MSREF lines up €450m hotel portfolio sale

Bank continues managing out the ill-fated fund that was briefly the largest private equity real estate vehicle in the world when it closed on $8bn in 2007.

Morgan Stanley is close to taking another step towards managing out investments in its ill-fated MSREF VI International fund with the sale of a European hotel portfolio for around €450 million.

The portfolio of assets, such as The Carlton Hotel in Cannes, France, and other Intercontinental hotels in Vienna, Amsterdam, Madrid, Rome, Frankfurt and Budapest is close to being sold to private investor Toufic Aboukhater, according to UK magazine, Property Week. 

The sale is part of Morgan Stanley’s efforts to manage out investments it made for MSREF VI, which was briefly the largest private equity real estate fund ever raised when it closed on $8 million in June 2007.

Investors were told as long ago as the first half of 2009 that the firm’s ongoing strategy with the fund was to focus on preserving and generating liquidity, deleveraging and de-risking the portfolio and working through debt issues with lenders.

Property Week reported that the equity value of the hotel portfolio just sold was written down to zero last year.

The package was acquired for €634 million in 2006 in a deal financed by Barclays Capital among other lenders.

Morgan Stanley has since gone on to raise MSREF VII Global – dubbed G7 internally. That fund won equity commitments of $4.7 billon, closed in May 2010 and has already made a string of distressed investments.

The platform also has also undergone a series of senior leadership changes since the launch of MSREF VI, with John Klopp and Olivier de Poulpiquet handed the day-to-day operations of MSREI, taking over as co-chief executive officers and co-chief investment officers in September last year.