Real estate business
Morgan Stanley’s Investment Management segment was the only division to report lower revenue and profitability as compared to the previous year. The division’s revenues declined by 11% to $669 million, mainly due to lower profitability on investments in the merchant banking and real estate investing business.
However, compared to the last quarter, revenues have increased by 14% and net profit has been $187 million as compared to a net loss of $6 million. The improvement has been due to higher assets under management and recovery in the real estate market. The company now manages $406 billion as compared to $286 billion a year ago.
Morgan Stanley (MS) in its real estate business competes with private equity players and real estate investment trusts like Blackstone (BX), KKR (KKR), Carlyle (CG), and Simon Property Group (SPG). In its merchant banking business, the company faces competition from JPMorgan Chase (JPM), Goldman Sachs (GS), Citigroup (C), Credit Suisse (CS), Evercore Partners (EVR), Deutsche Bank (DB), and Greenhill (GHL). Together, these companies form 17.06% of the Financial Select Sector SPDR (XLF).
Blackstone leads in real estate investments and has posted higher profits backed by liquidity and revival in the real estate market.
Investment Management division
Morgan Stanley manages funds for clients through traditional asset management, alternative investments, merchant banking, and real estate investing activities. The company’s offerings include equity, fixed income, money market funds, alternative investments, real estate investment, and merchant banking across the globe. Morgan Stanley tailors its offerings to the needs of institutional and retail investors.