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.
The $4.2 billion MSREF V real estate fund missed its April 15 deadline to repay 278 billion yen($3.3 billion) worth of debt packaged in commercial mortgage-backed securities on the 32-storey Shinagawa Grand Central Tower, a property which has seen its value plunge, two people involved in the transaction said.A Morgan Stanley spokeswoman in Tokyo declined to comment.
A New York based spokesman for Blackstone, which holds the most junior portion of the debt and gains the right to market the building for seven months, was not immediately available for comment.This is the largest repayment failure of debt packaged in CMBS in Japan, according to analysts and industry experts, bigger than the 112 billion yen that real estate investor K.K. daVinci Holdings failed to pay on the Pacific Century Place office building.
Phantom Report: Financial institutes walk away from deals that do not make a profit $$$. TEPCO and the Japanese government is covering up Fukushima nuclear reactor fuel rod damage [meltdown] of reactors 1,2 and 3. Fukushima and portions of the region will be a ‘no go zone’ for a very long time. Morgan Stanley default = Fukushima F.U.B.A.R.