How large is Morgan Stanley's exposure to commercial real estate? It's very difficult to tell, actually.

As we learned during the horrors of 2008, there are so many ways for banks to hide their exposure to certain asset classes. In fact, many banks were so good at concealing their exposure that their own management had no idea what they owned.

This morning's Wall Street Journal notes that Morgan Stanley has about $18 billion in exposure in just one unit--the institutional securities unit--to commercial real estate. Some of that might be hedged, although until we know how Morgan Stanley is hedging these risks that's no much to go on. The days have long since passed when banks could simply announce a position was "hedged" or "hedged with CDS" and expect investors to feel reassured.

Brad Hintz, the Sanford C. Bernstein analyst who everone listens to because he was a bigshot at Lehman a decade or so ago, expects "modest" write-downs. Credit Suisse analyst Howard Chen says that institutiional securities unit will write-down around $300 million. The struck us a suspiciously low when we're talking about a basis of $18 billion, but the Wall Street Journal says that many of the loans in this unit have already been written down by 50%. . The company has said its net exposure was $4 billion in the first quarter.

The federal government certainly thinks that Morgan Stanley's commercial real estate portfolio is loaded with junk. It tested Morgan Stanley's financial health under an assumption of losses as high as 45% on its commercial real estate loans, the steepest of any bank that underwent the tests. To translate: the government suspects that Morgan Stanley's commercial real estate assets are more toxic than those at any other financial firm.

But Morgan Stanley's exposure to commercial real estate is not confined to that institutional unit. It's asset management unit is loaded up with commercial real estaet also. "Much of the $1.5 billion in losses in Morgan Stanley's asset-management unit in past year came from commercial real-estate investments," the Journal reports.