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Energy Company sells Real Estate Holdings Print E-mail
Saturday, 09 September 2006

Duke Energy strips down its holdings and operations.  It announced that it created a joint venture for its real estate holdings with a Morgan Stanley unit in return for about $1.4 billion in cash after taxes.

Its holdings include North Carolina, Georgia, South Carolina, Florida, Virginia, Tennessee, Texas, Arizona and Washington, D.C.

Morgan Stanley bought 49 percent of the new joint venture, which borrowed about $1.2 billion and was valued at about $2.1 billion.

Charlotte-based Duke Energy will hold on to another 49 percent, and the remaining 2 percent is owned by Crescent's chief executive officer, Art Fields. The new company will keep the name Crescent Resources, stay headquartered in Charlotte and keep its current managers.

The move takes Crescent Resources off Duke Energy's earnings report, though Duke will receive annual earnings distributions from its investment in the new, standalone property company, Duke Energy spokeswoman Elizabeth Bennett said.

Morgan Stanley, meanwhile, is expanding its property holdings. Last month, The Wall Street firm's real estate unit bought California-based Glenborough Realty Trust, which owns office buildings in Washington, D.C., California, Boston, and northern New Jersey. Morgan Stanley manages $51 billion in real estate assets in the U.S., Europe and Asia.

Shares of Duke Energy rose 37 cents, or 1.2 percent, to close at $30.25 on the New York Stock Exchange. Morgan Stanley shares rose 73 cents, or 1.1 percent, to finish at $66.69.

Duke Energy announced in June it is spinning off its natural gas businesses into a standalone corporation that would be one of North America's largest gas businesses. Duke Energy filed documents with the U.S. Securities and Exchange Commission on Thursday detailing plans to separate the Houston-based unit it's temporarily named Gas SpinCo Inc.

Once the separation is complete early next year, Duke Energy shareholders will own a piece of both Duke Energy and the new Gas SpinCo. The distribution ratio must still be determined, but Duke Energy said it expects dividends from the two publicly traded companies will equal Duke Energy's current annual dividend of $1.28.

After the separation, Duke Energy will have regulated electric and gas units in the Carolinas, Indiana, Ohio and Kentucky; an international business with operations in Latin America; and a wholesale power unit.

Edwina Baniqued

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