Two of the world’s biggest property investors are poised to spend billions of dollars on discounted global assets.
Morgan Stanley’s property arm is in the early stages of raising funds for Morgan Stanley Real Estate Fund VII, the follow-up to MSREF VI, which raised a record-breaking $8bn (£4.04bn) of equity last year.
MSREF VI’s reign as the world’s largest property fund ended last week, when US private equity giant Blackstone Group said it had raised $10.9bn of equity for its latest opportunity fund, Blackstone Real Estate Partners VI.
Morgan Stanley Real Estate would not comment, but sources close to the group have confirmed that it is actively raising money for its next fund from global investors.
As with Blackstone’s fund, Morgan Stanley’s seventh opportunity fund is understood to be targeting global property assets that have been discounted by falling values.
John Carrafiell, global head of Morgan Stanley’s real estate investing arm, said last month that he thought the
MSREF VI closed at the end of June 2007, with 45% of its funds already committed, and enough leverage to achieve $30bn of buying power.
Neither Blackstone nor Morgan Stanley has disclosed the amount of debt they are aiming to raise for the funds.
Chad Pike, senior managing director and London-based co-head of Blackstone’s real estate group, said: “With this fund, we will be able to enter new markets and expand Blackstone’s global investment activities.”
Blackstone has so far raised a total of nine real estate funds with total commitments of $25.7bn.
MSREF funds have so far acquired more than $80bn of assets around the world.
Morgan Stanley posted a 41% fall in profit for the first quarter of this year, but the results were still above analysts’ forecasts.
The bank’s mortgage-related write-downs fell to $1.2bn in the quarter, from $9.4bn in its fourth quarter last year.
