Morgan Stanley, which once ran the biggest property-investment arm among Wall Street banks, expects to lose $5.4bn, or 61%, of its $8.8bn global fund from 2007, said a person familiar with the situation.

The firm sent a fourth-quarter update to investors in recent weeks showing the fund was likely to recover $3.4bn of the investment, said the person, who declined to be identified because the information wasn’t public. A spokesman for New York-based Morgan Stanley declined to comment.

Morgan Stanley raised the fund, Morgan Stanley Real Estate Fund VI International, toward the end of the property surge when market prices were at or near the peak. At the time, it was the largest private fund ever raised targeting high-return real estate investments., Wall Street Journal