MorganStanley may hand over $2.4bn hotel chain to creditors

NEW YORK: Financial services major Morgan Stanley may lose control of a Japanese hotel chain, which it bought for a whopping $2.4 billion, to creditors when the debt falls due in April, says a media report.

According to The Wall Street Journal, Morgan Stanley may have to hand over the keys of the $2.4-billion Japanese hotel chain to creditors when the debt falls due in April.

Morgan Stanley Real Estate Funds unit had acquired a chain of 13 hotels from All Nippon Airways Co in 2007. Since then, property prices across the globe have plummeted sharply, hit by the global financial turmoil.

The two main lenders in the Japanese hotel purchase, Citigroup and Japan's Shinsei Bank are pushing Morgan Stanley to put more equity into the property to give the devalued holdings more security. However, Morgan Stanley has been hesitating to do so.

According to the publication, a third lender sovereign wealth fund Government of Singapore Investment Corp has expressed interest in taking over the full-service hotels from Morgan Stanley and is discussing terms with the other lenders.