Summary
Morgan Stanley had been very aggressive in Asia's real estate market in the past 5 years. The resignation of its star dealmaker in China either sends us a signal that real estate bubble in Asia may burst or that Morgan Stanley is trying to raise quick cash.
Analysis
The resignation of Garth Perterson, a top dealmaker of Morgan Stanley’s China real estate business, could be a sign that Morgan Stanley is trying to contract its investment in real estate, esp, in Asia. They are concerned that the real estate market in Asia was to collapse. Another interpretation is that the headquarters, struggling with its balance sheet, is try to raise some cash by selling properties in Asia.
Since 1991, Morgan Stanley has set up 6 REITs. The funds that are invested in international real estate are MSREF III International, MSREF IV International and MSREF V. In 2006, MSREF V raised $4.2 billion globally, 55% of which invested in Asian real estate markets including Japan and China.
Morgan Stanley is invested in both residential and commercial real estate projects in China.
In 2004, it invested $75 million in a high-end residential building Jinlin. In 2005 it took over Shanghai International Trade Center, an office building, at $20 billion.
