Morgan Stanley (MS.N), grappling with real estate investment losses, may sell its 1.8 percent stake in Japanese beer maker Sapporo Holdings (2501.T), a move that could weaken its toehold in Japan's property business.

The U.S. bank, which some analysts expect to log a second quarterly loss, has told the beer maker it could sell all or part of its Sapporo holdings, Sapporo said in a statement on Monday.

Attracted by Japan's low interest rates and steady growth, Morgan Stanley bought shares of Sapporo in 2007 to cement a capital and business alliance, saying that it could raise its stake from the initial 1.5 percent to 5 percent.

A spokesman for Morgan Stanley declined to comment.

In April last year, Morgan Stanley also bought a 15 percent stake in Yebisu Garden Place, Sapporo's flagship commercial property in downtown Tokyo.

Sapporo, which trails Asahi Breweries Ltd (2502.T) and Kirin Holdings Co Ltd (2503.T) in Japan's competitive beverages market, earns the bulk of its profit from real estate.

Before the announcement, shares in Sapporo closed down 1.5 percent, underperforming Asahi's 0.2 percent fall and Kirin's 0.1 percent decline, but in line with the benchmark Nikkei average's .N225 1.4 percent fall.

(Reporting by Taiga Uranaka and Mayumi Negishi; Editing by Elaine Lies)