Morgan Stanley Takes $251 Million Charge for Crescent
Wednesday, October 21, 2009
Source: Bloomberg
Bloomberg reports: Morgan Stanley recorded a $251 million impairment charge on its Crescent real estate unit, another sign the $6.5 billion purchase made in 2007 is facing economic challenges.
Morgan Stanley is in talks with Barclays Capital to avert default on a $2 billion loan used to buy Crescent Real Estate Equities, according to people with knowledge of the situation. Morgan Stanley bought Crescent as the U.S. property market peaked and has since sold some of the assets to pay debt. The purchase gave the investment bank 54 office buildings in cities including Dallas, Houston, Denver, Miami and Las Vegas.
"They paid top dollar for those assets when they bought out Crescent," said Peter Slatin, editorial director at New York-based Real Capital Analytics, which tracks commercial real estate pricing worldwide. "They paid a pretty penny."
Commercial property values in the U.S. have plunged since 2007 as employers shed jobs and the recession reduced demand for offices, retail space and rental apartments. The Moody’s/REAL Commercial Property Price Indices fell 3 percent in August from July, bringing the decline to almost 41 percent since October 2007.
View the full article on Bloomberg: Morgan Stanley Takes $251 Million Charge for Crescent
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