Morgan Stanley property fund faces $5.4bn loss

Morgan Stanley has warned an $8.8bn property fund could face losses of up to $5.4bn.

The FT reports the Morgan Stanley Real Estate fund VI International has been forced to make write-downs or hand back the keys on a number of its investments, owing to their fall in value. Losses include investments in the European Central Bank's Frankfurt headquarters, a development in Tokyo and InterContinental hotels across Europe. Meanwhile, it has returned control of a €2.1bn portfolio of German offices to its lender, Royal Bank of Scotland. Morgan Stanley has fully written down its exposure to the fund.