Morgan Stanley has handed its Crescent real-estate subsidiary to Barclays Capital , drawing a line under a $6.5bn (£3.9bn) property deal that soured soon after it was struck in the summer of 2007.

The Wall Street bank said it had agreed to transfer the subsidiary to Barclays in exchange for a "full release" of liability on the loans relating to Crescent, which operates office space, residential developments and luxury hotels. Morgan had planned to put Crescent's assets into real-estate investment funds, but was left holding them with the markets seized up. Barclays, which provided $2bn loan for the deal, said it had acquired Crescent in a joint venture with the business's co-founder, John Goff.