MSREI named preferred bidder for €3bn Santander portfolio

The real estate investment management platform of the New York-based investment bank has emerged as the leading bidder for the Spanish bank's real estate assets, ahead of such rivals as Goldman Sachs and Cerberus.

Morgan Stanley Real Estate Investing (MSREI) has been named the lead bidder to buy a real estate portfolio once valued at €3 billion from Spanish banking group Santander.

The European real estate arm of the New York-based investment bank, headed by Brian Niles, has been chosen as preferred bidder for the portfolio, ahead of such rival bidders as Goldman Sachs and Cerberus Capital Management. MSREI is understood to have bid €1.2 billion for the portfolio, which would represent a 60 percent discount to market value. A consortium of Cerberus and Goldman Sachs is thought to have offered nearly €1 billion for the assets, which would reflect a discount closer to 70 percent.

Officials at Morgan Stanley, Goldman and Cerberus declined to comment.

Santander has become one of Spain's largest property owners since the onset of the global financial crisis in 2008, having been one of the region’s most active lenders in the preceding years. It has taken control of more than €8 billion of real estate in the past three years alone, including €826 million of assets in the first half of 2011. The Spanish banking giant first met investors in London at the end of September to present the assets in the portfolio, which include a few thousand residential units and a number of development sites.

MSREI currently is investing out of Morgan Stanley Real Estate Fund VII Global, its latest global opportunity fund, which closed on $4.7 billion of equity in May 2010. So far, the fund has invested predominantly in the US. However, it increasingly is looking at Asia and Europe, where the focus will be on distressed investing as European banks like Santander make long-awaited disposals.

Niles took over the day-to-day management of MSREI's European business after the firm relocated its co-chief executive officer and co-chief investment officer Olivier de Poulpiquet to Asia this summer.