Ex-Starwood, Extell Executives Eye $500 Million for NYC Property

(Bloomberg) -- A pair of real estate veterans are seeking to raise $500 million to bet on undervalued properties in anticipation of New York's revival, according to people with knowledge of the matter.

Sush Torgalkar, former chief executive officer of Extell Development Co., and Lanhee Yung, former head of fundraising and investor relations at Starwood Capital Group, have founded New York-based Sage Hall Partners and are eyeing a first close of their debut fund in early 2021, some of the people said.

The vehicle will focus on undervalued properties across sectors -- retail, hotels, residential, industrial and office -- in the greater New York metropolitan area, including parts of Long Island, Westchester, New Jersey and Southern Connecticut. As some New Yorkers flee in search of more space, the city's landlords have been hurt by the pandemic, with many offering steep discounts and other incentives to retain tenants.

Read more: Manhattan Office Space Floods Market in Biggest Jump Since 2008

“This is obviously a contrarian play, but we're long-term believers in what we think is the greatest city in the world,” Torgalkar said in an interview. “I have a hard time believing that this pandemic is going to kill the dream of people wanting to move to New York City,” he said, adding that lower valuations present a buying opportunity.

“I've never seen anything like the current demand from institutional investors for compelling strategies,” said Yung. She and Torgalkar declined to comment on the potential fund.

Yung and Torgalkar are children of Korean and Indian immigrants, respectively, and both grew up outside of Cleveland. The duo met at Cornell University, which counts Sage Hall among its prominent buildings. Yung, who graduated in 1997 and was two years' Torgalkar's senior, was a teachers' assistant. They crossed paths again when they were assigned cubicles next to one another in Merrill Lynch's real estate investment banking group, led at the time by Richard Saltzman, Michael Profenius and Marty Cicco.

Torgalkar, who spent almost two decades at real estate-focused private equity firm Westbrook Partners before joining Extell in 2019, stepped down from his post at the New York developer at the end of August. In a farewell email at the time, he said Gary Barnett, Extell's founder and chairman, would be both an investor in and an informal adviser to Sage Hall.

©2020 Bloomberg L.P.