Morgan Stanley’s $8.8B RE Fund May Lose $5.4B

Morgan Stanley (MS) has told investors that its $8.8 billion real-estate fund may lose nearly two-thirds of its money due to bad investments, according to The Wall Street Journal.

The $5.4 billion loss, which was made by the Msref VI International [Morgan Stanley Real Estate Funds], comes from investments in properties such as the European Central Bank’s Frankfurt headquarters, a big development project in Tokyo and InterContinental hotels across Europe, among others . The loss, notes the Journal, would likely be the biggest in the history of private equity real-estate investing.

Over the past 20 years, Morgan Stanley’s real-estate unit was one of the biggest buyers of property around the world, doing some $174 billion in deals since 1991.

Morgan Stanley told the Journal, which reviewed fund documents, that its real-estate group has “a longstanding history of investing through many different business cycles over the past two decades,” and that the co. is “committed to managing through this cycle and moving [its] real-estate business forward.”

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