According to Commercial Mortgage Alert, Morgan Stanley is getting back in the game. The bank, which was the dominant bookrunner of commercial MBS transactions through much of the 2000s, disbanded its real estate origination group in 2008 after the market crashed. The buzz is that Morgan Stanley has allocated capital for originations, although it’s not known how much. The bank presumably would have to staff up the CMBS operation, which once numbered more than 200 but was cut to a skeleton crew. The return of Morgan Stanley is a further sign that Wall Street players think securitization is poised for a rebound. Morgan Stanley was the leading CMBS underwriter as the market took off over the last decade. It was the top global bookrunner of CMBS transactions in 1999-2007 in all but one year. The company established itself as the leading underwriter for lenders that didn’t have broker-dealer arms, such as insurance companies, and set up two leading CMBS brands for those clients: “IQ” and “TOP.” In addition, Morgan Stanley was itself a leading originator of CMBS loans. In 2007, it contributed $13.8 billion of commercial mortgages to U.S. securitizations, ranking fifth in the industry.
“We purchase a lot of ‘IQ’ and ‘TOP’ CMBS,” commented Michael Sneden. “Morgan Stanley underwrote higher quality, lower leveraged CMBS that recovered quickly when CMBS began to rally in 2009. Having Morgan back in the market is another milestone in the recovery for CMBS originations.”