Morgan Stanley's Real Estate Push

Morgan Stanley's(MS) making a big push into real estate.

Last year Morgan Stanley ranked second behind private equity giant Blackstone Group in global real estate acquisitions. And while Blackstone is nailing down a $23 billion buyout of Chicago-based Equity Office (EOP) in the biggest-ever office tower deal, Morgan Stanley is quietly working on its own mega-international fund. The brokerage is raising $8 billion for a fund that would look to make acquisitions worldwide.

Clearly, plenty of private equity money has been swirling around real estate. Domestic acquisitions in real estate made by private equity investors surged last year to $62.4 billion, according to Dealogic.

But Morgan Stanley is alone among traditional Wall Street firms in plunging headfirst into real estate. It's the only bulge bracket firm in the real estate top 10 last year, Dealogic says.

Sonny Kalsi, who oversees Morgan Stanley's real estate investment management business, says the company is simply seizing an opportunity to make money.

"Real estate as an asset class was probably not viewed as a traditional asset class 10 years ago, and it clearly is now," says Kalsi. "There is bigger opportunity for arbitrage opportunities. You're seeing a lot of take-private opportunity in the U.S. right now. That's just driven by the fact that in general the average cost of capital of a private investor is lower than the public market because private investors can borrow aggressively at lower financing costs."