Morgan Stanley RE pays $1.9b for California's Glenborough Realty.

Morgan Stanley Real Estate announced it will buy California-based Glenborough Realty Trust in an all-cash transaction valued at approximately $1.9 billion.

Under the terms of the agreement, Morgan Stanley Real Estate will acquire all of Glenborough's outstanding common stock for $26 per share in cash through a merger transaction. The per share purchase price represents an 8.2% premium over Glenborough's closing price on August 18, 2006 and a 15.2% premium over the 30-day average closing price through August 18, 2006 for Glenborough's common stock on the NYSE.

Andrew Batinovich, Glenborough president and CEO commented, "This transaction allows Glenborough to unlock tremendous value for our stockholders and demonstrates the inherent value of Glenborough's assets and our operating platform."

"We are excited about this unique opportunity to acquire a well-diversified office portfolio," said Michael Franco, managing director of Morgan Stanley Real Estate. "Glenborough's high-quality office properties are located in some of the country's most desirable and supply-constrained office markets, such as Washington, DC and Northern and Southern California. In Glenborough, we believe we have acquired some terrific assets and a talented team of professionals."

The total consideration of approximately $1.9 billion includes repayment or assumption of Glenborough's existing debt and redemption of its Series A convertible preferred stock pursuant to its terms. The agreement contemplates that Glenborough will continue to pay regular quarterly distributions at an annualized rate of $1.10 per share and per unit through the closing of the merger with a pro rated distribution for the quarter in which the transaction closes being included in the merger consideration.

Completion of the merger is expected to occur during the fourth quarter and is subject to approval by Glenborough's common stockholders.

Goldman, Sachs & Co. acted as a financial advisor to Glenborough's board of directors and Morrison & Foerster LLP and Venable LLP served as legal counsel. Morgan Stanley acted as financial advisor to Morgan Stanley Real Estate and Goodwin Procter LLP and Paul, Hastings, Janofsky & Walker LLP served as legal counsel.

Glenborough is a REIT which is focused on owning high quality, multi-tenant office properties concentrated in Washington D.C., Southern California, Boston, Northern New Jersey, and Northern California. The company has a portfolio of 45 properties encompassing approximately eight million square feet.

Morgan Stanley Real Estate is comprised of three major global businesses: investing, banking and lending. Since 1991, Morgan Stanley Real Estate has acquired $87.7 billion of real estate assets worldwide and currently manages $50.9 billion in real estate on behalf of its clients. In addition, Morgan Stanley Real Estate provides a complete range of investment banking services and is also a global leader in real estate lending.