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BarCap takes over Morgan Stanley’s Crescent

Barclays Capital takes over Crescent Real Estate Equities from Morgan Stanley. The deal transfers liability for all Crescent’s debts to BarCap.

Barclays Capital has taken over Crescent Real Estate Equities from Morgan Stanley, it was confirmed today.

The firm said in a statement it had joined forces with Goff Capital Partners, the company set up by former Crescent vice chairman and chief executive officer John Goff, to run the company. Goff himself will return to the firm he co-founded in the early 1990s as chairman and CEO of the new Crescent, to be called Crescent Real Estate Holdings.

Crescent has been a problematic purchase for Morgan Stanley since its purchase in 2007.

The bank paid $6.5 billion for the REIT, including the assumption and refinancing of approximately $3.1 billion of debt, with plans to put Crescent's assets into real estate investment funds. Barclays provided a $2 billion loan to help finance the deal. However, the market soon seized up putting paid to the strategy and leaving the REIT on the bank's balance sheet.

In December last year, Morgan Stanley’s chief financial officer Colm Kelleher, highlighted the purchase of Crescent as one of the reasons behind $100 million of write-downs in its real estate, infrastructure and private equity investments. MSREF paid $22.80 per share in cash for the Fort Worth, Texas-based REIT, which controls a portfolio of 36 office buildings totaling 17 million square feet in Dallas, Houston, Denver and Las Vegas.

Terms were not disclosed, however Morgan Stanley is believed to have agreed to transfer the REIT to BarCap, in exchange for the Barclay's subsidiary taking over all liabilities, including the $2 billion Barclay's loan, people familiar with the matter said.