Posted by: BayAreaComRE | December 17, 2009

Morgan Stanley gives back part of huge S.F. portfolio

In a deal that has been developing for months, Morgan Stanley walks away from a real estate portfolio boasting 5, class A buildings in the Central Business District. AREA Partners, formally Apollo Real Estate Advisors, is next in line on the mezzanine debt, ahead of GE in the capital stack, and now controls 1 Post, Foundry Square (405 Howard), 60 Spear, 201 California and 188 The Embarcadero. Morgan Stanley relinquished control, “gave back the keys”, of a portion of the Glenborough portfolio, which was sold to Morgan Stanley as “the largest real estate transaction in San Francisco history” in 2007, according to the SF Business Times.

This illustrates the consequences of high-flying buying frenzies of institutional owners from 2006-2007, but also dispels concerns of a cataclysmic crash brought on by distressed assets in commercial real estate. The commercial real estate market has a sophisticated process of turning buildings back to the lenders and changing ownership of distressed assets. Now the rumors and uncertainty have been actualized, and leasing deals can now come to fruition. This should prove to be a blessing in disguise for the SF office market.

For more information:  San Francisco Business Times Article.



  1. […] transaction. We chronicled Morgan Stanley’s recent forfeit of the Glenbourgh portfolio. See our full coverage of the Morgan Stanley saga here. We predicted then that the portfolio in different hands would re-ignite leasing and remove a […]


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