HONG KONG/NEW YORK (Reuters) – Morgan Stanley (MS.N) is close to raising $6 billion for a new global property fund, falling short of its earlier target of $10 billion, sources with direct knowledge of the plan said.
The bank reduced its fundraising target late last year due to the poor global market environment, sources said. Fundraising for the new real estate fund is expected to be completed soon, said the sources.
The Morgan Stanley Real Estate Fund VII Global, the latest in the Wall Street bank’s series of international property investment funds, began raising money from institutional investors in early 2008.
The sources declined to be identified as they were not authorised to speak to the media. A Morgan Stanley spokesman declined to comment.
On Monday, Reuters reported U.S. private equity giant the Carlyle Group [CYL.UL] was raising its second Asia real estate fund with a target of $1 billion in a move to tap more property deals in key markets such as China and Japan.
Property markets around the world are falling as the global financial crisis deepens.
With banks cutting their exposure to property, landlords in Japan, China, India, Australia and other countries could be forced into fire sales if they fail to refinance loans, putting more properties on the market and driving valuations down further.
The downturn in global property markets will create a “vintage” period of strong returns for funds with cash to invest in the next two years, Paul Vosper, chief operating officer for real estate at Morgan Stanley’s Alternative Investment Partners unit told Reuters in early March.
(Reporting by George Chen in HONG KONG and Megan Davies in NEW YORK, Editing by Jacqueline Wong)