Housing News

Morgan Stanley to Surrender Buildings

One bank may be violating its own rule

Morgan Stanley has announced that it will surrender five of the ten San Francisco buildings that it acquired from Blackstone Group LP for $8 billion in 2007. Bloomberg reports, “The buildings were formerly owned by billionaire investor Sam Zell’s Equity Office Properties and acquired by Blackstone in its $39 billion buyout of the real estate firm earlier that year. The buildings Morgan Stanley is giving up are One Post, 201 California St., Foundry Square I, 60 Spear St. and 188 Embarcadero…”

For some people, it may be just another ordinary business day in corporate America but for The Huffington Post, it isn’t. The online news portal reports, “To the extent that Morgan Stanley is leading by example, the securities colossus is sending an unlikely message to underwater homeowners: Walk away.

The Wall Street firm is itself walking away from five San Francisco office buildings it purchased as part of a landmark $2.43 billion deal near the height of the real estate boom. But don’t call it a foreclosure or a default—not when this kind of money is involved. A spokeswoman interviewed by Bloomberg News called it “a negotiated transfer to our lenders.”

And we couldn’t agree more with Arianna Huffington and her team. No matter how they choose to call it, Morgan Stanley is literally walking away from these properties. Whatever game they’re playing, we’re sure that they’re setting a mixed message to the public: It’s morally unacceptable to walk away from your home but it’s okay for us to do so since we have our own business jargon to get away with anything once you suspect we’re not following our own rules.

And to whom is this message directed to? That goes to the 6.02 percent of homeowners included in the National Serious Delinquency Rate by First American Core Logic, a loan performance company. This year, we’re expecting the rate to double so that means more will be tempted to walk away from their homes.

Thank you Morgan Stanley for renewing the interest of underwater homeowners in leaving their keys by the doorstep and not coming back.

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