Morgan Stanley's EurAsia fund raises EUR 250m

Morgan Stanley Real Estate Investment said on Tuesday that its EurAsia institutional property fund has raised more than EUR 250mln of equity in less than a year and expects to raise a further EUR 250mln during the third quarter of 2008. After reaching its first closing in the fourth quarter of 2006, the fund has raised EUR 250mln of equity from four institutional investors and its equity capital is forecast to reach a total EUR 500mln during the third quarter of the year. 'This paves the way for a future investment volume of EUR 1bn,' Morgan Stanley said in a statement.

The real estate unit of the US investment bank said that the fund has acquired eight properties, five of which are located in Asia (four in Japan, one in Singapore), and three in Europe. The fund has also signed the deed for another property in Asia, but this will be transferred at a later time. The total investment volume currently stands at EUR 332mln.

The fund is targeting investments of no less than 50% in Asia and of no more than 50% in Europe. In keeping with its core-plus strategy, possible investment objects include core and value-added properties approximating a total market value of EUR 25 mln to EUR 120mln, Morgan Stanley said. The EurAsia Fund is targeting a total return of about 7.5 to 8%, and a target dividend of about 4.5 to 5%.

'Because of the heightened interest that institutional investors have been taking in them, the Asian markets will remain the focus of our investment strategy. In Europe, we are currently reviewing investments in emerging markets, such as Russia and Turkey,' said fund manager Matthias Hübner. Out of the Asian investments, at least 70 % is to be allocated in the established real estate markets of Japan, South Korea, Hong Kong and Singapore.