Morgan Stanley's Real Estate Push

Under CEO John Mack's leadership for the past two years, Morgan Stanley has been aggressively working to improve profitability. Mack has begun investing heavily in the private-equity industry (after the firm moved away from it under former CEO Phil Purcell) and building out alternative investments, particularly in hedge funds.

The real estate bets complement Mack's vision of the firm pushing to take on more risk while improving performance.

"John has clearly stated that he would like to see the firm more involved as a principal investor. We've been doing this for a long time," Kalsi says. "The other thing that John speaks about is emerging markets and growing internationally. We're on the tip of the spear of that. We were early into China, we were early into India, we're all over Russia, and we're trying to get all over in Brazil."

Morgan Stanley Real Estate provides investment banking, lending and investment management for the commercial and residential properties.

The brokerage launched its first private equity real estate fund in 1991. It had about $500 million in assets under management and focused on U.S. properties. Today the funds have more than $60 billion in assets under management globally. Investments include minority and majority stakes in U.S. and international real estate operating companies, owning equity and debt securities of those companies.