Morgan Stanley to buy Crescent Real Estate

NEW YORK (Reuters) - Crescent Real Estate Equities Co. CEI.N said on Tuesday it agreed to be acquired by Morgan Stanley's real estate unit for about $2.3 billion, excluding debt and preferred shares.

Morgan Stanley Real Estate will pay $22.80 per share in cash for Crescent.

The transaction offers a premium of roughly 5.4 percent to Crescent's closing stock price of $21.62 on Tuesday. Crescent said the deal represents a 12 percent premium over its prior 30-day average closing price.

Including assumption and refinancing of $3.1 billion of debt and the redemption of preferred shares, the transaction has a total value of $6.5 billion, said Crescent, a real estate investment trust based in Fort Worth, Texas.

Crescent said it manages about 70 office buildings in markets across the United States, with concentrations in Dallas, Houston, Austin, Denver, Miami, and Las Vegas. Crescent also holds investments in resort developments.

"The primary goal of the strategic plan we announced on March 1, 2007, was to maximize value for our shareholders," John Goff, Crescent's chief executive officer, said in a statement.

"This transaction accelerates the realization of that goal by delivering value to our shareholders more quickly and with greater certainty," he said.

The deal is worth about $2.3 billion, based on Crescent's 102.83 million common shares outstanding on May 1.

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On March 1, Crescent said it would rid itself of its second-home resorts and hotels to transform into a pure office real estate investment trust seeking to capture dollars from shareholders looking to place money in the shrinking field of office REITs.

Over the past two years, at least a dozen office REITs -- including Equity Office, Trizec, Reckson, Glenborough and CarrAmerica -- have either been bought by private investors or by other publicly traded REITs.

Closing of the Crescent-Morgan Stanley transaction, expected by the end of the third quarter, is subject to approval by Crescent shareholders.

Crescent said Richard Rainwater, one if its biggest stockholders, has agreed to vote in favor of the transaction.

The deal has been unanimously approved by Crescent's board of trust managers.

Greenhill & Co. LLC is financial adviser to Crescent. Morgan Stanley (MS.N) is financial adviser to Morgan Stanley Real Estate.

Morgan Stanley said it has acquired $121.5 billion of real estate assets worldwide since 1991 and that it also manages $55.6 billion in real estate assets on behalf of its clients.