State Street Corporation
) announced the integration of Morgan Stanley Real Estate
Investing's (MSREI) fund servicing business - the real estate
investment management wing of
). This is a notable addition to the 40-year relationship between
these two companies. Moreover, it boosted State Street's
market-leading alternative and real estate fund servicing
business. The integration process started in Feb 2012.
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Roughly 150 employees of MSREI moved to State Street on
completion of the integration. The company is offering
wide-ranging accounting and administrative services across
MSREI's full range of investment offerings.
Management at Morgan Stanley believes that State Street's
leadership position in servicing alternative assets, combined
with modern technologies and commitment to customer service, was
a boon for MSREI.
State Street's Alternative Investment Solutions (AIS) unit
provides a wide-ranging suite of middle office, fund
administration, risk analytics and credit services to hedge
funds, private equity funds, real estate funds and institutional
investors. The AIS division has more than 3,000 employees
globally, and it managed roughly $1.1 trillion in alternative
assets as of Dec 31, 2012.
Management states that the elevated operational and technology
costs, complex fund structures, increased governance and
transparency demands were the primary reasons for its alliance
with Morgan Stanley in real estate fund management. The
integration of MSREI's fund servicing segment further reinforced
State Street's AIS unit.
With the favorable trend towards private real estate investments,
the outsourcing of real estate fund administration is anticipated
to surge. Therefore, we believe that real estate investors will
gain from the combined entity, which will support their long-term
growth and expense management.
State Street currently carries a Zacks Rank #2 (Buy). Other major
regional banks that are performing well include
Fifth Third Bancorp
), carrying Rank #1 (Strong Buy) and #2, respectively.