Morgan Stanley Fund Defaults on $3 Billion Tokyo Real Estate Deal

via Reuters:

TOKYO (Reuters) – A Morgan Stanley property fund failed to make $3.3 billion in debt payments by a deadline on Friday, handing over the keys to a central Tokyo office building to Blackstone (BX.N) and other investors, the largest repayment failure of its kind in Japan.

Taking advantage of a run-up in property prices, MSREF V refinanced its debt on the Shinagawa property in 2007 with new debt worth 278 billion yen, twice the value of its purchase and likely yielding a tidy profit for the fund.

The refinanced debt was sold in six different tranches by Morgan Stanley to investors.

James Gorman, the CEO of Morgan Stanley, saw his 2010 compensation rise to $15.2 million from $6.5 million in 2009, according to an Associated Press analysis of data filed with regulators.

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