Morgan Stanley reveals 'secrets' of mega deals

Insider details of how Morgan Stanley engineered two of its biggest commercial property deals of recent times were revealed at the 10th Barcelona Meeting Point real estate symposium. John Carrafiell, boss of Morgan Stanley Real Estate, gave the details while discussing the 'art of the deal' during a lunch meeting organised by the Urban Land Institute.

Carrafiell engineered Morgan Stanley's acquisition of Dutch shopping centre development company Multi Developement. Due to this and Morgan Stanley's stakes in several other companies, Morgan Stanley is now the market leader of the developers sector in Europe. The US bank has $428 bn under management, of which more than $30 bn is in commercial property, putting it alongside ING Real Estate and Pramerica (Prudential) as the largest real estate players in the world.

Describing what makes a ' deal', Carrafiell said the most important factor was vision - the ability to see an opportunity where others could not. In the case of Multi (then known as AM) Morgan Stanley decided its stock price was undervalued because analysts were not able to properly assess the risks faced by a European shopping centre developer which had a large residential housing unit. Morgan Stanley stepped in and got Dutch company BAM to agree to buy the housing unit.

Tactics, according to Carrafiell, played the decisive role in the takeover of Canary Wharf in London. Morgan Stanley started in a weak position, holding only 14.5% of the shares. By linking up with financiers who could have aided a rival bidder, Morgan Stanley managed to raise $2.5 bn in 10 days and ultimately gain the prize.