co-founder, made it clear he had no interest in this. And so I did it, and it was actually, I liked trying to figure out how do we make this interesting? BGO's got 100 shareholders.

SLC now has 300 shareholders. How do we do this and make it all interesting? And then as we got through that process, Sun Life came back to me and said, okay, well, now what about you?

After we kind of figured it out for the team. And I said, well, I've been thinking about it. I've been doing real estate for 35 years at the time, now 36.

I think I'm done. Like I said, my whole view at Morgan Stanley was, if you did 20 years of service, which you then changed to 25 years of service, you fully vested in everything. You had a three-year non-compete, but you vested in everything.

So if you could walk in and say, I'm done, and walk out the door, and one of you didn't compete, you kept everything. I would have been 48 when that happened, and that seemed like that was always an objective. When I got fired after 18 years, that kind of like, I bet I then had this like, okay, I guess I'm approved, whatever else, I went on to do that.

So I've been already in the industry a lot longer than I thought I would be for the kid that had no idea what real estate was, what this was. When I said to Sun Life, I'm not sure that real, they said to me, we agree with you. We actually said, we understand that.

In fact, we thought you might, what about the whole platform? And I was like, God, if there had ever been a Machiavellian way that they handled this by kind of getting me to compete. And I will say, I really got to know the team at Crescent, the team at Infrared, really well as part of being the big brother to help figure out how this all kind of gets done, and doing it on behalf of the BGO team.

I really like them. They're smart. They've all been around their businesses for a while, but they're 115 years younger than me, and I like that.

I just like that energy and dynamism. I'm 58 now, Nancy. I'm not ready to retire.

This is a, I get to still have BGO, my baby, be the single biggest component of what I do, but I get to do this, all this new stuff. By the way, I will tell you that part of me was so worn down by this latest real estate cycle. I said, this is going to be awesome.

I get to do private credit and did spend time with that, just private credit market to melt down. So maybe I'm the bad luck charm. I'm the cooler…

Nancy Lashine (46:52 - 47:01)

No, no. Well, you're going into infrastructure and data centers and things like that and energy. I'm wondering what that portends.

That's another conversation.

Sonny Kalsi  (47:03 - 48:19)

Exactly. So look, it was just, it was no one thing. I think it was a combination of a lot of things that I just, the opportunity was interesting.

I know all the players. I like the team. Sun Life's been an awesome partner.

I'm totally biased, but I kind of feel like we have the best of both worlds where we've got this big institutional partner that is a majority shareholder, wants to be invested in all these asset classes, is invested, but it's also not interested in all being involved with day-to-day because that worked out well for them for a long term. They've owned MFS, the big mutual fund business in Boston, $600, $700 billion mutual fund business. They've owned it for 40 years and they're not involved with day-to-day at all.

And that business is not really, I would tell you is one part kind of all of that. And there's one part of me that said, if I don't do this, I'm going to be spending a lot of time wondering whether I should have done it. And so I have given myself a very firm five years.

I've said, I'm doing this for five years. I feel like that's the right timetable to do this for. If I get talked into a year or two beyond that, we'll cross that bridge when we get to it.

And that's been also very intentional. I've actually already decided that I want to make sure I name a successor in year three. So I've got time to have overlap and to do all of that.

So that's kind of it. Like, it's just like.

Nancy Lashine (48:19 - 48:23)

Yeah. And the kids are out of the house. There's just so much time you can spend in the sun.

Sonny Kalsi  (48:24 - 49:01)

 Well, when I first mentioned this to Michelle, she was like, why would you do that? You work so much. I probably just got back from two weeks on the road.

I always wind up home on a Friday and I'm in bed, jet lagged and under the weather, whatever. And I thought I remember telling one of my college buddies, I was like, my wife still loves me. Like, she's really worried about me.

Two days later, she comes back and she's like, I've been thinking about it. And I said, oh, I said, whatever. And I mentioned it to the same college buddy of mine, my wife.

Very well, he goes sight. She talked to her two sisters. She talked to her girlfriends.

And they're like, you want him around the house with all that energy and whatever.

Nancy Lashine (49:02 - 49:06)

 You know the Yiddish expression, I married you for life, but not for lunch.

Sonny Kalsi  (49:07 - 49:07)

Yes.

Nancy Lashine (49:08 - 49:22)

Yes. I have to ask you one, because I know we're running out of time, but I have to ask you this question. When you look back and you think about it now at GreenOak, at BGO, at Sun Life, what will make you think that you did it right?

Sonny Kalsi  (49:25 - 51:57)

So far, I feel like I've done it right. And I think the fact that we've got this great group of people that have been together for a long time, they weren't perfect. Like I said, the performance isn't perfect, but it's more good than not.

But these people have been around for a long time. Oh, we did the deal with Bentall Kennedy. I was really worried about turnover and who was going to stick around and who wouldn't stick around.

11 of the 12 BGO partners at the time are still here. And then we had the opportunity now to kind of say, okay, we have a hundred shareholders in BGO and you now have the opportunity to become a shareholder in SLC. You can take all your money.

There's no obligation not to do that. I think maybe eight of the hundred re-upped. And in fact, the employees own more.

If you take me and John out and you take the other founders, the other founders are all gone. Then you take me and John out. The rest of the employees actually own more in BGO.

Therefore, I looked through basis in SLC. And therefore, I looked through BGO that they owned before. And so that to me, I feel like as it relates to the business, put all the numbers aside, put everything else aside.

That to me is like, okay, we did something right here. And then the other thing is, as I care a lot about this industry. I care a lot about our obligation as the biggest real estate.

We produce 40% of the carbon emissions in the world. Transportation more so than energy. I care a lot about diversity in this industry.

As I've had a real opportunity to kind of make a difference out there. It's been really important to me to be able to do that, whether it's TRIA Foundation or some of the other stuff I've had the pleasure and opportunity to be part of. But that makes me feel like I've helped do something right.

 And now I have a Kalsi Jr. in the industry. My daughter, Cameron, is working at Cerberus Raising Team, which by the way, I had nothing to do with it.

This is meaning that I didn't push her on the industry. I didn't push her to do this. I forced her to become a human rights lawyer.

She might still do that one day, but she wasn't ready to go to law school. And so that's very cool. And I just think about the industry my daughter's stepping into 36 years after I stepped into it.

And it is diverse. There's more representation than there was when I started in this industry. It's not perfect, but I feel like it's going in the right direction.

And I feel like I've had a tiny part to do with that.

Nancy Lashine (51:57 - 52:15)

And that makes me feel Sunny, as you absolutely have, and you should absolutely claim credit for. I hope you'll come back and visit us again soon because love, love talking to you and you have so much to offer. We haven't, there's so many topics we haven't gotten to.

So thank you. Thank you for your time.

Sonny Kalsi  (52:16 - 52:21)

I'd be happy to do that. Remember Nancy, your email to me said, just say yes. And I replied, yes.

Nancy Lashine (52:22 - 52:59)

Yeah, that was a very sunny answer. Appreciate it. I hope you enjoyed this episode of Real Estate Capital.

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