Morgan Stanley acquired Crescent for $6.5 billion in August 2007, including debt. The bank had planned to put Crescent's assets into real estate investment funds, but markets soon seized up and Morgan was left holding these assets.
Morgan Stanley is also considering investing more capital into Crescent to keep it afloat, the paper said.
Barclays Capital had provided a $2 billion loan to help finance the Crescent deal and the debt is due on November 2.
Morgan Stanley and Barclays Capital could not be immediately reached for a comment by Reuters.
(Reporting by Sakthi Prasad in Bangalore; editing by Elaine Hardcastle)