Thursday, May 28, 2009
HCA International- Conservatives for Patients Rights
Conservatives for Patients' Rights commercial with the Doctor in England?
2008--- HCA International
Welcome to London's leading private hospitals- HCA International
Why we are London's No. 1 private hospital group- HCA International
� More than 3,000 top London and UK specialists in private practice- HCA International
No. 1 private hospital?- HCA International
This is what STUPID AMERICA gets:
LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED; HCA INVESTIGATION
Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994.
1997- As part of Richard Scott's severance package from Columbia he was paid $5.13 million and given a five year consulting contract at $950,000 per year.
1997+5 years consulting =2002
In 2002 FBI raided the offices of National Century Financial Enterprises in Dublin, Ohio.
National Century Financial Enterprises
Guess where ALL of Rick Scott’s Columbia homecare units were? National Century Financial Enterprises.
Largest fraud case the FBI has ever investigated-one acquittal- James K Happ, the ex-CFO of Columbia Homecare Group, Inc.
Jurors stated; "PROSECUTOR DID NOT DO HIS JOB"�hmm
Leo Wise , now at the ethics CBO ---jurors stated 'PROSECUTOR DID NOT DO HIS JOB'
"Ladies and gentlemen, this is a case of staggering fraud," 'It is one of the largest frauds the FBI has ever investigated. (Leo Wise )
The ONLY acquittal; James K Happ--the CFO of Columbia Homecare Group.
Leo Wise , (now at the ethics CBO) stated "Ladies and gentlemen, this is a case of staggering fraud," 'It is one of the largest frauds the FBI has ever investigated.
Then- low and behold: December 18, 2008 The ONLY acquittal; James K Happ!...belief that federal prosecutors had not done their job, the juror said.
Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard Rainwater.
Richard Rainwater, ex-partner of GW Bush with the Rangers
Leo Wise, now at the ethics CBO ---jurors stated 'PROSECUTOR DID NOT DO HIS JOB'
In 2002 FBI raided the offices of National Century Financial Enterprises in Dublin, Ohio
"This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America," said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.
Richard Scott -- sometimes called "the Bill Gates of health care" -- quit as chairman of Columbia/HCA Healthcare Corp. amid a massive federal investigation into the Medicare billing, physician recruiting and home-care practices of the nation's largest for-profit health care company.
Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard Rainwater.
Rainwater also owned a large stake in Magellan Health Care which controls Charter Medical. Magellan, run by Darla Moore, is the largest network of psychiatric hospitals in the country. They are becoming more and more involved in obtaining government money for services formerly not covered as health care, according to Fortune Magazine.
1997 - Columbia/HCA Healthcare Corp. - the nation's largest for-profit health care company
Thursday, May 28, 2009
Monday, May 4, 2009
Bigger than Enron...what about the Tennessee Largest Bankruptcy
Tennessee's Largest Bankruptcy in 1999 held most of NCFE so called purchases.
What about the bankruptcy fraud for the case filed July 29, 1999 in Memphis Bankruptcy Court? All the NCFE Debtor in Posession finance tool used to hide Columbia Homecare Group?
The court room full of lawyers cried FRAUD- the judge forbade the 'F' word in her court.
National Century victims awaiting repayment
Sunday, May 3, 2009 3:22 AM
By John Futty
THE COLUMBUS DISPATCH
When National Century Financial Enterprises collapsed into fraud-fueled bankruptcy, few investors were hit as hard as those in Arizona.
More than 100 of the state's agencies and communities were in an investment pool that held notes worth $131 million in the Dublin-based health-care finance company. Chandler, Ariz., a suburb of Phoenix, took the largest individual hit, losing $13 million.
"There was shock, there was disbelief," said Nachie Marquez, a spokeswoman for the city. "It's taxpayer funds. You put your trust in an investment pool and you think it's safe."
The Arizona investors were among hundreds of institutional victims across the U.S. whose losses totaled $2.38 billion -- the largest known fraud case in the country involving a private company.
The government is "aggressively working" to recover the money from the founders and executives of National Century. They were ordered to pay restitution after they were convicted in federal court in Columbus of conspiracy, securities fraud, mail fraud and money laundering, said Assistant U.S. Attorney Doug Squires.
Last week, U.S. District Judge Algenon L. Marbley issued an order requiring National Century co-founder Lance K. Poulsen, considered the architect of the scheme, and his co-conspirators to forfeit $1.7 billion in assets, the amount prosecutors say represents the proceeds of the conspiracy.
But attorneys for the victims say they are more likely to recover the most significant amounts through lawsuits filed against financial institutions that allegedly are liable for the fraud.
"While we appreciate the government's efforts to squeeze money out of the individual criminal defendants," the financial institutions named in the civil litigation "are able to pay much more than any of these folks have," said Scott Humphries of Houston-based Gibbs & Bruns. The law firm represents investors who lost a total of $1.6 billion.
Investors filed a flurry of lawsuits against National Century, its executives and its financial advisers after the company filed for bankruptcy in 2002. The suits, involving hundreds of plaintiffs in five states, were combined in 2003 and assigned to one federal judge in Columbus.
JPMorgan Chase, a trustee for National Century funds, agreed to pay $425 million to settle its portion of the lawsuit in February 2006, according to an annual report it filed with the Securities and Exchange Commission.
The plaintiffs said JPMorgan Chase was negligent in allowing National Century to make fraudulent transfers among its accounts and for not detecting or revealing the illegal activity to investors.
Settlement money and insurance coverage helped the city of Chandler recoup some of its losses, Marquez said.
"We've recovered about 40 cents on the dollar for our clients," Humphries said.
Civil litigation continues against Credit Suisse, the investment bank that issued National Century's bonds.
Meanwhile, the U.S. attorney's office has collected $2.3 million so far from the criminal defendants, said Fred Alverson, an office spokesman.
The total includes $396,178 that federal agents seized in March from the bank account of Rebecca S. Parrett, a National Century executive who has been a fugitive since shortly after her conviction in March 2008.
The money recovered from the defendants was delivered to the federal clerk's office but has not been distributed to any victims, Alverson said.
National Century purchased the accounts receivable from hospitals, clinics and nursing homes using money obtained by selling asset-backed notes to institutional investors.
Evidence in the criminal trials showed that the company executives diverted money to support their lavish lifestyles and made unsecured loans to the health-care providers, leading to the company's collapse.
The bankruptcy process had begun in 2002 when the FBI obtained a warrant to search the company's Dublin headquarters. Agents collected more than 2,000 boxes of documents and computer files that formed the basis for an investigation involving the FBI, the Internal Revenue Service, U.S. postal inspectors and Immigration and Customs Enforcement.
Institutional investors, which included police and firefighter pension funds, churches, labor unions, cities and counties, and insurance companies, were led to believe the company's bonds were among the safest investments available.
The business model presented to investors was solid but never followed by the company, Squires said.
"(Company executives) did not dip their toes in the pool of fraud, they jumped in from Day One," he said. "From the first investor report, it was fraudulent."
The assets of the conspirators were researched by the federal probation office, but the information is not public record. Defense attorneys have said their clients' assets largely were exhausted while fighting the criminal charges.
Squires said the U.S. attorney's office will attempt to get "every available penny" from those convicted by seizing bank accounts, pensions, 401(k)s and property.
jfutty@dispatch.com
--------------------------------------------------------------------------------
On the Web • Watch a video of Assistant U.S. Attorney Doug Squires at Dispatch.com/video. For complete coverage of the National Century case, visit Dispatch.com/metro.
What about the bankruptcy fraud for the case filed July 29, 1999 in Memphis Bankruptcy Court? All the NCFE Debtor in Posession finance tool used to hide Columbia Homecare Group?
The court room full of lawyers cried FRAUD- the judge forbade the 'F' word in her court.
National Century victims awaiting repayment
Sunday, May 3, 2009 3:22 AM
By John Futty
THE COLUMBUS DISPATCH
When National Century Financial Enterprises collapsed into fraud-fueled bankruptcy, few investors were hit as hard as those in Arizona.
More than 100 of the state's agencies and communities were in an investment pool that held notes worth $131 million in the Dublin-based health-care finance company. Chandler, Ariz., a suburb of Phoenix, took the largest individual hit, losing $13 million.
"There was shock, there was disbelief," said Nachie Marquez, a spokeswoman for the city. "It's taxpayer funds. You put your trust in an investment pool and you think it's safe."
The Arizona investors were among hundreds of institutional victims across the U.S. whose losses totaled $2.38 billion -- the largest known fraud case in the country involving a private company.
The government is "aggressively working" to recover the money from the founders and executives of National Century. They were ordered to pay restitution after they were convicted in federal court in Columbus of conspiracy, securities fraud, mail fraud and money laundering, said Assistant U.S. Attorney Doug Squires.
Last week, U.S. District Judge Algenon L. Marbley issued an order requiring National Century co-founder Lance K. Poulsen, considered the architect of the scheme, and his co-conspirators to forfeit $1.7 billion in assets, the amount prosecutors say represents the proceeds of the conspiracy.
But attorneys for the victims say they are more likely to recover the most significant amounts through lawsuits filed against financial institutions that allegedly are liable for the fraud.
"While we appreciate the government's efforts to squeeze money out of the individual criminal defendants," the financial institutions named in the civil litigation "are able to pay much more than any of these folks have," said Scott Humphries of Houston-based Gibbs & Bruns. The law firm represents investors who lost a total of $1.6 billion.
Investors filed a flurry of lawsuits against National Century, its executives and its financial advisers after the company filed for bankruptcy in 2002. The suits, involving hundreds of plaintiffs in five states, were combined in 2003 and assigned to one federal judge in Columbus.
JPMorgan Chase, a trustee for National Century funds, agreed to pay $425 million to settle its portion of the lawsuit in February 2006, according to an annual report it filed with the Securities and Exchange Commission.
The plaintiffs said JPMorgan Chase was negligent in allowing National Century to make fraudulent transfers among its accounts and for not detecting or revealing the illegal activity to investors.
Settlement money and insurance coverage helped the city of Chandler recoup some of its losses, Marquez said.
"We've recovered about 40 cents on the dollar for our clients," Humphries said.
Civil litigation continues against Credit Suisse, the investment bank that issued National Century's bonds.
Meanwhile, the U.S. attorney's office has collected $2.3 million so far from the criminal defendants, said Fred Alverson, an office spokesman.
The total includes $396,178 that federal agents seized in March from the bank account of Rebecca S. Parrett, a National Century executive who has been a fugitive since shortly after her conviction in March 2008.
The money recovered from the defendants was delivered to the federal clerk's office but has not been distributed to any victims, Alverson said.
National Century purchased the accounts receivable from hospitals, clinics and nursing homes using money obtained by selling asset-backed notes to institutional investors.
Evidence in the criminal trials showed that the company executives diverted money to support their lavish lifestyles and made unsecured loans to the health-care providers, leading to the company's collapse.
The bankruptcy process had begun in 2002 when the FBI obtained a warrant to search the company's Dublin headquarters. Agents collected more than 2,000 boxes of documents and computer files that formed the basis for an investigation involving the FBI, the Internal Revenue Service, U.S. postal inspectors and Immigration and Customs Enforcement.
Institutional investors, which included police and firefighter pension funds, churches, labor unions, cities and counties, and insurance companies, were led to believe the company's bonds were among the safest investments available.
The business model presented to investors was solid but never followed by the company, Squires said.
"(Company executives) did not dip their toes in the pool of fraud, they jumped in from Day One," he said. "From the first investor report, it was fraudulent."
The assets of the conspirators were researched by the federal probation office, but the information is not public record. Defense attorneys have said their clients' assets largely were exhausted while fighting the criminal charges.
Squires said the U.S. attorney's office will attempt to get "every available penny" from those convicted by seizing bank accounts, pensions, 401(k)s and property.
jfutty@dispatch.com
--------------------------------------------------------------------------------
On the Web • Watch a video of Assistant U.S. Attorney Doug Squires at Dispatch.com/video. For complete coverage of the National Century case, visit Dispatch.com/metro.
Tuesday, April 28, 2009
PAUL B. FARRELL
20 reasons new megabubble pops in 2011
Greed blinded us to subprime meltdown, it'll blind us next time too
By Paul B. Farrell, MarketWatch
Last update: 7:31 p.m. EDT June 2, 2008ARROYO GRANDE, Calif. (MarketWatch) -- You think I'm drinking that famous Beltway Kool-Aid, maybe because I'm predicting another meltdown coming in 2011? Well, you're being served from the same punch bowl, my friends.
Wall Street, Washington and the Fed are all praying the credit crisis is under control. Unfortunately, all their happy-talking is just a lot of hype, to hide their next bubble.
World markets are headed into another meltdown by the end of the first term of the next president ... and you won't even hear it coming under all the happy-talk.
Cycles happen. Bubbles blow, pop, meltdowns happen. Significantly, they're getting bigger and more frequent. Think 1987, 2000, 2007 -- the next in 2011. All the happy-talk from Washington and Wall Street gurus can't start the bull before it's time.
Nor will a lot of non-happy-talker warnings make a bubble burst early.
For example, two years ago I analyzed the 2000-2002 bear phase of "The Cycle." We reported on 16 reasons why all the happy-talk failed to restart the bull market during that 30-month recession, while investors slowly lost $8 trillion.
Now you'll see how all the warnings of a housing bubble and a coming meltdown also had no effect on the 2004-2007 bull phase of "The Cycle."
Why? Because bull/bear, bubble/bust, expansion/recession cycles have a natural pattern that ebbs and flows on their own time, making fools of all gurus predictions. And all the happy-talk and not-so-happy-talk in the world has no effect: Happy-talk won't restart a bull. Nor can not-so-happy-talk warnings puncture a bubble. Cycles have lives of their own, they mature and die unpredictable, age and pop when they feel like it.
Another will happen, soon. A busted bubble and a new meltdown coming by the end of the next presidential term. Why then? Because the last few occurred with increasing frequency, separated by thirteen years then seven, and the next will come within four years. These trends are obvious from studying the works of masters like former Commerce Department chief economist Ed Dewey's classics, including his Cycles, the Mysterious Forces that Trigger Events.
Here's my list of warnings from 20 not-so-happy-talkers. Notice how they were as unable to pop the 2004-2007 bubble before its time, as the happy-talkers were unable to restart a bull during the 2000-2002 recession:
2000: Fed governor warns Greenspan. Former Federal Reserve governor Ed Gramlich served 1997-2005. He was warning Alan Greenspan as early as 2000 about the coming subprime crisis. See his book "Subprime Mortgages: America's Latest Boom & Bust."
2004: Nixon's secretary of commerce. In "Running on Empty," Peter Peterson says: "This administration and the Republican Congress have presided over the biggest, most reckless deterioration of America's finances in history" creating a "bankrupt nation."
June 2005: The Economist. Cover story two years before collapse: "The worldwide rise in house prices is the biggest bubble in history. ... Rising property prices helped to prop up the world economy after the stock market bubble burst in 2000." Values increased 75% worldwide in five short years. "Never before have real house prices risen so fast, for so long, in so many countries ... This is the biggest bubble in history."
January 2006: Fortune. Interview with Richard Rainwater. "This is the first scenario I've seen where I question the survivability of mankind." He's 112th on the Forbes 400, worth $2.3 billion: "Most people invest and then sit around worrying what the next blowup will be. I do the opposite. I wait for the blowup, then invest." He waited with a half-billion-dollar war chest.
February 2006: Faber's Market Newsletter. "Correction Time is Here!" was Faber's headline: "If we combine the overbought condition of the stock market, investors' sentiment high optimism, equity mutual funds' low cash positions, and also heavy foreign buying, we have all the ingredients for a stock market correction in the US getting underway very shortly."
March 2006: Forbes. Economist Gary Shilling wrote: "The current housing weakness will develop into a full-scale rout ... It's clearly a bubble and is nationwide ... The house-price collapse will induce a painful recession that will send U.S. stocks into a tailspin ... China will suffer a hard landing ... and weakness in the U.S. and China will spread worldwide."
March 2006: "Sell Now." Former Goldman Sachs investment banker John Talbott's book: "Sell Now! The End of the Housing Bubble." His statistics covered America's top 130 metropolitan areas. The top 40 were facing an average 47.2% decline.
March 2006: Pimco Investment Outlook. In the quarterly newsletter, "The Gang That Couldn't Shoot Straight," Pimco's boss Bill Gross took a big swipe at a presidential economic report: "It's not so much that the report was a compilation of untruths or even half-truths. It's just that it failed to tell the truth," and hid the fact that Washington's "borrowed from the future to pay for today's party."
March 2006: Buffett in Fortune. Remember Warren Buffett's famous farmer story: "Our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4% more than they produce -- that's the trade deficit -- we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own."
May 2006: Harper's magazine. Michael Hudson wrote an article, "Guide to the Coming Real Estate Collapse," analyzing 20 trends: "Taken together, these factors will further shrink the 'real' economy, drive down those already declining real wages, and push our debt-ridden economy into Japan-style stagflation or worse."
August 2006: Wall Street Journal. Countrywide's CEO Angelo Mozilo: "I've never seen a 'soft-landing' in 53 years, so we have a ways to go before this levels out. I have to prepare the company for the worst that can happen." He did little. A year later, he was in full denial mode.
November 2006: Fortune. Cover story asks: "Can the Economy Survive the Housing Bust?" They said "the correlation between current builder confidence and future stock market returns over the past 10 years is downright unnerving." The NAHB confidence index is a leading indicator because the stock market inevitably follows in lockstep a year later. The index had "plummeted 54%."
November 2006: The Economist. In a cover story: "The Dark Side of Debt," Timothy Geithner, president of the Federal Reserve Bank of New York, said in a Hong Kong speech: "The same factors that have reduced the probability of future systemic events, however, may amplify the damage caused by, and complicate the management of, very severe financial shocks. The changes that have reduced the vulnerability of the system to smaller shocks may increase the severity of the larger ones." Geithner later negotiated the Bear Sterns collapse.
January 2007: Los Angeles Times. Schwab "averaged 242,300 trades a day the first nine months of 2006. That was up 29% from the same period a year earlier, and a click above its 242,000 peak in 2000"and the last collapse.
April 2007. GMO Quarterly Newsletter. GMO manages $145 billion. CEO Jeremy Grantham wrote: "The First Truly Global Bubble: From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure, and the junkiest bonds to mundane blue chips; it's bubble time. ... Everyone, everywhere is reinforcing one another. ... The bursting of the bubble will be across all countries and all assets ... no similar global event has occurred before."
June 2007: Shilling's Insight Newsletter. "Just as the U.S. housing bubble is bursting, speculation elsewhere will come to a violent end if history is any guide. ... Richard Bookstaber, who designed various derivative-laden strategies over the years, now fears that financial derivatives and hedge funds, focal points of today's huge leverage, will trigger a financial meltdown."
June 2007: Pop! Then it happened! And Dan Gross had a well-timed book: "Pop! Why Bubbles are Great for the Economy." He says bubbles work miracles, so just let them pop, Pop, POP!
July 2007: Fortune. As the contagion spread, Treasury Secretary and former Goldman Sachs CEO Henry Paulson tells Fortune "this is far and away the strongest global economy I've seen in my business lifetime." He's repeated the same remark often since. Earlier, he and Fed Chairman Ben Bernanke said the subprime crisis was "contained." Clueless, Bernanke assembled hedge fund managers, asking them to explain the global derivatives market.
August 2007. Wall Street Journal. Former SEC Chairman Arthur Levitt wrote on the Journal's Op-Ed page: "In terms of market meltdowns and the degree of pain inflicted on the financial system, the subprime mortgage crisis has the potential to rival just about anything in recent financial history, from the savings and loan crisis of the late 1980s to the post-Enron turndown in the beginning of this decade."
August 2007: 60 Minutes. While Paulson and Bernanke were claiming the subprime crisis was "contained," the chief architect of the subprime-housing meltdown, Alan Greenspan, was on tour, making millions, hustling his new book, "The Age of Turbulence."
On 60 Minutes he made a totally incredulous denial that he "really didn't get it until very late." He "didn't get it?" Yes, and to this day Greenspan rigidly maintains his blind faith in the free-market myth.
His latest argument: Bubbles are a function of innovation, like the dot-coms and subprime derivatives. Regulators should trust the free markets, never micromanage innovation.
But what blinded Greenspan? His ideology? A brain quirk? Genetics? The president's reelection? It doesn't matter why: Whatever it was, it's bad news for America. Why? Because if the leader of America's monetary system for 18 years "doesn't get" that he was also the chief architect of the biggest economic blunder in American history since the 1929 Crash, can we ever trust any future leaders?
Scary, isn't it! How can we have faith in the next guy? Are our leaders the problem? Or is the system broken? Is capitalism itself at risk when the best and brightest are "blinded," unable to see disasters until it's too late?
But that is our "system," and in this system our leaders inevitably morph into bulls, ideologically blinded by their power. And like real bulls, all they see is red. So eventually ... they must run onto a sword, and self-destruct!
20 reasons new megabubble pops in 2011
Greed blinded us to subprime meltdown, it'll blind us next time too
By Paul B. Farrell, MarketWatch
Last update: 7:31 p.m. EDT June 2, 2008ARROYO GRANDE, Calif. (MarketWatch) -- You think I'm drinking that famous Beltway Kool-Aid, maybe because I'm predicting another meltdown coming in 2011? Well, you're being served from the same punch bowl, my friends.
Wall Street, Washington and the Fed are all praying the credit crisis is under control. Unfortunately, all their happy-talking is just a lot of hype, to hide their next bubble.
World markets are headed into another meltdown by the end of the first term of the next president ... and you won't even hear it coming under all the happy-talk.
Cycles happen. Bubbles blow, pop, meltdowns happen. Significantly, they're getting bigger and more frequent. Think 1987, 2000, 2007 -- the next in 2011. All the happy-talk from Washington and Wall Street gurus can't start the bull before it's time.
Nor will a lot of non-happy-talker warnings make a bubble burst early.
For example, two years ago I analyzed the 2000-2002 bear phase of "The Cycle." We reported on 16 reasons why all the happy-talk failed to restart the bull market during that 30-month recession, while investors slowly lost $8 trillion.
Now you'll see how all the warnings of a housing bubble and a coming meltdown also had no effect on the 2004-2007 bull phase of "The Cycle."
Why? Because bull/bear, bubble/bust, expansion/recession cycles have a natural pattern that ebbs and flows on their own time, making fools of all gurus predictions. And all the happy-talk and not-so-happy-talk in the world has no effect: Happy-talk won't restart a bull. Nor can not-so-happy-talk warnings puncture a bubble. Cycles have lives of their own, they mature and die unpredictable, age and pop when they feel like it.
Another will happen, soon. A busted bubble and a new meltdown coming by the end of the next presidential term. Why then? Because the last few occurred with increasing frequency, separated by thirteen years then seven, and the next will come within four years. These trends are obvious from studying the works of masters like former Commerce Department chief economist Ed Dewey's classics, including his Cycles, the Mysterious Forces that Trigger Events.
Here's my list of warnings from 20 not-so-happy-talkers. Notice how they were as unable to pop the 2004-2007 bubble before its time, as the happy-talkers were unable to restart a bull during the 2000-2002 recession:
2000: Fed governor warns Greenspan. Former Federal Reserve governor Ed Gramlich served 1997-2005. He was warning Alan Greenspan as early as 2000 about the coming subprime crisis. See his book "Subprime Mortgages: America's Latest Boom & Bust."
2004: Nixon's secretary of commerce. In "Running on Empty," Peter Peterson says: "This administration and the Republican Congress have presided over the biggest, most reckless deterioration of America's finances in history" creating a "bankrupt nation."
June 2005: The Economist. Cover story two years before collapse: "The worldwide rise in house prices is the biggest bubble in history. ... Rising property prices helped to prop up the world economy after the stock market bubble burst in 2000." Values increased 75% worldwide in five short years. "Never before have real house prices risen so fast, for so long, in so many countries ... This is the biggest bubble in history."
January 2006: Fortune. Interview with Richard Rainwater. "This is the first scenario I've seen where I question the survivability of mankind." He's 112th on the Forbes 400, worth $2.3 billion: "Most people invest and then sit around worrying what the next blowup will be. I do the opposite. I wait for the blowup, then invest." He waited with a half-billion-dollar war chest.
February 2006: Faber's Market Newsletter. "Correction Time is Here!" was Faber's headline: "If we combine the overbought condition of the stock market, investors' sentiment high optimism, equity mutual funds' low cash positions, and also heavy foreign buying, we have all the ingredients for a stock market correction in the US getting underway very shortly."
March 2006: Forbes. Economist Gary Shilling wrote: "The current housing weakness will develop into a full-scale rout ... It's clearly a bubble and is nationwide ... The house-price collapse will induce a painful recession that will send U.S. stocks into a tailspin ... China will suffer a hard landing ... and weakness in the U.S. and China will spread worldwide."
March 2006: "Sell Now." Former Goldman Sachs investment banker John Talbott's book: "Sell Now! The End of the Housing Bubble." His statistics covered America's top 130 metropolitan areas. The top 40 were facing an average 47.2% decline.
March 2006: Pimco Investment Outlook. In the quarterly newsletter, "The Gang That Couldn't Shoot Straight," Pimco's boss Bill Gross took a big swipe at a presidential economic report: "It's not so much that the report was a compilation of untruths or even half-truths. It's just that it failed to tell the truth," and hid the fact that Washington's "borrowed from the future to pay for today's party."
March 2006: Buffett in Fortune. Remember Warren Buffett's famous farmer story: "Our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4% more than they produce -- that's the trade deficit -- we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own."
May 2006: Harper's magazine. Michael Hudson wrote an article, "Guide to the Coming Real Estate Collapse," analyzing 20 trends: "Taken together, these factors will further shrink the 'real' economy, drive down those already declining real wages, and push our debt-ridden economy into Japan-style stagflation or worse."
August 2006: Wall Street Journal. Countrywide's CEO Angelo Mozilo: "I've never seen a 'soft-landing' in 53 years, so we have a ways to go before this levels out. I have to prepare the company for the worst that can happen." He did little. A year later, he was in full denial mode.
November 2006: Fortune. Cover story asks: "Can the Economy Survive the Housing Bust?" They said "the correlation between current builder confidence and future stock market returns over the past 10 years is downright unnerving." The NAHB confidence index is a leading indicator because the stock market inevitably follows in lockstep a year later. The index had "plummeted 54%."
November 2006: The Economist. In a cover story: "The Dark Side of Debt," Timothy Geithner, president of the Federal Reserve Bank of New York, said in a Hong Kong speech: "The same factors that have reduced the probability of future systemic events, however, may amplify the damage caused by, and complicate the management of, very severe financial shocks. The changes that have reduced the vulnerability of the system to smaller shocks may increase the severity of the larger ones." Geithner later negotiated the Bear Sterns collapse.
January 2007: Los Angeles Times. Schwab "averaged 242,300 trades a day the first nine months of 2006. That was up 29% from the same period a year earlier, and a click above its 242,000 peak in 2000"and the last collapse.
April 2007. GMO Quarterly Newsletter. GMO manages $145 billion. CEO Jeremy Grantham wrote: "The First Truly Global Bubble: From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure, and the junkiest bonds to mundane blue chips; it's bubble time. ... Everyone, everywhere is reinforcing one another. ... The bursting of the bubble will be across all countries and all assets ... no similar global event has occurred before."
June 2007: Shilling's Insight Newsletter. "Just as the U.S. housing bubble is bursting, speculation elsewhere will come to a violent end if history is any guide. ... Richard Bookstaber, who designed various derivative-laden strategies over the years, now fears that financial derivatives and hedge funds, focal points of today's huge leverage, will trigger a financial meltdown."
June 2007: Pop! Then it happened! And Dan Gross had a well-timed book: "Pop! Why Bubbles are Great for the Economy." He says bubbles work miracles, so just let them pop, Pop, POP!
July 2007: Fortune. As the contagion spread, Treasury Secretary and former Goldman Sachs CEO Henry Paulson tells Fortune "this is far and away the strongest global economy I've seen in my business lifetime." He's repeated the same remark often since. Earlier, he and Fed Chairman Ben Bernanke said the subprime crisis was "contained." Clueless, Bernanke assembled hedge fund managers, asking them to explain the global derivatives market.
August 2007. Wall Street Journal. Former SEC Chairman Arthur Levitt wrote on the Journal's Op-Ed page: "In terms of market meltdowns and the degree of pain inflicted on the financial system, the subprime mortgage crisis has the potential to rival just about anything in recent financial history, from the savings and loan crisis of the late 1980s to the post-Enron turndown in the beginning of this decade."
August 2007: 60 Minutes. While Paulson and Bernanke were claiming the subprime crisis was "contained," the chief architect of the subprime-housing meltdown, Alan Greenspan, was on tour, making millions, hustling his new book, "The Age of Turbulence."
On 60 Minutes he made a totally incredulous denial that he "really didn't get it until very late." He "didn't get it?" Yes, and to this day Greenspan rigidly maintains his blind faith in the free-market myth.
His latest argument: Bubbles are a function of innovation, like the dot-coms and subprime derivatives. Regulators should trust the free markets, never micromanage innovation.
But what blinded Greenspan? His ideology? A brain quirk? Genetics? The president's reelection? It doesn't matter why: Whatever it was, it's bad news for America. Why? Because if the leader of America's monetary system for 18 years "doesn't get" that he was also the chief architect of the biggest economic blunder in American history since the 1929 Crash, can we ever trust any future leaders?
Scary, isn't it! How can we have faith in the next guy? Are our leaders the problem? Or is the system broken? Is capitalism itself at risk when the best and brightest are "blinded," unable to see disasters until it's too late?
But that is our "system," and in this system our leaders inevitably morph into bulls, ideologically blinded by their power. And like real bulls, all they see is red. So eventually ... they must run onto a sword, and self-destruct!
Morgan Stanley Real Estate Acquires Crescent Real Estate Equities
Morgan Stanley Real Estate Acquires Crescent Real Estate Equities (CEI) for $22.80/Sh
May 22, 2007 5:04 PM EDT
Crescent Real Estate Equities Company (NYSE: CEI) entered into a definitive agreement pursuant to which funds managed by Morgan Stanley Real Estate will acquire Crescent in an all cash transaction for $22.80 per share and the assumption of liabilities for total consideration of approximately $6.5 billion. Shares of Crescent Real Estate Equities closed at $21.62 today.
May 22, 2007 5:04 PM EDT
Crescent Real Estate Equities Company (NYSE: CEI) entered into a definitive agreement pursuant to which funds managed by Morgan Stanley Real Estate will acquire Crescent in an all cash transaction for $22.80 per share and the assumption of liabilities for total consideration of approximately $6.5 billion. Shares of Crescent Real Estate Equities closed at $21.62 today.
Toxic Corporate Real Estate
This occurred in 2007?
Morgan Stanley Real Estate announced today that it has completed the previously announced acquisition of Crescent Real Estate Equities Company (CEI) for $6.5 billion.
All of Crescent’s outstanding shares of common stock have been converted to the right to receive $22.80 per share in cash without interest and less any applicable withholding for each share of common stock.
“We are excited to acquire the unique portfolio of properties that Crescent put together,” said Michael Franco, Managing Director, Morgan Stanley Real Estate. “We believe that the depth and breadth of our real estate investing platform will enable us to maximize the value of the diverse holdings of office, destination resorts and resort residential.”
With the acquisition of Crescent, Morgan Stanley Real Estate adds to its portfolio 54premier office buildings totaling 23 million square feet located in select markets across the United States with major concentrations in Dallas, Houston, Denver, Miami, and Las Vegas. In addition, it gains investments in resort residential developments in locations such as Scottsdale, AZ; Vail Valley, CO; and Lake Tahoe, CA and in the wellness lifestyle leader, Canyon Ranch®.
Morgan Stanley acted as financial advisor to Morgan Stanley Real Estate with Goodwin Procter LLP and Jones Day acting as legal counsel. Greenhill & Co., LLC acted as the financial advisor to Crescent with Pillsbury Winthrop Shaw Pittman LLP acting as legal counsel.
Morgan Stanley Real Estate is comprised of three major global businesses: Investing, Banking and Lending. Since 1991, Morgan Stanley Real Estate has acquired $121.5 billion of real estate assets worldwide and currently manages $55.6 billion in real estate assets on behalf of its clients. A complete range of market-leading investment banking services for real estate clients include advice on strategy, mergers, acquisitions and restructurings, as well as underwriting public and private debt and equity financings. As a global leader in real estate lending, Morgan Stanley has offered approximately $156.0 billion of CMBS through the capital markets since 1997, including $35.5 billion in 2006. For more information about Morgan Stanley Real Estate, please visit www.morganstanley.com/realestate.
Morgan Stanley (MS) is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 600 offices in 32 countries. For further information about Morgan Stanley, please visit
www.morganstanley.com.
Contacts:
For Morgan Stanley Real Estate
Media Relations:
Alyson D’Ambrisi, 212-762-7006
Morgan Stanley Real Estate announced today that it has completed the previously announced acquisition of Crescent Real Estate Equities Company (CEI) for $6.5 billion.
All of Crescent’s outstanding shares of common stock have been converted to the right to receive $22.80 per share in cash without interest and less any applicable withholding for each share of common stock.
“We are excited to acquire the unique portfolio of properties that Crescent put together,” said Michael Franco, Managing Director, Morgan Stanley Real Estate. “We believe that the depth and breadth of our real estate investing platform will enable us to maximize the value of the diverse holdings of office, destination resorts and resort residential.”
With the acquisition of Crescent, Morgan Stanley Real Estate adds to its portfolio 54premier office buildings totaling 23 million square feet located in select markets across the United States with major concentrations in Dallas, Houston, Denver, Miami, and Las Vegas. In addition, it gains investments in resort residential developments in locations such as Scottsdale, AZ; Vail Valley, CO; and Lake Tahoe, CA and in the wellness lifestyle leader, Canyon Ranch®.
Morgan Stanley acted as financial advisor to Morgan Stanley Real Estate with Goodwin Procter LLP and Jones Day acting as legal counsel. Greenhill & Co., LLC acted as the financial advisor to Crescent with Pillsbury Winthrop Shaw Pittman LLP acting as legal counsel.
Morgan Stanley Real Estate is comprised of three major global businesses: Investing, Banking and Lending. Since 1991, Morgan Stanley Real Estate has acquired $121.5 billion of real estate assets worldwide and currently manages $55.6 billion in real estate assets on behalf of its clients. A complete range of market-leading investment banking services for real estate clients include advice on strategy, mergers, acquisitions and restructurings, as well as underwriting public and private debt and equity financings. As a global leader in real estate lending, Morgan Stanley has offered approximately $156.0 billion of CMBS through the capital markets since 1997, including $35.5 billion in 2006. For more information about Morgan Stanley Real Estate, please visit www.morganstanley.com/realestate.
Morgan Stanley (MS) is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 600 offices in 32 countries. For further information about Morgan Stanley, please visit
www.morganstanley.com.
Contacts:
For Morgan Stanley Real Estate
Media Relations:
Alyson D’Ambrisi, 212-762-7006
Rainwater's 'Single Worst Investment' Toxic Real Estate
Renowned investor Richard Rainwater saw 70% of the value drain out of his $100 million investment in Thornburg Mortgage
by Christopher Palmeri
Sometimes even billionaires make bone-headed moves. Richard Rainwater, the legendary Fort Worth investor, has seen a 70% decline in just two months on some $100 million he put into troubled home lender Thornburg Mortgage (TMA). Rainwater calls it the "the single worst investment of my career."
The 65-year-old-financier, with a fortune estimated at $3 billion by Forbes magazine, told BusinessWeek.com he was watching TV last year when he saw Thornburg's chief executive, Larry Goldstone, speaking about the mortgage crisis. "He seemed like a bright guy," Rainwater recalls. Rainwater says he then checked with some of his investment industry sources who said they considered Thornburg a "capable group."
Buying into the Jumbo MarketIn January Rainwater plunked down about $100 million to buy roughly 5 million shares of the Santa Fe (N.M.) company's preferred stock. Rainwater bought shares both in a public offering that Thornburg had arranged and on the open market. He says his average cost was 21.45 a share. The preferred stock trades today at 6.25 per share; Thornburg common shares closed Mar. 13 at 2.26, down from 28 in May.
Filings with the Securities & Exchange Commission show that Rainwater and his wife, Darla Moore, own preferred stock convertible into 9.3 million shares of Thornburg's common stock, about 6% of the company's shares outstanding. By the time Rainwater invested, Thornburg was already in trouble. That was reflected in the fact that Thornburg was offering a dividend on the preferred shares of 10%. The company declined to comment on the issue.
Founded in 1993 by the current chairman, Garrett Thornburg, the company specializes in making "jumbo" single-family home loans to what it calls "superprime" customers. Those are individuals with credit scores of 744 or higher. Some 97% of its investments are in loans rated AA or higher by ratings agencies. Thornburg says just 0.4% of its loans are delinquent, compared to an industry average of more than 4%.
Rainwater says it was the high-end nature of Thornburg's business that attracted him to the company. "Housing values are suffering everywhere," he says. "But at the high end things are holding up better." On its Web site Thornburg is offering mortgage rates as low as 7.9%.
Crumbling Credit Markets
Last summer Thornburg averted greater financial difficulties by selling $20 billion of its assets. In recent weeks, though, its problems have escalated as lenders began requiring the company to put up more capital to back its mortgage investments. The company says it is presently negotiating with creditors who want $600 million in additional financing.
The problem, says Keefe, Bruyette & Woods (KBW) analyst Bose George, is that Thornburg has been funding its business with short-term loans. That worked when capital was easy to find. "They have one of the best balance sheets on the asset side," George says. "The problem is in the market—it's hard to borrow money." George says he sees the market shifting away from independent lenders such as Countrywide Financial (CFC) and Thornburg. In the future, "mortgage lending is going to be done by banks," he says. "Nonbanks have turned out to be extremely vulnerable to this kind of downturn."
Win Some, Lose Some
Rainwater is famous for scooping up assets in troubled companies. As a chief adviser to Fort Worth's billionaire Bass brothers in the 1980s, he directed the family to invest in then-floundering Walt Disney (DIS). That company went on to great success under Chief Executive Michael Eisner. In the 1990s, Rainwater plunged into oil and gas companies then struggling with low commodities prices. He invested in the Hunt brothers' bankrupt Penrod Drilling, since merged into Ensco International (ESV), and T. Boone Pickens' Mesa Petroleum, now a part of Pioneer Natural Resources (PXD). "Oil I understand," Rainwater says. "Interest rates…?"
Last August Rainwater sold Crescent Real Estate Equities to Morgan Stanley (MS) for $6.5 billion. Crescent was a big owner of office buildings. Rainwater sold at what now looks to have been the peak of the recent commercial real estate cycle. "It just seemed like the right time to do it," he says, with the prices paid for office property working out to yield just 4% to 5% for buyers.
Rainwater says his portfolio is still up for the year thanks to his energy holdings, which include blue chip oil and gas companies such as Chevron (CVX) and ConocoPhillips (COP).
Nonetheless, he says, the losses so far on Thornburg "still don't feel good."
Palmeri is a senior correspondent in BusinessWeek's Los Angeles bureau
by Christopher Palmeri
Sometimes even billionaires make bone-headed moves. Richard Rainwater, the legendary Fort Worth investor, has seen a 70% decline in just two months on some $100 million he put into troubled home lender Thornburg Mortgage (TMA). Rainwater calls it the "the single worst investment of my career."
The 65-year-old-financier, with a fortune estimated at $3 billion by Forbes magazine, told BusinessWeek.com he was watching TV last year when he saw Thornburg's chief executive, Larry Goldstone, speaking about the mortgage crisis. "He seemed like a bright guy," Rainwater recalls. Rainwater says he then checked with some of his investment industry sources who said they considered Thornburg a "capable group."
Buying into the Jumbo MarketIn January Rainwater plunked down about $100 million to buy roughly 5 million shares of the Santa Fe (N.M.) company's preferred stock. Rainwater bought shares both in a public offering that Thornburg had arranged and on the open market. He says his average cost was 21.45 a share. The preferred stock trades today at 6.25 per share; Thornburg common shares closed Mar. 13 at 2.26, down from 28 in May.
Filings with the Securities & Exchange Commission show that Rainwater and his wife, Darla Moore, own preferred stock convertible into 9.3 million shares of Thornburg's common stock, about 6% of the company's shares outstanding. By the time Rainwater invested, Thornburg was already in trouble. That was reflected in the fact that Thornburg was offering a dividend on the preferred shares of 10%. The company declined to comment on the issue.
Founded in 1993 by the current chairman, Garrett Thornburg, the company specializes in making "jumbo" single-family home loans to what it calls "superprime" customers. Those are individuals with credit scores of 744 or higher. Some 97% of its investments are in loans rated AA or higher by ratings agencies. Thornburg says just 0.4% of its loans are delinquent, compared to an industry average of more than 4%.
Rainwater says it was the high-end nature of Thornburg's business that attracted him to the company. "Housing values are suffering everywhere," he says. "But at the high end things are holding up better." On its Web site Thornburg is offering mortgage rates as low as 7.9%.
Crumbling Credit Markets
Last summer Thornburg averted greater financial difficulties by selling $20 billion of its assets. In recent weeks, though, its problems have escalated as lenders began requiring the company to put up more capital to back its mortgage investments. The company says it is presently negotiating with creditors who want $600 million in additional financing.
The problem, says Keefe, Bruyette & Woods (KBW) analyst Bose George, is that Thornburg has been funding its business with short-term loans. That worked when capital was easy to find. "They have one of the best balance sheets on the asset side," George says. "The problem is in the market—it's hard to borrow money." George says he sees the market shifting away from independent lenders such as Countrywide Financial (CFC) and Thornburg. In the future, "mortgage lending is going to be done by banks," he says. "Nonbanks have turned out to be extremely vulnerable to this kind of downturn."
Win Some, Lose Some
Rainwater is famous for scooping up assets in troubled companies. As a chief adviser to Fort Worth's billionaire Bass brothers in the 1980s, he directed the family to invest in then-floundering Walt Disney (DIS). That company went on to great success under Chief Executive Michael Eisner. In the 1990s, Rainwater plunged into oil and gas companies then struggling with low commodities prices. He invested in the Hunt brothers' bankrupt Penrod Drilling, since merged into Ensco International (ESV), and T. Boone Pickens' Mesa Petroleum, now a part of Pioneer Natural Resources (PXD). "Oil I understand," Rainwater says. "Interest rates…?"
Last August Rainwater sold Crescent Real Estate Equities to Morgan Stanley (MS) for $6.5 billion. Crescent was a big owner of office buildings. Rainwater sold at what now looks to have been the peak of the recent commercial real estate cycle. "It just seemed like the right time to do it," he says, with the prices paid for office property working out to yield just 4% to 5% for buyers.
Rainwater says his portfolio is still up for the year thanks to his energy holdings, which include blue chip oil and gas companies such as Chevron (CVX) and ConocoPhillips (COP).
Nonetheless, he says, the losses so far on Thornburg "still don't feel good."
Palmeri is a senior correspondent in BusinessWeek's Los Angeles bureau
Here come the Real Estate Toxic Mortgages...
Crescent Real Estate Equities Co. (NYSE: CEI) has finally found a buyer, and one that seems to like its mixed-use approach. Morgan Stanley Real Estate has agreed to acquire the Fort Worth, Texas-based REIT for a deal that totals $6.5 billion, including the assumption of debt.
Crescent, a mixed-use REIT owned by Texas billionaire Richard Rainwater, was in the midst of morphing itself into a pure-play office REIT. After evaluating its strategic options, the company came to the conclusion that it could "take advantage of the void left by rabid industry consolidation" as a remade office REIT. More likely, it was positioning itself better for an outright sale.
The Crescent deal just underscores the notion that the private equity boom is still in full swing. According to a New York Times article citing data from Thomson Financial, there have been $281 billion worth of private equity deals in the U.S. so far this year -- that's triple the amount compared to the same period last year, which ended up breaking all sorts of records.
There seems to be plenty of momentum left for REIT take-private deals, too. Year to date, 12 REITs have gone private for a total of $16.2 billion. But, there's still a ways to go to catch up to the lofty levels of 2006, when 23 deals totaling $64.3 billion, including the mammoth EOP buyout, took place, according to SNL Financial data listed in an article by The Wall Street Journal.
Greenhill & Co. LLC served as Crescent's financial advisor and Pillsbury Winthrop Shaw Pittman LLP provided legal
Prior to the deal with Morgan Stanley, Crescent had set into motion a series of deals, including the $550 million sale of its six hotels plus the 343,664-square-foot Austin Centre office building for $75.5 million to Walton Street Capital LLC in March. It also struck a deal recently to sell a portfolio of Dallas-area office assets to a venture between Trimarchi Management and UBS for about $420 million, according to published reports. Crescent also sold the historic Exchange Building in Seattle for $80.6 million to a joint venture between GE Asset Management and The Ashforth Co.
The REIT was preparing to shop its resort and residential development business through JP Morgan and was still evaluating plans for Canyon Ranch, a wellness lifestyle company owned in partnership with Mel Zuckerman and Jerry Cohen.
It's not clear what Morgan Stanley will do with the various pieces of Crescent going forward. The financial services firm considers Crescent's "unique" platform complimentary to its own wide range of business lines.
Morgan Stanley has certainly cast a wide net for real estate acquisitions, gobbling up properties and real estate companies in all sectors of the industry, and has been a major force in the take-private deals that have fueled the hot investment sales market over the past two years.
Last year, it acquired Town and Country Trust, an apartment REIT, through a venture with Onex Real Estate and Sawyer Realty Holdings LLC, in a deal valued at $1.5 billion. Also in 2006, it paid $1.9 billion to acquire Glenborough Realty Trust, a San Mateo, CA-based office REIT. It recently acquired CNL Hotels & Resorts for about $6.6 billion, including the sale of a portion of the properties to Ashford Hospitality Trust.
The financial firm has also reached into its deep pockets for a plethora of property acquisitions lately. It recently paid about $2.43 billion to buy a portfolio of former EOP assets in San Francisco from Blackstone. It also acquired a 28-story office tower at 2 Park Ave. in Manhattan for $519 million. On the retail side, Morgan Stanley recently formed a joint venture with Inland Western Retail Real Estate Trust Inc. to acquire and manage retail properties in target markets across the U.S. with a goal of building a billion-dollar portfolio.
The Crescent deal just underscores the notion that the private equity boom is still in full swing. According to a New York Times article citing data from Thomson Financial, there have been $281 billion worth of private equity deals in the U.S. so far this year -- that's triple the amount compared to the same period last year, which ended up breaking all sorts of records.
There seems to be plenty of momentum left for REIT take-private deals, too. Year to date, 12 REITs have gone private for a total of $16.2 billion. But, there's still a ways to go to catch up to the lofty levels of 2006, when 23 deals totaling $64.3 billion, including the mammoth EOP buyout, took place, according to SNL Financial data listed in an article by The Wall Street Journal.
Greenhill & Co. LLC served as Crescent's financial advisor and Pillsbury Winthrop Shaw Pittman LLP provided legal counsel. Morgan Stanley acted as financial advisor to Morgan Stanley Real Estate with Goodwin Procter LLP and Jones Day providing legal counsel.
Crescent, a mixed-use REIT owned by Texas billionaire Richard Rainwater, was in the midst of morphing itself into a pure-play office REIT. After evaluating its strategic options, the company came to the conclusion that it could "take advantage of the void left by rabid industry consolidation" as a remade office REIT. More likely, it was positioning itself better for an outright sale.
The Crescent deal just underscores the notion that the private equity boom is still in full swing. According to a New York Times article citing data from Thomson Financial, there have been $281 billion worth of private equity deals in the U.S. so far this year -- that's triple the amount compared to the same period last year, which ended up breaking all sorts of records.
There seems to be plenty of momentum left for REIT take-private deals, too. Year to date, 12 REITs have gone private for a total of $16.2 billion. But, there's still a ways to go to catch up to the lofty levels of 2006, when 23 deals totaling $64.3 billion, including the mammoth EOP buyout, took place, according to SNL Financial data listed in an article by The Wall Street Journal.
Greenhill & Co. LLC served as Crescent's financial advisor and Pillsbury Winthrop Shaw Pittman LLP provided legal
Prior to the deal with Morgan Stanley, Crescent had set into motion a series of deals, including the $550 million sale of its six hotels plus the 343,664-square-foot Austin Centre office building for $75.5 million to Walton Street Capital LLC in March. It also struck a deal recently to sell a portfolio of Dallas-area office assets to a venture between Trimarchi Management and UBS for about $420 million, according to published reports. Crescent also sold the historic Exchange Building in Seattle for $80.6 million to a joint venture between GE Asset Management and The Ashforth Co.
The REIT was preparing to shop its resort and residential development business through JP Morgan and was still evaluating plans for Canyon Ranch, a wellness lifestyle company owned in partnership with Mel Zuckerman and Jerry Cohen.
It's not clear what Morgan Stanley will do with the various pieces of Crescent going forward. The financial services firm considers Crescent's "unique" platform complimentary to its own wide range of business lines.
Morgan Stanley has certainly cast a wide net for real estate acquisitions, gobbling up properties and real estate companies in all sectors of the industry, and has been a major force in the take-private deals that have fueled the hot investment sales market over the past two years.
Last year, it acquired Town and Country Trust, an apartment REIT, through a venture with Onex Real Estate and Sawyer Realty Holdings LLC, in a deal valued at $1.5 billion. Also in 2006, it paid $1.9 billion to acquire Glenborough Realty Trust, a San Mateo, CA-based office REIT. It recently acquired CNL Hotels & Resorts for about $6.6 billion, including the sale of a portion of the properties to Ashford Hospitality Trust.
The financial firm has also reached into its deep pockets for a plethora of property acquisitions lately. It recently paid about $2.43 billion to buy a portfolio of former EOP assets in San Francisco from Blackstone. It also acquired a 28-story office tower at 2 Park Ave. in Manhattan for $519 million. On the retail side, Morgan Stanley recently formed a joint venture with Inland Western Retail Real Estate Trust Inc. to acquire and manage retail properties in target markets across the U.S. with a goal of building a billion-dollar portfolio.
The Crescent deal just underscores the notion that the private equity boom is still in full swing. According to a New York Times article citing data from Thomson Financial, there have been $281 billion worth of private equity deals in the U.S. so far this year -- that's triple the amount compared to the same period last year, which ended up breaking all sorts of records.
There seems to be plenty of momentum left for REIT take-private deals, too. Year to date, 12 REITs have gone private for a total of $16.2 billion. But, there's still a ways to go to catch up to the lofty levels of 2006, when 23 deals totaling $64.3 billion, including the mammoth EOP buyout, took place, according to SNL Financial data listed in an article by The Wall Street Journal.
Greenhill & Co. LLC served as Crescent's financial advisor and Pillsbury Winthrop Shaw Pittman LLP provided legal counsel. Morgan Stanley acted as financial advisor to Morgan Stanley Real Estate with Goodwin Procter LLP and Jones Day providing legal counsel.
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