* May hand $2.4 bln ANA hotel chain to creditors -WSJ
* Creditors include Citi, Shinsei and Singapore's GIC
* Officials decline to comment
* Shinsei has warned of potential real-estate writedowns
(Updates with Morgan Stanley, background)
TOKYO, Feb 17 Morgan Stanley (MS.N) may hand
over to creditors its $2.4 billion investment in a chain of
Japanese hotels when the debt becomes due in April, the Wall
Street Journal said on Wednesday, citing people familiar with
Morgan Stanley acquired the chain of 13 hotels from All
Nippon Airways (9202.T) in 2007, in what was then the biggest
hotel transaction in Asia. Since then, property prices
worldwide have dropped sharply, hit by the global financial
Two of the main lenders in the purchase, Citigroup Inc
(C.N) and Shinsei Bank (8303.T), want Morgan Stanley to put
more equity into the property, for more security against
declining prices, the paper said.
So far Morgan Stanley has been reluctant to do that, the
Officials for Morgan Stanley, Citigroup and Shinsei all
declined to comment.
Another lender, Singapore sovereign wealth fund GIC
[GIC.UL], is interested in taking over the hotels from Morgan
Stanley and is currently in discussions with the other lenders,
the paper said, citing one person.
An official for GIC declined to comment.
Japan's property market became highly leveraged in recent
years, with overseas investors such as Morgan Stanley and
Goldman Sachs (GS.N) scoring a series of big deals.
But foreign players were forced to pull back after the
global credit crisis, leaving behind a growing pile of
distressed property, such as failed developments, companies
unable to refinance loans and bankrupt developers.
Japan had $23.8 billion worth of distressed assets in the
fourth quarter of 2009, more than double the $9.5 billion in
the same period a year earlier, according to data from Real
Shinsei Bank, the midsize lender about one-third owned by
U.S. buyout firm JC Flowers and Co, warned investors this month
it may need to book additional reserves and writedowns related
to its real-estate investments.
(Reporting by Junko Fujita and Mariko Katsumura in TOKYO and
Kevin Lim in SINGAPORE; Writing by David Dolan; Editing by