Duke Energy and Morgan Stanley Real Estate Announce a Joint Venture Regarding Crescent Resources
Transaction Values Crescent at $2.1 Billion
CHARLOTTE, N.C. – Duke Energy and Morgan Stanley Real Estate announced today the signing and closing of a transaction creating a joint venture between Duke Energy and Morgan Stanley Real Estate Fund (MSREF) V U.S. with respect to Crescent Resources, Duke Energy’s real estate subsidiary.
Ownership of the new joint venture will be 49 percent by Duke Energy, 49 percent by MSREF and 2 percent by Crescent’s chief executive officer. The joint venture will retain the name Crescent Resources and its headquarters will remain in Charlotte.
The transaction ascribes a total enterprise value of approximately $2.1 billion to Crescent. It provides Duke Energy with approximately $1.4 billion after-tax cash proceeds at closing, in addition to its 49 percent ownership of the venture. As part of the transaction, Crescent was recapitalized and borrowed approximately $1.2 billion of new debt at closing, which will be classified off Duke Energy’s balance sheet. Substantially all debt proceeds were distributed to Duke Energy.
“This joint venture will create opportunities for Crescent as it leverages Morgan Stanley Real Estate’s financial strength, access to capital markets, deal flow and expertise in land development,” said James E. Rogers, president and chief executive officer of Duke Energy. “While Duke Energy will retain a significant interest in the future success of the business, the new structure is consistent with our plan to focus primarily on the power business by reducing our investment and risk profile associated with non-core businesses.”
“The acquisition of an interest in Crescent represents a significant milestone for MSREF and provides access to a premier development company,” said Michael Franco, managing director and head of MSREF V U.S. “We look forward to working alongside Crescent's best-in-class management team and Duke Energy to continue to grow the company in both the residential and commercial sectors in attractive and growing real estate markets.”
The current Crescent management team will operate the joint venture and Crescent will continue to participate in each of the sectors of real estate development in which it is currently involved.
Duke Energy was advised by Banc of America Securities LLC and MSREF was advised by Morgan Stanley Real Estate for the transaction.
Crescent Resources, LLC is a land management and real estate development company. Formed more than 40 years ago by Duke Energy, the company has land interests in nine states in the Southeast and southwestern United States. Crescent creates award-winning country club communities, neighborhoods, apartment and condominium communities, Class A office space, business and industrial parks and shopping centers. More information about Crescent Resources is available on the Internet at www.crescent-resources.com.
Duke Energy is a diversified energy company with a portfolio of natural gas and electric businesses, both regulated and unregulated, and an affiliated real estate company. Duke Energy supplies, delivers and processes energy for customers in the Americas. Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.
MSREF V U.S. is managed by Morgan Stanley Real Estate, which is comprised of three major global businesses: Investing, Banking, and Lending. Since 1991, Morgan Stanley has acquired $87.7 billion of real estate assets worldwide and currently manages $50.9 billion in real estate assets on behalf of its clients. In addition, Morgan Stanley Real Estate provides a complete range of market-leading investment banking services to its clients, including advice on strategy, mergers, acquisitions and restructurings, as well as underwriting public and private debt and equity financings. Morgan Stanley is also a global leader in real estate lending and, using its own capital, originated approximately $28 billion in commercial mortgages in 2005. For more information about Morgan Stanley Real Estate, go to www.morganstanley.com/realestate.
Morgan Stanley (NYSE: MS) is a global financial services firm and a market leader in securities, investment management, and credit services. With more than 600 offices in 30 countries, Morgan Stanley connects people, ideas and capital to help clients achieve their financial aspirations.