| HONG KONG
HONG KONG Dec 2 Morgan Stanley is
asking investors in a $4.7 billion real-estate megafund to
extend the investment vehicle's life because it has yet to put
the majority of the money to work, a source familiar with the
discussions said on Friday.
Investors in the Morgan Stanley Real Estate Fund (MSREF) VII
Global will decide this month whether to approve a fresh lease
of life for the fund, with the product set to expire in June
Of the $4.7 billion raised, only 40 percent or about 1.9
billion, had been invested, the source said, adding that the
fund's managers had preserved much of the capital, anticipating
further stress in the world's property markets.
Now they hope investors will agree that the time is right to
deploy the capital.
Morgan Stanley and its property asset-management wing,
Morgan Stanley Real Estate Investing, declined to comment.
With the sovereign debt crisis playing out in the euro zone,
and austerity measures sweeping major Asian growth engines such
as China and India, private-equity fund managers say attractive
distressed investments are appearing.
Morgan Stanley on Monday named a new head for its global
real estate investment fund in India, Shirish Godbole.
PERE magazine, the real estate publication of private-equity
publishers PEI, reported on its website that Morgan Stanley
would ask investors such as China Investment Corp,
Government of Singapore Investment Corp Pte Ltd,
General Motors Co and Canada Pension Plan Investment
Board to approve an extra 12 to 18 months for MSREF VII.
PERE said the vote required a two-thirds majority, by
capital, with larger investors therefore carrying more weight.
The report said the fund had switched focus away from the United
States after making more than 20 investments there in
apartments, homes and portfolios of nonperforming loans.
At $4.7 billion, MSREF VII raised 46 percent less than its
predecessor, MSREF VI, which raised $8.8 billion in 2007.
Fundraising for the seventh fund came amid media reports that
MSREF VI was facing a loss of as much as $5.4 billion.
One investor told Reuters in Hong Kong that he lost $20
million out of $25 million invested in the fund.