James Flaum and Kwasi Benneh

In 2023, Morgan Stanley once again displayed an ability to adapt to capital market conditions — in this case, ones shaped by historically high interest rates.

After shifting to more balance sheet deals in 2022, the past year for Morgan Stanley saw a far more weighted focus back on the CMBS market. Of the investment banking giant’s $5.4 billion of U.S. originations, 77 percent were via securitizations with 23 percent from bank lending.

“Most of our volume was CMBS with significantly reduced demand for balance sheet due to market conditions,” Kwasi Benneh said. 

While overall lending volume was way down from 2022 in a higher interest rate environment, Morgan Stanley remained an active player in the public markets throughout 2023 and ranked fourth in the U.S. securitization league tables for the year. In addition to refinancing some office loans into securitization deals, Morgan Stanley also led restructurings of $8 billion in modifications for some deals that had looming maturities.  

“Modifications require a lot of work,” James Flaum said. “But with sufficient additional equity contributions and loan extensions, it will allow sponsors to execute business plans and put properties on a solid footing, a win-win for sponsors and lenders.”  

One of the notable transactions from Morgan Stanley last year involved a $925 million CMBS loan to refinance Unibail-Rodamco-Westfield’s Westfield Century City mall in Los Angeles. Morgan Stanley provided a two-year, floating-rate loan, with the secured overnight financing rate plus 2.92 percent. And URW was required to buy a rate cap of 6 percent as part of the deal. 

Morgan Stanley also closed a $375 million CMBS loan to refinance Blackstone’s Park Avenue Tower, a 36-story office building at 65 East 55th Street in Manhattan.