The Real Deal Miami

Private equity firms circling Morgan Stanley real estate fund

August 11, 2010 03:00PM

Morgan Stanley has been getting nibbles from multiple U.S. private equity firms looking to take a stake in the bank’s beleaguered real estate funds management business, sources told the Financial Times. Among those who are interested: KKR and TPG, both of which currently have little in the way of property operations, and Colony Capital, which yesterday handed over its stalled, $2 billion Xanadu complex in New Jersey’s the Meadowlands to creditors. Despite the number of suitors lining up for a share, each has proposed only a relatively small investment in the $8.8 billion fund, which is not expected to return much in the way of fees or profits, the paper reported. Morgan Stanley, which may need to cut its stakes in real estate investments anyway in order to comply with the Volcker rule, said it has not made any decisions so far. [Financial Times via CNBC]