The Surrender of Greenway Plaza: Morgan Stanley’s Great Houston Office Building Investment Flop

What do all these Houston office towers have in common?

That’s right — they’re all part of the vast Crescent Real Estate Equities empire, which at the peak of the market 2 years ago comprised 54 properties in all, stretching from Texas to the California coast. That’s when Morgan Stanley snatched up the whole thing for a mere $6.5 billion, thanks in part to a little $2 billion loan from Barclays Capital.

Today, Morgan Stanley announced it is giving up on the whole thing. Back to the bank all those properties go. All of them. (Okay, minus a few that were jettisoned along the way.)


Morgan’s plans for Crescent ran off the track soon after it bought the portfolio from Richard Rainwater, the renowned Texas investor, and [Crescent cofounder John] Goff.

Morgan originally planned to put the properties in one of the real-estate funds it manages for institutions and wealthy individuals. But fund investors balked at buying the buildings at top-of-the-market prices, forcing Morgan to keep the properties on its own balance sheet.

The Barclays debt originally was due Aug. 3, but the bank agreed to extend it several times.

So who’ll be running the Fulbright Tower, Greenway Plaza, Houston Center, and Post Oak Central complexes now?

Barclays formed a joint venture with Goff Capital Inc. to take over the properties and named John Goff, co-founder of Crescent before it was sold to Morgan, chairman and chief executive of the new joint venture.

Photo of Greenway Plaza: Flickr user ShinyCrazyDiamond

4 Comment

  • anybody have the occupancy numbers for Greenway proper? I office in 24 – the redheaded stepchild Greenway building. We seem pretty full over here.

  • Morgan’s purchase was another one of Wall Street’s ill-thought plans with no exit strategy. I think overall the buildings are doing all right, but not enough for Morgan to cover the debt with everything else that they have to balance on their sheet. They needed to just write off their debt and get it off their books. I think the buildings will be in good hands since essentially the same ones that owned them a couple of years back will be managing them for the banks.

  • “They needed to just write off their debt and get it off their books”

    Morgan did not have the debt, they wrote the equity to zero. You must have done well personally knowing the market was going to crash and all.

  • Sounds like an awful lot of shuffling deck chairs, err money.