Morgan Stanley, the largest real estate investor among Wall Street banks, is raising as much as $8 billion for what would be the biggest-ever high-yield real estate fund.

“We continue to see significant investment opportunities outside the U.S., dominated by activity in Japan,”the global co-head of Morgan Stanley Real Estate, Jay Mantz, told the Washington State Investment Board’s private markets committee during a presentation in Olympia yesterday. The panel recommended an investment of $440 million.

Real estate firms are raising record amounts from institutional investors such as pension funds that are seeking higher returns than stocks and bonds. Morgan Stanley is raising an opportunity fund, a type that seeks annual returns of at least 20%. It will be invested outside America, with 75% in developed markets such as Japan and Germany and 25% in emerging markets led by China and India.

“This platform for international real estate investment is matched by few firms,” a real estate consultant to Washington State, Michael Humphrey of Courtland Partners, told the pension trustees.”They have a great deal of skill.”

Morgan Stanley increased its fees with the new fund, Morgan Stanley Real Estate Fund VI International, which would surpass the $5.25-billion Blackstone Real Estate Partners V fund raised by New York-based Blackstone Group LP in June.

Morgan Stanley Real Estate has acquired about $62.3 billion of property assets worldwide, including Canary Wharf in London, that city’s second financial district. The firm in July made its first real estate in Russia, buying a stake in a local developer, and plans to increase investment in China and India, where fast economic growth is creating more demand for housing and retailers.

Based on a standard management fee of 1.5% of capital committed, the new Morgan Stanley fund would generate $120 million annually in management fees alone. The actual fee on the fund wasn’t disclosed.