Morgan Stanley is handing five San Francisco office buildings back the lenders who financed their acquisition.
The properties were purchased from the Blackstone Group near the top of the market. Their values are now thought to have declined as much as 50%, according to Bloomberg. Basically, it looks like Morgan Stanley is acting like many homeowners with underwater mortgages—and just walking away.
Officially Morgan Stanley says this isn’t a default or a foreclosure. “This isn’t a default or foreclosure situation,” Morgan Stanley spokeswoman Alyson Barnes told Bloomberg. “We are going to give them the properties to get out of the loan obligation.”
But unofficially, there’s not much separating this from jingle mail.
Blackstone looks pretty smart. The five buildings were formerly owned by Sam Zell’s Equity Office Properties, which Blackstone bought in 2007 for $39 billion. It quickly flipped many of the properties, including 10 it sold to Morgan Stanley for $2.5 billion. Many of those who bought the properties from Blackstone or purchased them from others who bought from Blackstone later came to regret that choice.
Business Insider Emails & Alerts
Site highlights each day to your inbox.